Fully Insured Group Health Insurance Plans Versus Self-Insured Group Plans in Virginia

Fully insured plans issued in the Commonwealth of Virginia are regulated by the Bureau of Insurance and are subject to all applicable laws and regulations governing group health plans in Virginia. A "fully insured plan" is a plan the employer purchases directly from an insurance company, and the insurance company assumes the risk to pay all covered health claims.

Self-insured (or self-funded) plans are funded by the employer to pay the health claims of its employees. The employer actually pays the bills for its employees' health care and assumes all associated risks. Sometimes, the employer with a self-insured plan will hire an insurance company to handle administrative duties. In this case, the insurance company is not assuming any financial risk, but is acting as a third-party administrator, following the directives of the employer. Self-insured plans are subject to the Federal Employee Retirement Act of 1974 (ERISA). The U.S. Department of Labor is the federal government agency that is responsible for handling matters involving self-insured plans.