What is a self-insured employer plan?
Many people are not sure whether the health plan they have through their employer is fully insured or self-insured. But if you work for a large company or government, there is a chance your health plan is self-insured.
These self funded plans are not insurance. The employer pays employee benefits from the employers own pocket.
Self funded employers often hire third party administrators (TPAs) to keep track of premiums, claims and related paperwork. This can make it difficult for employees to know whether their employer is insured or self-insured. For example, assume Jim and Susan are two neighbors with employer sponsored health coverage through the same insurance company. Their plans might look the same - their insurance cards look similar, their procedures for getting bills paid are similar, and the insurance company processing their claims is the same. In reality, however, the insurance company may be the actual insurer of only Jim, and merely the third party administrator for Susan's employer, a self-insured company.
Insured vs. self-insured has important regulatory implications. If an employee is in an insured plan, the insurer must comply with state benefit mandates, claims handling standards, privacy rules, and other regulations that are applicable to all health insurers. An insured employee also has access to the Oregon Insurance Division's consumer advocates, who help consumers resolve hundreds of health insurance complaints each year under state insurance laws; and if a law has been violated, the insurance can be subject to civil penalties of up to $10,000 per violation.
However, if the employee is in a self-insured plan, ERISA preempts most state insurance regulation, including benefit mandates. Congress has enacted some consumer protection laws that apply to both insured and self-insured health plans, but Oregon's consumer protection laws typically provide additional protections for insured Oregonians. For example, Oregon's recently enacted mental health parity law requires more comprehensive mental health coverage than the federal mental health benefit law, and the Oregon mandate does not apply to self-insured plans.
Many companies in Oregon provide self-insured or self-funded health care to their employees. To find out whether you are in a self-insured plan, check with your human resources department or your insurance company.
The Employee Retirement Income Security Act
Health Benefit
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