Apparently our medical plan is moving from fully funded to self insured. What does that mean and is our coverage going to remain a premium plan? If anyone is knowledgeable in this area kindly explain. Below is simplistic explanation. My experience with such plans in the past has not been the best.


Why your members should know the difference
One of the many many ways that the health insurance market doesn’t act like “real” insurance is through the use of self-insured plans by most large employers. When a plan is self-insured, it means the Union is paying all of the health care costs plus administration costs—not “just” premiums.

Here’s the difference:

If an Union-sponsored plan is fully-insured, the insurance company is ultimately responsible for the health care costs and the Union pays premiums.

If an Union-sponsored plan is self-insured, the Union is ultimately responsible for the health care costs, and pays for all of those costs plus administration fees.

If your plans are self-insured, your members should know it and they should know why.

Many Unions move to self-insured plans once they reach a specific size because it becomes less expensive for them to pay for all of the medical expenses than to pay the premiums required by the insurance company to take on the risk. If this is the case for your company, you should not be shy to communicate that information to your members. Your members should know that their Union—not the insurance company—is picking up the bill for all of those costs. And, they should know that the insurance carrier is responsible for negotiating rates with in-network providers and processing claims.