HR Glossary

Self-Funded (Self-Insured) Plan

The self-funded plan refers to a health care insurance program in which larger companies pay the health care costs for their employees rather than insuring them.

what-is-self-funded-self-insured-plan

Self-funded (Self-insured) plan

The self-funded plan refers to a health care insurance program in which larger companies pay the health care costs for their employees rather than insuring them. Through this process, the company is acting as its own insurance company.

To avoid the possibility of very high, unexpected expenses, companies sometimes take out an additional insurance, such as an excess coverage plan.

Advantages of self-funded plans

  • Employers can customize the plans that they offer to their employees
  • There are not as many regulations that the company needs to worry about
  • Lower costs for both the employer and employees
  • Having more control over what kind of coverage company offers to the employee s
  • More control in managing the administrative aspects of the plan

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