Self-Funded vs. Fully-Insured

The distinction is who bears the claims risk: a fully-insured plan pays a carrier a premium and the carrier owes the claims, while a self-funded employer pays claims from its own funds — which determines whose rules govern a denial.

Whether a plan is self-funded or fully-insured decides who actually pays your claims and, crucially, which rules govern a denial. In a fully-insured plan, the employer buys coverage from an insurance carrier for a premium, and the carrier bears the financial risk and owes the claims — so state insurance law, including state prompt-pay statutes and appeal remedies, applies. In a self-funded plan, the employer pays claims out of its own pocket and typically hires a carrier only as a third-party administrator to process them; these plans are governed by federal ERISA and generally escape state insurance regulation. The confusing part is that both often carry the same carrier's logo on the card and remit, so a self-funded plan can look identical to a fully-insured one while playing by entirely different rules. For appeals, this is a real fork: on a fully-insured plan you may have state prompt-pay interest and a state external-review path; on a self-funded ERISA plan you have federal appeal rights and document-disclosure leverage instead. Determining which one you're dealing with — sometimes only discoverable by asking or reading the plan documents — is a prerequisite to picking the right appeal argument and the right deadline.

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