Self-insured plan
A self-insured plan is employer-sponsored health coverage in which the employer, rather than an insurance company, pays covered medical claims. The employer may hire an administrator to process claims and may buy stop-loss insurance for very large claims. The plan document sets covered services, exclusions, deductibles, out-of-pocket limits and appeal rights.
Also called: self-funded, fully insured, self-insured (or self-funded) plan
If your employer's plan is self-insured, the money for your covered claims comes from the employer, even when a familiar insurance company's name is on your card. That changes who makes the final benefit decision, where an appeal goes and which regulator can help. Your own costs still come from the plan's terms: its deductible, copay and coinsurance amounts, network rules and out-of-pocket maximum.
How a large claim is paid
The employer "collects premiums from enrollees and takes on the responsibility of paying employees' and dependents' medical claims," according to HealthCare.gov (opens in a new tab). Many employers buy stop-loss insurance so one very large claim does not fall entirely on them. The example uses a $30,000 specific stop-loss attachment point described in a Department of Labor stop-loss public comment (opens in a new tab); it is an illustration, not a national average or required limit.
Hover or tap a row to highlight it.
| Step | Amount |
|---|---|
| Eligible claim for one enrollee | $80,000 |
| Employer plan pays first | $30,000 |
| Stop-loss reimburses the employer ($80,000 minus $30,000) | $50,000 |
| Total eligible claim paid | $80,000 |
| Employer's net cost after reimbursement | $30,000 |
The $30,000 is the employer's share, not yours. Stop-loss generally protects the employer or plan, and it does not pay the enrollee directly or change your deductible or out-of-pocket limit.
Funding arrangements and stop-loss options, and what each changes
The funding label decides who carries the claims risk, according to the Department of Labor's 2026 report to Congress (opens in a new tab).
- Fully insured. The employer pays a premium to an insurer, and the insurer takes responsibility for covered claims.
- Self-insured or self-funded. The employer keeps claims-paying responsibility and pays claims from general assets or a trust as they occur.
- Mixed-insured. The plan pays some benefits directly and insures others.
- Third-party administration. An insurer or administrator processes claims, provides a network, issues ID cards and handles appeals without taking on the claims risk. Some employers administer the plan themselves instead.
- Specific stop-loss. Covers unusually large claims for one enrollee. Reported attachment points have ranged from about $20,000 to $1 million, according to a Department of Labor public comment (opens in a new tab).
- Aggregate stop-loss. Covers total plan claims above a set point, with reported examples around 110% to 150%, or about 125%, of expected claims.
A higher attachment point leaves more risk with the employer, while a lower one moves more risk to the stop-loss insurer, with price depending on plan design, claims history, size and underwriting. Buying stop-loss does not turn the plan into a fully insured one. A level-funded plan, often sold as a fixed monthly payment, may combine estimated claims funding, administrative fees and stop-loss; its documents show whether the underlying plan is self-insured, fully insured or mixed.
Where you see the term
The phrase belongs to employer group health coverage. You find it in the Summary Plan Description, plan document, benefits handbook, Summary of Benefits and Coverage, enrollment and open-enrollment materials, benefit websites, ID cards, renewal notices and claim-denial letters that name the plan administrator. Employers also see it in third-party administrator agreements and stop-loss contracts. An employer may self-fund dental, vision, disability or life benefits too, and the plan documents define each one.
It is not a coverage label on personal auto, homeowners, condo, renters, pet or individual life policies. "Self-insured" also describes separate legal arrangements, such as self-insured workers' compensation or automobile financial responsibility, which have nothing to do with the employer health-plan meaning.
Why Connecticut and New York insurance rules usually do not reach these plans
Federal ERISA generally supersedes state laws that relate to covered employee benefit plans, subject to exceptions, under 29 U.S.C. § 1144 (opens in a new tab). The Connecticut Insurance Department (opens in a new tab) regulates fully insured plans and does not regulate self-funded health plans. Self-insured employer plans are governed by ERISA rather than Connecticut insurance legislation, according to the state's Office of the Healthcare Advocate (opens in a new tab). Connecticut benefit mandates therefore generally apply to fully insured plans issued in the state, not to ordinary private self-funded plans.
In New York, provisions such as N.Y. Insurance Law § 3216 (opens in a new tab) and N.Y. Insurance Law § 3217-a (opens in a new tab) apply to policies and insurers, and they do not convert an employer's self-funded plan into a fully insured policy. Plans run by states, counties, school districts and municipalities follow different rules, including federal Public Health Service Act requirements, per CMS (opens in a new tab).
Questions to ask your employer, administrator or insurer
- Is this plan self-insured, fully insured or mixed-funded? The answer shows who bears the claims risk and which appeal system applies.
- Who is the plan sponsor, and who makes final benefit decisions? The insurer on your card may be only the third-party administrator.
- Where are the Summary Plan Description and full plan document? They list covered services, exclusions, cost sharing, claim procedures, deadlines and appeal rights.
- Does the plan have specific or aggregate stop-loss, and does it affect my benefits? Stop-loss protects the employer and is separate from your deductible or out-of-pocket maximum.
- Who handles an appeal, and should I contact the state insurance department or the Department of Labor? Private self-funded ERISA plans generally follow federal procedures, with oversight from the Department of Labor (opens in a new tab).
Frequently asked questions
These come up most at enrollment and after a denial.
Is a self-insured plan the same as a self-funded plan?
Usually. The two terms are used interchangeably for an employer health plan in which the employer keeps responsibility for covered claims, according to the Department of Labor (opens in a new tab).
Does a self-insured plan mean my employer pays my whole medical bill?
No. The plan pays covered claims according to its terms, and you may still owe deductibles, copayments, coinsurance, noncovered charges or out-of-network amounts.
Does a self-insured plan have to cover every Connecticut or New York mandated benefit?
Generally not, because ERISA preemption limits how state insurance mandates apply to private self-funded plans. Federal requirements still apply, and the plan document lists what is covered.
Are "self-funded" plans sold to individuals the same thing?
No. The Connecticut Insurance Department warned in 2024 that some "self-funded, limited partner" products marketed to individuals were not major medical coverage and could leave people with unpaid bills, per its consumer alert (opens in a new tab). Ask for the plan document and confirm it is a genuine employer or association plan.