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Where can I find info about risks vs. benefits of self-insurance vs. individual medical/health insurance? |
Especially when one has Type-II diabetes. Self-insurance plans are usually only successful among larger organizations that have enough people to effectively diversify the risk among contributors. It works along the same lines as a diversified investment portfolio - not everyone is going to get cancer in the same year, but maybe 1 in 1000 will. It's pretty tough to diversify your personal significant future health risks between me, myself and I. If your question is about your employer considering self-insuring: Self insured organization usually define the benefits (co-pays, Rx benefits, stop losses, annual limits, lifetime limits, etc.) just like any other medical plan, and then hire/contract an administrator to review and pay claims based upon the established policy. Instead of writing a check to an insurance company every month for your insurance coverage, they will take the money and put it in a fund and pay approved claims from that fund. The organization will usually buy some stop loss insurance, so that if claims exceed X dollars in a period, the insurance will start paying. This is usually a pretty high figure before the stop loss insurance starts paying, but enough that it will keep the plan from going bankrupt. Insurance actuarials figure out stuff like this. One risk that you need to be aware of, and this applies to self-insured plans and group plans, the employer can change the benefits in these plans at any time, except in cases of employment contracts or other provisions that might prevent them from changing the benefits. My employer has made several changes to our self-insurance plan over the last 5 years to keep the cost down for the employer. My employer has been self-insured for years, and the experience has been fairly positive. When private insurance costs were soaring, our costs increased, but at a fraction of the rate. Last year, our costs were up less than 3%. That's the difference, if the employees don't go to the doctor as much, the money is left in the fund for future expenses, it doesn't go out the door to an insurance company whether you use the benefit or not. There is usually some additional effort by the employer to keep their employees healthy (exercise programs, smoking cessation, nutrition programs, etc.), since they can actually SAVE MONEY if the employees don't require as much care. |
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