Question:
what does it mean if company is self insured

my company has it's own insurance co. i believe it is underwritten by a bigger co. like humana. is this what self insured means?    — GAILETT (posted on December 11, 2002)

December 11, 2002
A company is self-insured if the money paid for your covered health costs is the company's money. It does not have to come from the operating budget; it can be put aside in a trust. If the company is a subsidiary of a parent company and the parent pays the cost, then it is still self insurance. However, if the company (or parent) has an actual licensed insurance company, which sells insurance to other companies, too-- I believe this is not self-insurance. As I said, sometimes self-insured companies puts money in a fund. In these cases, it may hire an insurance company to run the fund. This still is self-insurance. If the insurance company also insures for major expenses (i.e., over $2000), that part of the coverage is insured, but the first $2000 is self insured. Feel free to email me if you have more questions about self-insurance. Beth
   — Beth S.

December 12, 2002
Most larger companies are self insured with regard to their health insurance plans. (In most cases, you'll never know or have to know that fact.) Like the previous response says, the employer sets aside money into a fund that pays claims and administration expenses for their health insurance plan. The company contracts with an insurance company to administer the plan (provide the doctor and hospital networks, pay claims, etc.) The employer has total flexibility (within federal and state laws) to specify what is covered or excluded and what the co-pays/deductibles will be for various procedures and doctors visits, etc. Hope that helps answer your question.
   — lezawomack