What is a self-funded/self-insured plan? How do I know if I have one?

Many employers, especially large ones, offer workers health coverage that is known as a “self-funded” (also referred to as “self-insured”) arrangement, which is where the employer pays enrollees’ medical claims directly, as opposed to traditional health insurance (known as fully-insured), where the employer buys coverage from a state-regulated insurance company.

Most companies with a self-funded plan contract with a health insurance company to pay the medical claims and provide enrollees access to the insurance company’s health care provider networks. Your insurance card will typically look the same as an insurance card for a fully-insured plan. For these reasons, you may not notice that your plan is self-funded.

In general, self-funded plans must comply with federal laws, including the Affordable Care Act. However, unlike fully-insured plans, self-funded coverage provided by private employers is largely not required to comply with state insurance laws, such as those that require certain benefits to be covered. For example, some states require health plans to cover fertility services; but if your plan is self-funded, it is not required to cover those services, though it may choose to. If you’re not sure whether your employer-sponsored plan is self-funded, check your plan documents or ask your human resources department.