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.
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%.
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.