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Self-Insured Employers: An Alternative to Group Health Insurance

Understanding Self-Insured Employer Plans

A self-insured employer is a company or organization that uses its own funds to pay for the health care expenses of its employees, rather than purchasing a traditional group health insurance plan from an insurance company. The employer sets aside a pool of money to pay for medical expenses, and typically hires a third-party administrator to manage the claims process and assist with compliance with local regulations.

The main difference between a self-insured employer and one that has a group insurance plan is that the former assumes the financial risk for its employees’ medical expenses, while the latter transfers that risk to an insurance company. Self-insured employers typically have more control over the design and administration of their health benefits program, and may have the opportunity to save money if their employees’ medical expenses are lower than expected.

Examples of companies and countries that practice self-insured employer plans include large corporations in the United States, such as Walmart and Starbucks, and some countries in Europe, such as the United Kingdom and Germany.