A self-insured person or company is someone or a business that decides not to buy traditional insurance, but rather pays out of pocket for losses based on their own analysis of risk. Self-insurance is most commonly used in health care, where a large employer will contract with an insurance company to provide administrative services such as enrollment and claims processing but will take on the overall financial responsibility for paying employees’ medical claims.
The decision to self-insure is a complicated one that involves weighing risks against benefits. For individuals, a significant benefit of self-insurance is that it can save money on premiums. However, a person also must make sure that they have enough cash on hand to cover potential losses, like in the case of a car accident or severe illness. Depending on the individual’s situation, it may be worth talking to a financial advisor to see what’s the best course of action.
For businesses, a primary benefit of self-insurance is the ability to control their workers’ compensation costs. The cost of purchasing a traditional policy can increase each year to cover the insurance carrier’s administrative and staffing costs, but a self-insured company can adjust their budget each year based on past experience and their own analysis of risk. It is important to note that even if a company chooses to self-insure, they must continue to pay assessments into the state’s workers’ compensation funds, including the First Injury Fund, the Second Injury Fund and the Rate Adjustment Fund.
While many companies opt to self-insure, others choose to purchase traditional insurance. For those, it’s important to keep in mind that federal and state laws still require that individuals carry a minimum level of automobile insurance, home insurance and medical coverage. Likewise, employers must comply with the Employee Retirement Income Security Act (ERISA) or face penalties.
The complexities of self-insurance can be intimidating, but it’s important to understand that there are a variety of circumstances where it might be the right decision. In addition to analyzing the costs and benefits, it’s important to consider whether a particular plan type is in compliance with state and federal regulations. For example, if an individual or family chooses to self-insure their health coverage, it’s important to ensure that they don’t violate HIPAA rules that prohibit insurers from denying patients coverage based on medical history or Affordable Care Act (ACA) mandates that limit surprise balance billing. Similarly, an employer who chooses to self-insure its health insurance must still comply with ACA requirements, such as COBRA and limits on how much an employer can increase or decrease their insurance plans for older employees. If you have questions about the legality of a particular plan type, contacting an attorney is an excellent option.самоосигуряващо се лице или фирма