Self-Insurance Basics

Did you know that your business can become an insurer? No matter what your business is, you can start providing health insurance to your employees. Self-insurance, or self-funding, is allowing your employees to pay their insurance premiums to a trust rather than an insurance company. When a claim is made, the cost is then covered through the money in the trust.

If you are considering self-insurance for your company, make sure to keep these guidelines in mind:

  • Size matters – the more employees you have at your company, the better your rates will be since you will have a larger pool. Companies that have less than 50 employees should seriously consider if self-insurance is really the right choice.
  • Look at your bank account – deposits that employees make into the trust are not allowed to be mixed with any company funds to ensure that the well-being and health of everyone who participates. If your company is dealing with a cash flow problem, you may not want to get into a self-insurance program until your finances are straightened out.
  • You may start to look at employees a little different – self-insurance plans can let businesses know more about how medical dollars are spent by employees. While older employees tend to have more medical expenses, they also do not take on dangerous hobbies.
  • Your HR department will be overworked – to get your self-insurance program up and running, your HR department will have to take on a lot more responsibility. However, once the plan is up and running, it will operate just like a traditional health insurance policy.

For all of your health insurance coverage needs to ensure that you and your employees are properly protected, contact the insurance experts at North Central Insurance in Elk River, Minnesota. We will work with you to ensure that you have the right amount of coverage, all at the right price.