There are many large companies and government organizations who are going to self insurance as a benefit for their employees. This is an idea that is becoming very popular throughout the United States and there are several reasons for this. Of course, the cost of health care is the main issue and the profit margins paid for medical care is a place where large organizations feel they can save money.

This is how it works: A large organization, which has hundreds or thousands of employees will continue to pay the insurance premiums just as it always has. The employees will pay their part or their dependents’ part exactly as they have in the past. The difference is that these premiums go into an account that is saved and invested. There is no insurance company receiving this money. If you are an employee of an organization that is self-insured, you will notice no changes at this juncture, you pay your premiums just as usual.

The organization will contract with a company to run their medical business. This company has a network of doctors and clinics that the employees will use if they need medical attention. This medical services company also takes care of paying for the services out of the fund that the company has set up for the premiums. A company may build their own clinics for routine visits or a minor injury.

This company administers the medical plan in a way to minimize costs and deliver good care to people on a much more personal level than a large insurer might.

In deciding whether this is a good deal for the employee or not, one must look at two factors. First is the financial stability of the organization. Is there any danger of them going out of business? Are they well protected against the economic downturn and will the insurance fund stay stable? It is important for the organization to give assurances that the money in the fund is protected and can never be used for any other purpose. If these factors are covered, self insurance can be a good benefit to an employee.