What’s The Process To Become Self-insured?

Completing and submitting an application to be self-insured is most often the most time-consuming aspect of putting together a self-insured program. Regulations vary by state and the application process can take between 60 and 90 days. Most states will require financial statements, description of the company and proposed claims administration program, historical losses, details of excess insurance coverage, and a self-insurance bond or LOC as security.

How Do Self-insured Companies Handle Claims?

Not many self-insured companies handle their own claims. Claims service companies specialize in providing claims administration and loss control services. They contract with self-insured companies to provide these services for an agreed fee. Depending on the region, these firms may be called service companies, third party administrators (TPA’s) or claims administrators.

How does a Self-Funded health plan differ from a Traditional Fully Insured plan?

In a self-funded plan, the employer assumes the financial risk for employee health claims rather than paying fixed premiums to an insurance company. This allows greater flexibility in plan design, potential cost savings, and direct control over claims and plan administration, while being governed primarily by federal regulations.