Tell Me Something

[spence]

Originally Posted by scottw

you are referring to a small # of ASO's...hardly the norm..

Typically, only large employers choose to self insure their employee health plans.

Again, this simply isn't true. The ASO market is huge and has been rapidly spreading to small and medium size businesses.

The employees of a self insured employer often do not understand that the employer has a self insured plan. The employees are issued an “insurance” card with the name of a health insurance company on it, such as “Blue Cross & Blue Shield” or “UnitedHealthcare”, but the insurance company is only acting as an administrator, not an insurer.

Yes, because their employer has underwritten the insurance.

Avoidance of state insurance regulation is one reason for the increase in self insured plans. Since self insured plans does not involve a traditional insurance arrangement between an employer and an insurance company, self insured plans are exempted from many types of state insurance regulations by the federal ERISA statute. For example, state law coverage mandates (e.g., a state law that requires that certain health benefits be covered by insurance contracts, such as fertility treatments) do not apply to self insured plans. In addition, self insured plans can avoid other costs built into traditional health insurance premiums, such as state premium taxes, contributions to the state high-risk insurance pools (if any), and contributions to a health insurance company’s profits and reserves.

Huh?

Employers that self insure, however, typically do no bear all the risk of a self insured plan. Instead, self insured employers usually buy traditional insurance to cover the risk of very high losses due to large or unexpected health claims by their employees. This insurance is called “stop loss insurance.” Although this insurance covers the health care claims of the employees, it is not considered health insurance because is does not cover health care claims directly. Instead, it protects the employer against large losses it might suffer as a result of being self insured.

So? It's called risk management. Happens all the time.

You seem to be having a particularly incoherent day today, and considering how low the bar is usually set, this is disturbing.

-spence