What Is A Self Insured Health Plan
A self
insured health plan is unique. Also known as
self-funded health plan, it is a health insurance or health care benefits which
is given to the employees by the employers. Shortly said, the employers pay for
the insurance themselves for the insurance because they simply choose not to
pay fixed premium of health insurance to insurance carrier. Usually, there is a
special trust fund which is set up in order to earmark the money which is both
employee and corporate contributions to pay the incurred claims. Today, based
on a report published by EBRI or Employee Benefit Research Institute, there are
around 50 million workers including their dependents having this health plan.
This number represents around 33% of total participants of health plan insurers
in the private employment.
Reasons To Choose Self Insured Plan
Definitely, it is important to
understand the reason why this health plan makes a good or right choice for
both employer and employees. Well, at least there are different reasons why it
has been a favorite option by the employers.
· Customizable
Plan
This health plan is customizable
according to the employers’ wish in order to meet any specific needs in health
care for the employees or workers. It is certainly different to the standard
insurance policy. This type of health plan is considered more suitable.
· Control
Employers have control over this plan
which is considered important for them in order to enable the interest income
maximization. In standard health plan, the insurance carrier is usually the one
that generates the income through premium dollars investment.
· No
Pre-Pay Coverage
Here is another benefit that becomes the
reason why this health plan has been a favorite. This health plan doesn’t
require the employers to pay for the pre-pay for coverage. As a result, it
provides improved cash flow.
· Not
Subject to Conflicting Mandates and Premium Taxes
There are some conflicting mandates in
state health insurance benefit/regulation which often are subjected to the
employers. But fortunately, the self insured health plans are not subject to
this as they are regulated under ERISA or federal law. And, the employers are
also not subject to premium taxes of state health insurance. The number of the
taxes is quite high though around 2-3%.
· Flexibility
What employers can enjoy is freedom or
flexibility in terms of choosing the right network in order to meet the needs
of employee’s health care.
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