Learn About the Affordable Care Act

Businesses that Self-Insure

Employers that offer health insurance to their workers do so through either self-insured (aka self-funded) or fully insured plans. In a self-insured plan, the employer pays for workers’ healthcare costs out of a pool of money it has set aside. In a fully insured plan, the employer pays a fee (premiums) to an insurance company (such as Humana, UnitedHealthcare, Blue Cross Blue Shield). The insurance company then pays workers’ healthcare costs. In 2011, 60% of workers who got health insurance through their job were in self-insured plans.

 

Sometimes, employers with self-insured plans hire an insurance company to manage their workers’ healthcare claims. This means you may be in a self-insured plan even if you get paperwork with an insurance company’s name on it.

 

Some of the Affordable Care Act changes do not apply to self-insured plans. Unlike many other health insurance plans, self-insured plans do not have to:

  • Cover essential health benefits
  • Limit your deductibles (other plans cannot have annual deductibles of more than $2,000/individual and $4,000/family)
  • Justify large rate increases
  • Extend health insurance to anyone who applies (but they cannot discriminate based on a pre-existing condition)
  • Guarantee that you can renew your coverage no matter if your health status changes or how many healthcare services you use
  • Spend at least 80% of your premium dollars on healthcare services

In addition, self-insured plans can:

  • Charge higher premiums based on your health status. Other plans can vary premiums based only on age, tobacco use, where you live and whether you are buying an individual or family plan.

 

To find out if you are in a self-insured plan, ask your human resources department or call the insurance company listed on your insurance documents