Health insurance questions drive some companies to self-insure
Some mid-size companies are opting to self-insure their employees rather than contract with a third-party insurance provider.
The Portland Press Herald reported that Guilford-based sister companies Hardwood Products Co. LLC and Puritan Medical Products Co. LLC are self-insuring their 475 workers.
“We’ve been able to keep our employees’ premiums at the same level and lower their deductibles over the last couple years,” Scott Wellman, chief financial officer at Hardwood Products and Puritan Medical, told the paper.
Self-insurance means a company underwrites its workers’ health insurance policies and pays claims directly to medical providers. It’s become more popular nationally among midsize companies and some small businesses since the passage of the Affordable Care Act in 2010, the Press Herald reported.
Dan O’Halloran, an employee benefits consultant in Yarmouth, said companies that self-insure can reduce the overall cost of their employee health benefits by at least 5% by avoiding ACA-related taxes and fees.
The risks of self-insurance include unexpected costs of a volatile market and employee health, O’Halloran said.
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