Why is the RCA medical plan self-insured?
Self-insurance is the dominant funding approach for plan sponsors with one thousand or more households. The reason is economics. Self-insured plans avoid risk and profit charges imposed by risk-taking entities such as insurance companies. In addition, fully insured groups are required to pay state premium taxes and are subject to state-mandated benefits. Self-insured groups pay only for their own claims experience and the cost of administration. Although the results from self-insuring are more volatile, in the long run self-insurance is the least expensive funding approach. Smaller groups are often forced to be fully insured and pay higher costs long-term, as they are unable to absorb the volatility of self-insurance.
