What does 'self-insure' mean for employers?

Self-insurance refers to a situation where employers take on the financial responsibility for their employees' medical expenses rather than transferring that risk to an insurance company. When employers self-insure, they pay directly for covered medical bills incurred by their employees, which means they manage all the associated costs themselves. This approach allows employers to have greater control over their healthcare costs and can result in savings if the actual claims are lower than expected.

While other options might reflect different aspects of employer insurance strategies, they do not capture the essence of self-insurance. Purchasing insurance for all employees indicates a fully insured model where the risk is transferred to an external insurer. Managing their own investments most closely relates to financial management rather than directly covering medical expenses. Relying on state programs for employee coverage suggests a dependence on external resources rather than assuming direct responsibility for health-related costs, which again diverges from the concept of self-insurance.