What does the term 'self-insured' imply for an employer?

The term 'self-insured' signifies that an employer assumes the financial responsibility for its own employees' medical claims rather than transferring that risk to an insurance company. This means that the employer retains all the risks associated with claims, managing and funding the claims out of its own resources. By doing so, the employer has the potential for cost savings if claims are lower than expected but also faces the burden of covering higher-than-expected claims, which can impact the organization's finances.

In contrast, the other options suggest scenarios where the employer does not bear the risk. For instance, stating that the employer has no financial responsibility for claims would imply a reliance on external insurance, which is not the case with self-insurance. Similarly, relying only on government programs would indicate outsourcing of risk to public entities, which doesn't align with self-insured practices. Lastly, the idea that the employer must follow strict guidelines set by insurers is characteristic of traditional insurance arrangements rather than self-insurance, wherein the employer typically has the flexibility to set its own policies and procedures.