Every time I think I have a handle on this, something confuses me! What is the difference between a self-funded insurance plan and fully insured?


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  • A self-funded plan is a plan set up by an employer or union where the entity actually pays the claims (usually they are reinsured by a stop-loss carrier after a certain amount, ie., $30,000 or more). A contribution is calculated for the employee to make, but the employer (entity) assumes the risk up to a certain point. A fully-insured plan is just that. An insurance company charges premiums, and assumes the risk directly, subject to the provisions of the policy. Self-funded plans generally aren't subject to state insurance laws, but may be subject to ERISA, unless they are governmentals, non-profit or church plans. Such plans make a determination whether or not they are subject to ERISA.
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