Self insurance

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Updated: 3/27/2003 1:09 pm
Self-insurance is an alternative to conventional group health insurance plans. With a self-insurance plan, the employer assumes full risk for employee claims and can use all plan funds until claims are paid. These plans are designed to offer the employer greater cash flow control and plan design flexibility. The employer opens and funds a plan benefit account at a bank of the employer's choice with the insurance company's approval. The employer is responsible for providing the insurer with eligibility information on its employees and a description of the plan. The employer then pays an administrative service fee to the insurer to cover claims, management reporting, and other services. The insurance company will process and audit all claims for the employer and then pay the claims with checks written on the employer's plan benefit account. The employer retains all financial and legal responsibility for the plan claims and expenses. For more information on self insurance, contact an insurance expert.

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