Single Employer Trusts (Employee Benefits)

Self-Insurance for employee benefits can be defined as when an employer provides its employees with medical benefits coverage and chooses to pay the majority of the claims out of its own pocket, rather than purchase a regular insurance product.

Self-Insurance for employer sponsored medical benefits was facilitated in 1974 by the passing of the federal Employee Retirement Income Security Act. Since its enactment self-insurance has become feasible to thousands of employees that have been able to design benefit programs to suit their employees, save premiums and ultimately enhance their own financial performance. Self-insuring employee benefits requires companies to develop their own benefit plans, tailored to suit their own requirements, appoint an administrator to pay claims and monitor the program and purchase stop-loss or other forms of high-level insurance to protect the company's assets. Assets to pay for the costs of the plan are normally set aside into a trust arrangement where income can accrue, as funds are built-up in a tax efficient manner. Today it is estimated that over 50 million U.S. citizens have employee benefits provided through self-insurance.