Workers’ compensation insurance protects employees. Most companies are required by law to carry some form of workers’ compensation. In some cases, a company may choose to self-insure.
Is Self-Insured Workers’ Compensation Necessary?
Employers do not have to choose to be self-insured. Workers’ compensation is necessary, but a company can use traditional means to obtain it, such as through a third-party. If an employee is injured while working, the company is responsible for lost wages and medical treatment. Companies that want more control over the workers’ compensation cost, may find self-insuring to be more reasonable.
Why Should Employers Consider Self-Insured Workers’ Compensation?
Self-insured work comp comes with its share of advantages and disadvantages. Since the employer pays for claims out of pocket, they can save money. The plans, in general, are more affordable and since they handle the claims within the company, they are easier to manage.
This form of insurance is easier for companies to manage if the company has some medical or legal knowledge when a claim does arise. To avoid large injury claims, companies should have a risk management program in place.
Self-insured workers’ compensation protects employees similarly to traditional workers’ compensation coverage. For companies that want to control the costs and the claims, self-insuring may be the best possible option.