What does a self-insured health plan typically depend on for financial management?

A self-insured health plan operates differently from traditional insurance models, where the employer assumes the financial risk for providing health care benefits to its employees. This means that instead of paying a premium to a third-party insurer, the employer sets aside funds to cover medical claims incurred by employees. As such, financial management of a self-insured health plan significantly relies on the employer's financial reserves and effective risk management strategies.

In this model, employers must accurately estimate healthcare expenses, maintain sufficient reserves to cover potential claims, and implement cost-control measures such as wellness programs or negotiating directly with healthcare providers. This approach not only allows for flexibility in benefit design but can also result in cost savings over time if managed properly. Understanding these aspects is crucial for a Certified Billing and Coding Specialist since it impacts how claims are processed, the expected costs associated with healthcare services, and the financial planning required to support self-insured plans.