You are missing the fact that its basically his employer self insuring, as a form of unpaid compensation. The only thing the insurer is doing is acting as a billing agent.

It’s not self-insurance, necessarily. When OP says “zero premium” they mean (even if they don’t know it) that their employer is paying 100% of their premium.

What they said, I worked for an outfit with a similar plan (lower max. out of pocket, though). They were self-insured, though, and the latest year I have data for, it was about $20K/year for health coverage.

Also worth noting that self-funded plans will have their premiums set based on the plan's actual claims experience, which means employers with a sicker risk pool will pay more. This also encourages discrimination against older or unhealthy/disabled workers, since they statistically cost more. (This is illegal, but it happens all the time and is hard to prove.)

Well, when I was working there, employee premiums where exactly 0, company picking up the entire tab, but I am quite sure that this stuff does happen.

The employer picking up 100% of the premiums (which, in a self-funded plan like this, are paid into the plan trust) just makes this kind of stuff even more likely. If an employee or employee's covered spouse or dependent has health issues requiring $XXX,XXX/year of treatment, getting rid of the employee will directly save the company $XXX,XXX/year. Quite a powerful incentive for scumbags, even if it's completely immoral and illegal (ERISA 510).

Of course. Since the company actually does have some decency (being privately held helps, too) eventually they just decided, as I hear, to simply convert to a (still generous) regular insurance plan.

Granted, the other reason was that because of Pajamacare, health plans that are "too good" get taxed excessively.