Workers may not notice a big difference when an employer switches to a self-funded plan. Employees get benefit guides and identification cards verifying coverage. They make co-payments for medical services and see payroll deductions for heatlh benefits. Money from these payroll deductions goes toward administration, claims, and other set fees for the self-funded plan.
Employers with self-funded health plans usually hire third-party administrators to handle enrollment, health care premiums, process and pay claims, develop provider networks, and other services. The third-party administrator can be an individual, a business entity, or an insurer.
Self funded plans do not transfer health care risk to an insurance company. They are subject to ERISA, HIPPA, COBRA, and other federal regulations rather than state insurance laws.