Certified Revenue Cycle Representative (CRCR) Practice Exam

In a self-insured plan, who bears the costs of medical care?

1. The employee fully

2. The government

3. The employer on a pay-as-you-go basis

4. Insurance companies

The correct answer is: The employer on a pay-as-you-go basis

In a self-insured plan, the employer assumes the financial risk for providing health care benefits to employees instead of transferring that risk to an insurance company. This means the employer pays for medical claims directly as they arise, rather than paying a fixed premium to an insurance provider. This pay-as-you-go approach allows the employer to manage their cash flow and potentially save on insurance premiums, but it also means they need to be financially prepared for the unpredictability of health care costs incurred by their employees. By engaging in self-insurance, employers often have more flexibility in designing their health benefits and can tailor plans to better meet the specific needs of their workforce. However, this arrangement also requires robust management of claims and potential liabilities.