3 Precautions for Self-Insured Companies

With the increasing cost of health insurance, many self insured companies have become to emerge. Companies that self insure attempt to take control of rising health insurance costs by paying claims directly instead of paying premiums to an insurer. While becoming a self insured company can help save a lot of money in health insurance premiums, companies need to take some precautions to ensure that self insurance does not become more costly than using an insurance company.

 Be Prepared for Higher Than Expected Losses

You should be aware the losses due to claims can be much larger than anticipated, and that losses may require that you spend capital that had been earmarked for other purpose or money used in the operation of the business. So, make sure that you have adequate reserves to pay out the maximum claim amounts without placing too much of a strain on capital requirements.

Implement a Stop Loss Policy

You should consider purchasing a stop loss gap policy to pay amounts that exceed manageable claim limits. Stop loss policies are considerably less expensive than standard health insurance plans and can help to pay for catastrophic loss claims.

Account for Administrative Costs

You should always take into account the costs of hiring someone to administer the company self insurance plan, manage risks; promote wellness and good health or costs for other employees that may be needed to implement your company’s self insurance plan.

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