Claim form to determine self funded or insured employer sponsored health insurance plan

Do You Know if You Have an Insured or Self-Insured Employer Health Insurance Plan? You Should

Do you get health insurance coverage through your employer? Do you know if your employer-sponsored health insurance plan is insured or self-insured? Do you know the
difference? Do you know why it matters?

You should.

But if you don’t, you are not alone. Most people don’t.

This blog explains the difference between insured and self-insured employer health insurance plans, why it matters, and how you find out which plan you have.

Difference Between Insured and Self-Insured Plans?

These are two ways that employers provide health insurance benefits for their

Insured plan: this is where an employer buys a health insurance plan from a private insurance company to cover the costs of employee health care.

The insurance company assumes the risk and responsibility of paying for your medical expenses. These employer plans are also called “funded” plans.

Self-insured plan: this is where an employer sets aside money to cover the costs of employee health care directly. In this case, it is like your employer is also your insurance company.

However, employers often hire an outside company to handle the claims, bills, and other paperwork. What can sometimes cause confusion is that employers will hire insurance companies to handle that paperwork.

So, when an employee looks at their insurance card, it has the name and logo of an insurance company (instead of their employer). But the insurance company isn’t the one financially responsible for paying for an employee’s medical care These employer plans are also called “self-funded” plans.

Although self-insured plans are most commonly used by large companies, smaller businesses are beginning to self-fund. A big reason for this is cost. It is often cheaper for employers to self-fund a plan then to buy an insurance plan for their employees.

Why it Matters?

It is important to know if your employer-sponsored health insurance plan is insured or self-insured, because consumer laws and protections apply differently based on the plan you have.

Under a federal law called ERISA, when a state decides to create health insurance consumer protections, they do not apply to self-insured plans in that state.

Consumer protections include things like requiring coverage for certain types of care, creating timelines for certain benefits, and requiring plans to continue coverage.

For example, if you work for an employer with less than 20 employees, you are not eligible for COBRA, to keep your employer plan when you leave your job. However, most states have a law that is similar to COBRA that covers smaller employers. But if your employer plan is self-insured, the state COBRA law won’t apply.

Here are some more examples of state laws that do NOT apply to self-insured plans:

  • In Michigan and other states, plans have to follow specific rules about how they use prior authorizations before you receive medical care
  • In some states, plans are required to cover oral chemotherapy at the same rate, as IV chemotherapy
  • In California and other states, plans are required to cover fertility preservation and infertility
  • 13 states require insurance coverage of biomarker testing

How You Find Out Which Plan You Have?

Based on the logo, it can be hard to tell from your insurance card if you have a self- insured plan. But there may be language on the card that says something like, “this insurance company provides claims processing only and assumes no financial risk for claims.” That is a sign that it is a self-insured plan.

If you can’t tell from your insurance card, you can call your insurance company to ask.

You can also ask someone at work. That might be a human resources representative or whomever handles employee benefits.

While it is important to know what type of plan you have, don’t be concerned if you are in a self-insured plan. It is possible that a self-insured plan will voluntarily decide to offer those state consumer protections. And, some self-insured plans offer more benefits than those sold by health insurance companies.

Learn more about navigating health insurance.


About Triage Cancer

Triage Cancer is a national, nonprofit providing free education to people diagnosed with cancer, caregivers, and health care professionals on cancer-related legal and practical issues. Through eventsmaterials, and resources, Triage Cancer is dedicated to helping people move beyond diagnosis.

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