February 4, 2011
The costs of health care are increasing every year, which makes having an affordable health care plan essential. Self-insured plans are becoming more popular for both employers and employees, especially for larger companies. According to an article in the National Health Policy Forum, “In 2009, 57 percent of covered workers were enrolled in a partially or fully self-insured health plan.” (#1) A self-insured employer is responsible for paying claims individually instead of prepaying for standardized coverage through an insurance company. Because self-insured plans follow federal regulations (ERISA), state health ...view middle of the document...
If choosing a provider outside of the network, the employee is still insured but the reduced rates and deductibles do not apply. An article from the Congressional Research Service explains it best. “ Although the in-network benefit value of a typical HMO plan is greater than a typical PPO plan, 69% of covered employees in 2008 were enrolled in a PPO, and 23% were enrolled in an HMO.8” (#2) Paying extra for more choices in health care providers is definitely a disadvantage to PPO’s, but this doesn’t seem to affect the overall advantage of what a PPO offers. A self-insured company accepts the risk of paying medical costs for its employees, but what if an employee has a pre-existing condition? Legislation in many states beginning in 1992 limits “…the ability of an insurer to exclude some or all preexisting conditions from coverage.” (#3) There is an option for companies to purchase a stop-loss insurance protect financial disaster from catastrophic or unpredictable losses. Stop loss insurance requires an insurance company to become liable for losses that exceed certain limits called deductibles.
Many states have brought up the issue companies having a low attachment point, when the amount of medical costs one incurs exceeds the amount specified by an employer to pay. This amount...