Health Insurance Center
Health Insurance Q & As
Question 5 of 13 in Employer-sponsored Group Policies
My employer has a self-insured health insurance plan. What does this mean and is this a good deal for me?
Some large employers operate their own health insurance plan as opposed to purchasing coverage from an insurance company. Typically the large employer pays a third party (such as an insurance company or other administrator of health care claims) to administer the plan which they have designed for their employees - the large employer pays the costs (claims plus administration) directly out of the company's coffer. While the large employer saves the profit margin that an insurance company builds into its premium, it raises the exposure of the large company to greater risk in the event that more claims than anticipated must be paid. Due to the nature of these plans (and tight regulation of such plans), most self-insured employer-sponsored plans are very efficient and provide good health insurance benefits to employees.