In A Comparison of Self-Funded and Insured Health and Welfare Plans, health benefits expert witnessMark Johnson, J.D., Ph.D., ERISA Benefits Consulting, Inc., writes:
Employee welfare benefit plans can be either fully insured, or self-funded. This article explains and compares the differences between the two types.
Most companies have a fully insured employee benefit plan, where the employer arranges for health coverage from an insurance company. The insurance company assumes the risk for payment of claims based on an actuarial analysis of the policy terms and covered group. The insurance company collects a monthly premium, which is typically shared by the employer and the employee, and pays for claims based on the policy terms. The covered employee is responsible for any deductibles and co-payments.