Self-funded health insurance was once solely the domain of large employers. Most businesses believed that they would have to have massive resources at their disposal to offer such health plans. However, smaller companies are increasingly looking to self-funded options as a way to control rapid increases in healthcare costs.
Under a self-funded health insurance plan, businesses pay the cost of their workers’ healthcare directly, while still maintaining stop-loss coverage that kicks in if expenses start to run too high. This gives businesses greater control over what they pay for than typical insurance plans, where premiums rise every year with little control from the employer.
The New Jersey Star-Ledger recently reported that statewide enrollment in the small employer insurance market has dropped in recent years. Officials from the state’s Department of Banking and Insurance said they believe one reason for this is that more small businesses are moving to self-funded plans.
A 2008 report from the Congressional Research Service revealed that 55 percent of adults covered by private insurance are enrolled in self-insured plans, which marked an increase over previous years.
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