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Self-Insurance

Self-insurance is a type of risk management insurance where a person places a certain amount of money away to counter potential losses in the future. Self-insurance can be taken for an insurable risk—which is an uncertain event that could happen in the future—that the insured has no control over. However, one of the other factors governing the possibility of taking out self-insurance is that the risk should be measurable. In other words, one should be able to either put a price or rate on it. Self-insurance is also offered to employees by large corporates in the form of employee benefits. Listed below are a few questions answered by the Experts on issues related to self-insurance.

Why would a town want to sue the county under Article 78 to become self-insured?

The Article 78 petition has probably been filed by a party who wants the state to review what they have dictated in a matter like this. It’s possible that the party works with the county and feels that the county should ensure that its workers are protected by insurance.

An employee’s child is taking a new drug that costs more than previous drugs. In this case, would it be legal for the Human Resource manager of the company to reveal details of the child’s medical expenditure because the company is self-insured?

If the Human Resource manager simply asks the employee about the increase in the amount for the drug, it would be well within the company’s rights to pose this question. But if the Human Resource manager were to tell anyone else in the company, such as other employees, this would be a violation of the confidentiality agreement between the employer and employee. According to the Health Care Privacy Act (HIPPA), the only thing that the employee can do in this case is file a complaint with the Department of Health and Human Services and let them investigate the issue. For information on filing a complaint, visit: http://www.hhs.gov/ocr/hipaa

If a person is self-employed and their insurance is unable to cover the cost of their expensive medication for seizures, what can they do?

In most cases, an insurance company will refuse to cover a drug or a treatment if the insurance plan has limited drug coverage, if they believe that the treatment is not necessary, or if the drug does not have the approval of the Food and Drug Administration. Also, with self-insurance, the insurer can deny a person insurance coverage if they have a pre-existing condition. In most cases, it is generally hard to get an insurance company to pay for an atypical treatment even if they are required to provide the coverage in the contract. The person would need to study their insurance contract carefully and check if the medication can be covered or not.

If a person has a small business, are they required to have self-insurance for all of their subcontractors or just for their employees?

An employer is generally only required to offer self-insurance for their employees. If the person has subcontractors working for them, they would need to contact their insurance company and check if the waivers signed by the subcontractors would be sufficient for them to opt out of worker’s compensation. If the insurance company does not accept the waiver, the person may want to think about having the subcontractor bear the cost themselves as a prerequisite to working for the company.

There are several rules and regulations laid down by the law that govern self-insurance and both employers and employees may not fully understand them. While the questions above may have answered a few of your questions, there may be others that are specific to your case. In times like this, put your questions to Experts who can offer professional opinions and insights at an affordable cost.
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