What is a self-funded plan?

A self-funded plan is a type of health insurance plan in California that is run by an employer or other entity, instead of an insurance company. In a self-funded plan, the employer or entity takes on the financial risk for providing health insurance benefits to eligible employees. Additionally, these employers or entities pay for the health care expenses of their employees directly, instead of purchasing a policy from an insurance company. The benefits of a self-funded plan are that the employers or entities may be able to save money by avoiding expensive premiums associated with traditional health insurance policies. They also have the flexibility to customize their plan design and choose their own provider networks. However, the downside of a self-funded plan is that employers or entities assume full financial responsibility for all medical claims, which can become costly if claims exceed expectations. Additionally, employers or entities must comply with state and federal laws regarding health insurance, such as the Affordable Care Act, and they, like traditional health insurance companies, are subject to state regulations and may be required to file premium taxes with the California Department of Insurance.

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What is a self-funded plan?

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