What is an example of a self-funded health plan?

A self-funded health plan is one where an employer assumes the financial risk for providing health care benefits to its employees. Instead of purchasing a traditional insurance policy from an insurance company, an employer pays for employees' medical claims directly. This arrangement often allows employers more flexibility in designing their benefits and can be a cost-effective option for larger organizations that can predict their health costs more accurately.

Employer-sponsored plans that are self-funded typically consist of the employer setting aside funds to cover employee health care claims, which can lead to savings on premiums compared to fully-insured plans. Additionally, these plans may involve working with third-party administrators (TPAs) to manage claims and other administrative tasks. The self-funded model is advantageous for controlling costs and customizing coverage to fit the specific needs of the workforce.

Marketplace plans, government health plans, and individual health plans do not represent self-funded health plans. Marketplace plans are offered through health insurance exchanges, where individuals and families can purchase insurance, often with subsidies. Government health plans, such as Medicare or Medicaid, are funded and regulated by government entities. Individual health plans are purchased by individuals directly from insurers, typically involving risk pooling to protect against high medical costs.