A self-funded health plan is a type job-based health insurance coverage. The unique factor there is that the employer actually pays the claims with its own funds. The difference between self-funded health plans and fully insured plans, is that fully insured plans are when the employer contracts with an insurance company and the insurer covers the employees and dependents.
This distinction affects you and the reason for that is that although federal insurance laws apply to all job-based plans, state insurance regulations apply only to fully insured plans that are sold through an authorized insurance company. And so, you can understand that while self-funded plans are only subject to federal laws, fully insured plans are controlled by both federal and state laws.
What is a self-funded health plan?