Self Insured Plan vs. Fully Insured Plan
What is the difference between a Self Insured and a Fully Insured ERISA plan?
Under a self-insured ERISA welfare plan, the sponsoring employer is responsible for administering and guaranteeing benefits under the plan. Conversely, under a fully-insured ERISA welfare plan, a health insurance company is responsible for administering and guaranteeing benefits under the plan.
How does an employer (company) typically guarantee benefits under a self-insured plan?
Most commonly, a self-insured plan purchases re-insurance for excess expenses.
Is a self-insured plan subject to state insurance laws?
Yes. Insurance has historically been governed under state law. Several states have laws governing self-insured plans. This is so non-insurance companies cannot evade state insurance laws, even under ERISA.
Are large company (50+ employees) plans subject to the Affordable Care Act?
Yes. Large companies (50+ employees) are subject to the large-employer provisions of the ACA. While large employers are not obligated to provide insurance for their employees, they must nevetheless pay a tax per employee if insurance is not provided. Further, if any employee purchases insurance on a state-sponsored ACA exchange, the employer must pay an additional tax for that employee.
Have Questions about your Pension or Benefits Plan?