Can someone please explain what a "self-funded" company insurance plan is?

[chrissyk]

We just got the BC/BS info from my husband's company's new insurance plan. It says that the plan is "self-funded" and is administered by BC/BS. Does this mean that the company is self-insuring? If so, doesn't this seem very risky for a relatively small company? I called BC/BS to ask about this, and the rep. did seem to confirm that self-funding isn't considered a great idea for a small company. Heck, even GM seems to have trouble being self-insured these days.

I asked about possibly buying a high-deductable BC/BS policy on our own and dropping the employer policy, but BC/BS doesn't allow that if you have access to a BC/BS policy through work Am I crazy to be worried about the solvency of this insurance plan? I'm pretty sure that someone at my husband's company was sold a bill of goods by a "benefits insourcing" company, and now we all have this kind of insurance. Thank you for any info. I need to be able to make an informed decision about what we can/should do at this point.

 

[Toby'sFriend]

most companies that self-insure carry some kind of catastrophic expense policy that limits the maximum amount they will have to pay out.

 

[chrissyk]

most companies that self-insure carry some kind of catastrophic expense policy that limits the maximum amount they will have to pay out.

That makes me feel better. How can I find out if my husband's company carries this type of re-insurance, though? They don't have an HR person anymore. They use this "benefits insourcing" company instead (and their customer service stinks!!).

 

[needanewjob]

Most self-insured companies do in deed have a stop loss amount. My former company had a stop loss at $100,000. So if a particular surgery/event ran a tab of say $250,000, the company would pay 100,000 and then the stop loss insurance would kick in and negotiate and pay the extra 150,000.

I don't think any company would be self insured without stop loss coverage so I wouldn't worry about it.

 

[Miss Jasmine]

Is this small company owned by a larger company? Just curious.

 

[chrissyk]

Is this small company owned by a larger company? Just curious.

No, it's a smaller company all on it's own. I would be less worried about the self-funded insurane plan if it were a larger company (and therefore a larger pool of insureds).

 

[mickeyboat]

With insurance premiums rising faster than the speed of light, small business are being forced to move towards self-insuring. I can't imagine any company would self-insure without some sort of stop-loss coverage.

Our company self-insured 8-10 years ago. We had one or two bad years which forced us to move toward more traditional insurance coverage. We are considering adopting a plan this year where the plan would carry a high deductible, which the company would self insure.

Denae

 

[diskids2]

There are many people who self insure as well. The cost of the monthly preminums CAN be less expensive than the amount that they may have to pay for additonal family coverage through the employer.

 

[chrissyk]

There are many people who self insure as well. The cost of the monthly preminums CAN be less expensive than the amount that they may have to pay for additonal family coverage through the employer.

Do you mean that there are many people who buy high-deductable coverage on their own? We're going to do that at some point, as I am very interested in being able to open an HSA. For right now, BC/BS won't sell us an individual policy because we have BC/BS access through DH's work, though. That's fine, but I wanted to make sure that this "self-funded" business was not some sort of disaster waiting to happen.

Honestly, what happens if someone in the rather small insured pool gets REALLY sick, has a bad accident, has a very premature baby, etc. I know that when my friend had her premature twins, each one cost her insurer over 1 million dollars before he came home I can't see how a small pool of insureds at my DH's company could cover such a thing, even with a reinsurer picking up the "catastrophic" costs. Maybe I'm misunderstanding how "self-funded" insurance plans work, though