Summary of Self-Funded Health Insurance Plan Information

Part 2, Chapter 6: Self-funded Plans Page 5

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Summary

Self-funded plans represent an important part of the health insurance system in America. In many cases, such plans appear to offer benefits that are equal to -- or more comprehensive than -- traditional insurance policies or managed care plans. Self-funded plans may also allow for benefits to be offered in situations in which they might not otherwise be available.

However, self-funded plans may present a unique situation for consumers in some ways, since such plans are established by a plan sponsor such as a corporation, a union, an association, or a state or municipal government agency rather than by an insurance company. In addition, self-funded plans are regulated under a federal law called ERISA -- the Employee Retirement Income Security Act -- in terms of benefit-related issues, rather than under state law. ERISA is implemented by the Pension and Welfare Benefits Administration of the United States Department of Labor, not by state Departments of Insurance or state Departments of Health. Over the past few years, there have been some important changes in the laws that relate to self-funded plans, particularly in terms of providing additional protections for consumers.

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