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🏢 '''Self-insured health plan''' — also known as a self-funded health plan — is an arrangement in which an employer assumes the financial risk of providing [[Definition:Health insurance | health insurance]] benefits to its employees directly, rather than purchasing a fully insured group policy from an [[Definition:Insurance carrier | insurance carrier]]. In this model, the employer pays [[Definition:Claims cost | claims]] out of its own funds as they are incurred, instead of remitting fixed [[Definition:Insurance premium | premiums]] to a carrier that would bear the risk. Self-insurance is a major segment of the employer-sponsored health insurance market, particularly in the United States, where a substantial majority of workers at large firms are covered under self-funded arrangements. The concept also exists in other forms globally, though the regulatory environment, prevalence, and structure vary considerably by jurisdiction.

⚙️ While the employer retains the core insurance risk, self-insured plans are rarely administered by the employer alone. Most engage a [[Definition:Third-party administrator (TPA) | third-party administrator]] to handle day-to-day functions such as [[Definition:Claims processing | claims processing]], [[Definition:Provider network | network]] management, and member services. Critically, self-insured employers almost always purchase [[Definition:Stop-loss insurance | stop-loss insurance]] — both specific stop-loss, which caps the employer's exposure on any single claimant, and aggregate stop-loss, which limits total plan-year claims liability. This stop-loss layer is underwritten by traditional insurers and reinsurers, making it a significant business line in its own right. In the U.S., self-insured plans are governed primarily by the federal Employee Retirement Income Security Act ([[Definition:ERISA | ERISA]]), which [[Definition:Preemption | preempts]] most state insurance regulations — a distinction that gives self-funded plans considerable flexibility in benefit design but also places them outside the reach of state-mandated benefit requirements and premium taxes. Outside the United States, employer self-insurance of health benefits exists in markets like the United Kingdom (often for supplemental health perks), Australia, and parts of the Middle East, though the regulatory frameworks and prevalence differ substantially.

💡 The appeal for employers is primarily financial and strategic. By self-insuring, a company avoids the carrier's profit margin and [[Definition:Risk charge | risk charge]] embedded in fully insured premiums, retains [[Definition:Investment income | investment income]] on reserves held for unpaid claims, and gains access to detailed [[Definition:Claims data | claims data]] that can inform wellness programs and cost-containment strategies. For the insurance industry, the growth of self-insurance has reshaped the competitive landscape: carriers that once sold fully insured group products now compete to provide [[Definition:Administrative services only (ASO) | administrative services only]] contracts and stop-loss coverage. [[Definition:Insurtech | Insurtech]] companies have entered the space as well, offering data analytics platforms, digital TPA services, and innovative stop-loss structures to serve mid-market employers that are increasingly exploring self-funding. The dynamic creates a continuum of risk transfer — from fully insured to fully self-funded — with a range of hybrid solutions like [[Definition:Level-funded health plan | level-funded plans]] occupying the middle ground.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Stop-loss insurance]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Administrative services only (ASO)]]
* [[Definition:Level-funded health plan]]
* [[Definition:Group insurance]]
* [[Definition:ERISA]]
{{Div col end}}

Definition:Self-insured health plan - Revision history

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