Good employers understand how important it is to offer a competitive benefits package that includes health insurance and worker’s compensation. This attracts talent to your company and is an incentive for them to stay employed with you. As health costs continue to rise, however, many businesses are starting to think about other options that may be available to them.
There are two different types of worker’s compensation plans employers can choose from – self-insured plans and fully insured plans. Taking a look at worker’s compensation self-insured vs fully insured may help you better understand which is best for your business.
The Difference Between Self Insured and Fully Insured
Under a fully insured worker’s compensation plan, an employer will pay a premium to their insurance provider. In exchange for this monthly premium, the insurance company assumes all the risk when it comes to paying for a claim.
A self-insured plan, however, makes the employer responsible for the financial risk associated with a worker’s compensation claim. While employers, in this case, don’t pay premiums to insurance companies, they do have to pay out-of-pocket when their employees get hurt.
According to Caitlin Morgan Insurance Services, many employers find self-insured worker’s compensation plans to be preferrable. This “pay-as-you-go” system helps improve cash flow for businesses and help them control costs. Self-insured plans can also make sure that employees are taken care of sooner rather than later.