What does self-insurance in a workplace entail?

Self-insurance in a workplace involves employers assuming the financial risk of providing health benefits to their employees rather than purchasing a traditional insurance policy from an outside insurance company. When an employer pays directly for employees' medical bills, they are taking on these costs themselves, which means they have more control over the healthcare costs and can tailor health benefits to meet the specific needs of their employees.

This approach allows businesses to save on premiums that would typically be paid to an insurance carrier, although it also carries the risk of unpredictable medical costs. Employers who self-insure often set aside funds to cover potential claims and may also utilize third-party administrators to help manage claims and process payments.

The other options do not accurately represent the concept of self-insurance, as they either suggest that the financial burden falls on employees or rely on third-party insurance companies to manage medical expenses.