[delinka]

In my case, my company "self-insures" but they hire processors (Bluecross, CIGNA, etc) to handle the claims. I doubt that any employer is processing all claims themselves directly. I would have to do the research, but it seems sensible to me that the processor would require some amount of money in escrow (or some other insurance policy) to cover such an event.

[pandaman]

Most companies do and thus, most people believe they have a policy from the processor, not their company. Also many companies hire processors for payroll too (ADP and the likes). Does it seem sensible to you that in this case the payroll processor would require some amount of money in escrow to cover severance, PTO, California's WARN etc in case of bankruptcy?

[delinka]

Similar to people thinking they have a policy from the processor rather than their employer, health providers are completely unaware that my employer pays the bills. If the providers don't get paid according to the contract, they'll go after the processor. The processor wants a buffer, insists on escrow or something.

As employees, people are seldom under the delusion that they work for, e.g., ADP. My last company paid me through a processor. My direct deposits showed as coming from the processor. To any bank, it looked as if I was employed by the processor, but the employees knew who the employer was. Should the employer suddenly cease to exist and owe employees anything, employees will go after the employer, not ADP.

[pandaman]

> If the providers don't get paid according to the contract, they'll go after the processor.

No, not really. Do a search of "insurance claim denied" and see who is on the hook. Even in the case when the processor simply decides not to pay.

[delinka]

“...according to the contract” is the operative phrase there.

[pandaman]

I am not sure what you mean here. There is no contract, which turns an insurance administrator to an insurance under-signer.