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🏥 '''Self-funded health plan''' is an arrangement in which an employer assumes direct financial responsibility for paying its employees' [[Definition:Health insurance | health insurance]] claims rather than purchasing a fully insured policy from an [[Definition:Insurance carrier | insurance carrier]]. Sometimes called a self-insured health plan, this model allows the employer to retain the [[Definition:Premium | premium]] dollars that would otherwise flow to an insurer, bearing the [[Definition:Underwriting risk | underwriting risk]] itself while typically hiring a [[Definition:Third-party administrator (TPA) | third-party administrator (TPA)]] to handle [[Definition:Claims processing | claims processing]], [[Definition:Provider network | network]] access, and plan administration.

⚙️ Under this structure, the employer establishes a trust or dedicated fund from which claims are paid as they arise. To protect against catastrophic or unexpectedly high aggregate claims, most self-funded employers purchase [[Definition:Stop-loss insurance | stop-loss insurance]] — both specific stop-loss, which caps exposure on any single claimant, and aggregate stop-loss, which limits total plan-year liability. Because self-funded plans are regulated primarily under the federal [[Definition:Employee Retirement Income Security Act (ERISA) | Employee Retirement Income Security Act (ERISA)]], they are generally exempt from state insurance mandates, [[Definition:Premium tax | premium taxes]], and many state-level benefit requirements — a regulatory distinction that heavily influences the decision to self-fund.

💡 The prevalence of self-funded plans reshapes the competitive landscape for carriers and [[Definition:Insurtech | insurtech]] firms alike. Large employers have increasingly moved to self-funding over the past several decades, meaning that insurers often compete for administrative-services-only (ASO) contracts and [[Definition:Stop-loss insurance | stop-loss]] policies rather than traditional fully insured business. For [[Definition:Managing general underwriter (MGU) | MGUs]] and specialty carriers, the growing stop-loss market has become a significant growth area. Meanwhile, data-driven startups are targeting self-funded employers with tools for [[Definition:Predictive analytics | predictive analytics]], [[Definition:Cost containment | cost containment]], and [[Definition:Population health management | population health management]], recognizing that these employers have both the financial incentive and the data access to invest in innovative solutions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Stop-loss insurance]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Self-insured employer]]
* [[Definition:Employee Retirement Income Security Act (ERISA)]]
* [[Definition:Administrative services only (ASO)]]
* [[Definition:Fully insured plan]]
{{Div col end}}

Definition:Self-funded health plan - Revision history

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