What is self-insurance?
With self-insurance, the business predetermines and then pays a portion or all of the medical expenses of employees in a manner similar to that of traditional health care providers. Funding comes through establishment of a trust or a simple reserve account. As with other health care plans, the employee may pay a portion of the cost in premiums. Catastrophic coverage is usually provided through a “stop loss” policy, a type of coinsurance purchased by the company. The plan may be administered directly by the company or through an administrative services contract.
Some employers who are financially sound (and usually quite large) are “self-insured.” An employer can only be self-insured if it obtains permission from the Wisconsin Department of Workforce Development (DWD). DWD requires employers to demonstrate a very sound financial condition in order to be self-insured.
