Healthcare Self-funding 101

Question 1

How is Self-funding different than Fully Insured?

Answer 1

ERISA is federal law that pre-empts State Insurance Law. This means where State Law most commonly governs Policies issued in their state, in the case of Self-Funded plans the states have limited or no oversight.

Question 2

How did ERISA create the opportunity for Self-funding to be regulated at the federal level?

Answer 2

ERISA established the ability for Plan sponsors to offer coverage to employees that involved some level of risk to the Plan sponsor.

Question 3

When do State’s retain control of Self-Funded plans?

Answer 3

ERISA pre-empts State Insurance law except when there is a Plan Sponsor who includes many employer plans. For instance, Multiple-employer welfare Arrangements, also called MEWA’s are self-funded plans with many different employers sharing risk. These plans in most states are regulated by the State Insurance Department.

Question 4

What three regulations protect employee rights under ERISA?

Answer 4

Fiduciary, privacy (HIPAA), security (HiTech)