SELF-INSURED PLAN

Summary

A self-insured plan is a health benefits arrangement where an employer acts as its own insurance company. Instead of paying premiums to an external insurance carrier, the employer sets aside funds and directly pays for employees' medical claims as they occur. This gives the employer more control over benefit design and costs, but also means they assume the financial risk of high or unexpected claims. Many self-insured employers purchase stop-loss insurance to protect against catastrophic claims that exceed a certain threshold.

Usage Context

Understanding self-insured plans is crucial when studying employee benefits, healthcare financing, risk management, and corporate insurance strategies. This concept is particularly important in courses covering human resources management, healthcare economics, and business risk assessment.

Common Confusions

• Thinking employees receive different quality of care under self-insured plans
• Confusing self-insured with self-funded retirement plans
• Believing self-insured plans don't follow insurance regulations
• Assuming only large companies can be self-insured
• Mixing up self-insured plans with health savings accounts (HSAs)