If you are currently considering self-insurance for your health care plans, you might wonder how common this is. While the numbers might not have any real bearing on your final decision, it might give you an idea of how your competitors structure health care plans.
According to the Society for Human Resource Management, private-sector employers increasingly self-insure health care plans. However, this trend remains more common among smaller firms than larger companies.
What companies are self-insuring?
The SHRM reports that over a three-year period beginning in 2013, self-insurance by company size rose or fell by the following percentages:
- From 83.9% to 78.5% for large employers
- From 25.3% to 29.2% for midsize employers
- From 13.3% to 17.4% for small employers
These numbers represent how many employers per size maintained at least one self-insured plan. So, many companies also provided a traditional plan.
What are some common reasons for the shift?
SHRM remains cautious in proposing that the Affordable Care Act may account for the shift. While health care plans might become more affordable for larger companies, it might become more expensive on a per-capita basis, which might also affect the ability of smaller companies to afford them.
Companies that seek to self-insure may need to weigh the pros and cons carefully. For example, a company with a relatively young and healthy workforce in a low-risk field might have a lot less to worry about. However, a company employing older workers or operating in a high-risk field might go bankrupt trying to cover health care plans in-house. Just like with insurance companies, the company’s costs depend on how many people make claims on the plans and how expensive those claims are.