Self-Insurance May Be the Smartest Choice for Employers

A great concern for employers these days is how to provide their employees with medical benefits. One smart health insurance option is setting up a self-insurance plan. Although it may seem like this would be a greater expense, it can actually be more cost-effective.

The Set-Up

With this type of set-up, the employer creates a separate entity, much like a trust fund, from which employee health claims will be paid. The funds will typically be taken out of employees’ paychecks, to which the employer may also add to as part of an overall benefits package. A third-party will usually be hired to administer the plan.

The Benefits

One of the benefits of this type of health insurance is that there is greater flexibility involved. The employer can set up a plan that truly fits the needs of its workers. Another benefit is that, unlike a regular insurance plan, you don’t just lose the premiums you pay if they’re never used.

Additional Coverage

In addition to this type of smart health insurance, employers will usually purchase some type of stop-loss or catastrophe insurance to cover large and unpredicted claims. According to Caitlin Morgan Insurance Services, it’s also a good idea to put programs into place, such as wellness education, that help employees learn how to take care of themselves better and, therefore, better avoid illness and injury.