Tips for Self-Insured Plans
Tips to Help You Understand and Appeal Health Plan Decisions When the Coverage is
If your coverage for health care is provided through your employer, it is very important
to know if the coverage is self-insured or fully-insured. If the coverage is fully-insured,
the Virginia Bureau of Insurance or other state insurance department may address
any problems that you have. If the coverage is self-insured, then problems will
need to be addressed by the Department of Labor (DOL), an agency of the federal
government. The following information will help you determine if your coverage is
fully-insured or self-insured.
KEY TERMS YOU SHOULD KNOW
Managed Care Health Insurance plan (MCHIP) – a health
carrier, such as a Health Maintenance Organization (HMO) or a Preferred Provider
Organization (PPO), that designs arrangements to provide covered services in an
efficient and cost-effective manner, to help control the cost of your coverage.
Group Health Insurance – health insurance provided
by an employer to employees and in some cases family members, and paid for by the
employer, the employees, or both; coverage may be through an MCHIP or other type
of health insurance.
Fully-insured – group health insurance where an employer
pays a premium to an MCHIP or other insurer and in return, the MCHIP or insurer
assumes the financial risk of paying claims. There is an insurance contract between
the employer and the MCHIP or other insurer.
Self-insured – group coverage where the employer acts
as its own insurer, and uses an MCHIP, “insurer”, or administrator to administer
the plan: establish a provider network, process claim payments, and conduct other
tasks necessary to run the plan. There is no insurance contract between the employer
and the administrator because the employer bears the risk for payment of claims.
ERISA – Employee Retirement Income Security Act that
Congress passed in 1974 that provides exclusive federal jurisdiction over single
employer benefit plans, including self-insured plans.
DOL – U.S. Department of Labor, part of the federal
government and responsible for ensuring employers comply with ERISA.
To determine if your health care coverage is fully-insured or self-insured, check
with the Benefits Administrator or Plan Administrator in your employer’s Human Resource
office. You may also find clues in documents provided by the plan in any language
that states the plan is only acting as an administrator or providing “administrative
services only” to the employer.
Large companies frequently self-insure for a variety of reasons, including consideration
of the costs involved. Some large companies offer both self-insured and fully-insured
coverage, so be sure to check for your specific coverage.
If you have a dispute with a self-insured plan, state regulatory agencies like the
Bureau of Insurance will not be able to formally assist you, because ERISA gives
the federal government exclusive regulatory jurisdiction over self-insured plans.
Since there is no insurance contract between the employer and administrator in a
self-insured plan, the Bureau of Insurance cannot intervene because it only regulates
insurance companies. The Bureau of Insurance does not regulate employers. You can
seek assistance from your employer by contacting the Plan Administrator or Benefit
Administrator. In addition, you can contact the DOL for assistance:
U.S. Department of Labor
Employee Benefits and Security Administration
Washington District Office
1335 East-West Highway, Suite 200
Silver Spring, Maryland 20910
(Toll-free: 866-444-EBSA (3272))
Self-insured plans also provide a way for individuals covered under the plan to
file appeals through the internal appeal procedure available with that particular
Along with exemption from regulatory jurisdiction by the Bureau of Insurance, self-insured
plans are exempt from Virginia insurance laws, including those that pertain to mandated
benefits, appeals, and consumer rights.