(via WashingtonPost.com) Self-insurance, in which businesses go off the traditional insurance grid and handle claims on their own, has become more popular among large employers over the past 15 years. But as new provisions of the Affordable Care Act take hold, some benefits professionals are starting to recommend self-insurance as a way for small businesses to dodge new costs associated with the law.
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“It used to be with a typical self-funded plan you wouldn’t even get the re-insurers to give you a competitive rate until you had 100 people,” said Howard Soltoff, an insurance consultant for Bethesda-based Tribridge Partners. “But now, if you have 10 employees, you can get a self-funded plan.”

That doesn’t mean businesses should necessarily opt for such coverage. Smaller businesses tend to have more to lose than larger ones in self-insuring. With only a few dozen employees paying into the risk pool, a sudden large unexpected expense, such as an employee having a premature birth or a sudden need for an organ transplant, could prove costly if managers have not planned ahead.

To provide some cushion, most self-insurers purchase what’s known as stop-loss insurance to cover them in the case of a single sky-high cost. But the business is still liable for large claims falling below whatever threshold is set, which can be upwards of $300,000 for some companies.

“You could have one claim that kills you, if something catastrophic happens,” said Janice Algie, human resources director at the Fairfax-based Peterson Cos., a real estate company.

Read the entire story at WashingtonPost.com: “Self-insurance could be small business option”