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Protect Yourself: Self-Insured Plans

If claim costs are fairly consistent, your employer may consider a self-funded health care plan.

  • If claim costs are fairly consistent, your employer may consider a self-funded health care plan. With a self-funded plan, your employer -- not an insurance company -- provides the funds to make claim payments for company employees and their dependents.
  • In the event that claims are higher than predicted, a self-funded health insurance plan can be backed-up by a stop-loss contract. The stop-loss contract is designed to limit your employer's liability for claims.

Generally, there are two variations of this coverage:

1) Specific stop-loss coverage applies after your medical expenses exceed a predetermined threshold such as $5,000.

2) Aggregate stop-loss coverage applies when your employer's liability for group insurance claims exceeds a specified amount. The insurance company will pay all claims once the specified amount is reached.

An employer self-funded plan may be an indemnity program, which reimburses you for the medical care you have received. Or, your employer may provide benefits through the service plan offered under an HMO, or through the insurance company's PPO network.

An insurance company may also be used for a self-funded employer to help out with needed administrative services.

Government allows anyone who is self-employed to deduct a portion of his or her health insurance premiums.

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