Ace the Illinois Health Insurance Exam 2025 – Insure Your Success Today!

A self-insured plan in health insurance is characterized by the employer taking on the financial responsibility for providing health benefits to employees, rather than transferring that risk to an insurance company. In this arrangement, the employer pays for medical claims directly out of pocket or sets aside funds to cover anticipated healthcare costs, rather than purchasing an insurance policy that covers those expenses.

This type of plan allows employers greater control over their health benefits, including the ability to customize the plan to better meet the needs of their workforce. Additionally, self-insured plans can offer the potential for cost savings, as employers may not have to pay premiums to an external insurer and can directly manage their healthcare spending.

The other options describe different aspects of health insurance but do not accurately capture the essence of a self-insured plan. For example, an external insurance company bearing all financial risks would denote a fully insured plan. Dependent care coverage pertains to a specific type of benefit that is not directly linked to the self-insurance concept, while plans limited to catastrophic issues typically imply a higher level of risk transfer to insurers, which contradicts the self-insured model where employers retain that risk.