How do I determine whether I am fully-insured or self-insured?

Determining whether an employer is self-insured or fully-insured

Self-insured employers, also known as "self-funded" employers:

  • Have liability for all claims made by the employee and pay for each claim.
  • Control what is covered and what is not.
  • May transfer some liability through the purchase of stop-loss insurance.
  • Claims are processed and paid by the employer, or a third party administrator (TPA) on behalf of the employer.

Fully-insured employers:

  • Claims are processed and paid by an insurance company.
  • Employer pays a fixed premium to transfer liability for all claims to an insurance company who then pays the claims.
  • Insurance company must cover State-mandated benefits and offers "One-size-fits-all" plan or "Off the shelf" insurance policy.
  • Stop-loss insurance is not necessary as all risk is already transferred to the insurance company to cover claims. 
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