What is a Self Insured Plan?

A self-insured group health plan (or a 'self-funded' plan) is one in which the employer assumes the financial risk for providing health care benefits to its employees. In other words, self-insured employers pay for each out of pocket claim instead of paying a fixed premium to an insurance carrier. There are two primary sources of legal compliance for self-insured health plans: Internal Revenue Code of 1986 (IRS), and the Employee Retirement Income Security Act of 1974 (ERISA).