Fully Insured vs. Self Insured Plans

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What is the difference between a fully insured plan and a self insured plan?
With fully insured plans, the employer pays a premium to an insurer, and the insurer pays claims of the pool of premiums it collects from everyone it insures. Under a self insured plan the employer is responsible for paying all claims of company assets.

How can you find out what type of play you have?
Because many companies use insurance companies to handle claims, you may not necessarily know whether or not your plan is self insured. To find out, contact your employees benefits administrator in your employer’s human resource department.

Why does it matter to you that a plan is self insured?
Self insured plans are regulated by federal law, not by state law. This means state laws that apply to dully insured benefit plans do not apply to self insured plans. For example, many states have laws requiring that insurance plans offer specific benefits. Federal law may not require those same benefits, and self insured plans do not have to offer them. The appeals process is also different for self insured plans because appeals, too, are governed by federal law rather than state law. Under self insured plans, you appeal to the U.S. Department of Labor rather than within your state.

What federal law regulates self insured plans?
The Employee Retirement Income Security Act (ERISA) regulates self insured plans. The plans are under the jurisdiction of the U.S. Department of Labor.

If your plan is self insured, what appeal rights do you have?
All self-insured plans must have an appeal procedure that meets the detailed requirements set out in federal law. Check your benefit contract for the appeal procedure under your employer’s plan.

What can you do if you have a complaint about your plan?
If you have a complaint about your self-insured plan, contact the U.S. Departmentof Labor:

(202) 219-8776 voice
(606) 578-4680 voice

Modified with permission from Health Information and Advocacy Center, a project of PACER CENTER

To contact FVND call 888-522-9654,  or write PO Box 163 Edgeley, ND 58433)