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ERISA/"Self-funded" plans: what to know

ERISA self-funded plans: what to know
ERISA self funded plans: what to know

By Martine G. Brousse

"The Medical Bill Whisperer"

Patient Advocate, Certified Mediator


October 18, 2023

You know or have just found out that your health insurance plan is “self-funded” or “falls under ERISA”.

What is an ERISA plan?

And what does it mean to you and what are the pluses and minuses?

A. What is it?

1. What it’s not:

· A plan bought by you or your employer on the open market

· A plan bought through the (Obamacare) Exchange or Marketplace

2. What it is:

· A plan designed and paid by the employer

· A plan that is NOT obtained through paying premiums to an insurance company

· A plan where the final authority lies with the employer

· A plan where an insurance and/or Third-Party Administrator (TPA) is hired to only manage claims and appeals, but…

· A plan where the employer pays your claims as priced by the insurance company or TPA.

B. How does it work?

· Your employer sets the terms of coverage for the plan: what is covered and any exceptions

· Your employer hires an insurance company or TPA to price claims submitted by medical providers, then issue payments that come out of company coffers

· Your employer hires this insurance company and/or TPA to handle other administrative tasks such as appeals and authorizations

· You get an insurance card, choose medical providers through its network, but are limited by terms of policy which the insurance/TPA cannot change, even if the insurance's own plans would cover the service.

C. What does it mean?

1. Legal mandates

· States’ insurance regulations do NOT apply (unless your employer chooses to abide)

· Only some federal insurance regulations might apply

2. Appeals Rights

· 2 levels of appeals go to insurance, with limited success if fighting terms of coverage

· 3rd level of appeal goes to Dept of Labor in DC, which usually only rules on whether the terms of policy were applied, NOT on medical necessity or medical-related issues

3. Medical coverage

· Limited to terms of policy, NOT insurance’s medical policies or coverage under its own plan

· Insurance/TPA has zero authority to change or extend terms of policy

D. Pluses

· Lower cost to employer means lower cost to you if you are paying part of the premiums, as the employer does not have to pay high insurance premiums or pay for insurance’s overhead, profit margins, fees etc.

· Coverage is usually more generous, and may include perks such as wellness programs or alternative therapies (acupuncture, chiropractic etc)

· Plan can be customized to demographics of employees (i.e. extended mental health coverage for high-stress jobs, wellness incentives for older folks..)

· Plan can be updated by employer to respond to employees’ requests or changing needs

· Employer has the authority to override the terms of policy or insurance denial, and issue an exception.

E. Minuses

· Plans can impose limits based on “moral” or “religious” grounds (i.e no coverage for birth control or abortion)

· Unless updated regularly, plan coverage may be obsolete or not up to date (i.e no or limited coverage newer treatments or modalities)

· Members must deal with insurance company and/or TPA which have no authority except parrot the terms of the policy. Getting things done can be tedious and complicated.

· Coverage may be reduced next year to lower costs if claims this year are too significant.

F. Tips

1. Bypass the insurance and TPA if necessary and go to HR/Upper management directly:

· To get an exception to the policy (special treatment, new drug not on formulary etc)

· To expedite an urgent authorization if the insurance/TPA are delaying

· To ask for coverage to be extended (i.e more than 12 visits a year for ABA therapy for an autistic child)

2. Report inefficient insurance/TPAs and their mishandlings

· Too many employee complaints will prompt employer to change plan administrator or get involved to remedy mistakes, delays, misapplication of benefits or poor customer service

3. Make a friend!

· Get to know who is the insurance liaison person at HR . That person can help you resolve issues, review a request for an exception or research requests for changes/extension in coverage

· Having a point of contact at the TPA is advisable, to get issues with the insurance promptly resolved

· The big boss’ or CFO’s assistant can be a valuable helper to get to upper management when you need to make a case for an exception or change in coverage. And yes, baked-goods or fancy coffee bribery is OK.

In conclusion, it is a good idea to find out whether your plan is self-funded or through a ‘regular” plan administered by your state’s Dept of Insurance. Your rights, coverage and ability to get exceptions will depend on it.

Martine Brousse was a long-time Billing Manager for Physicians before switching to the side of patients in 2013. The move has allowed her to apply her deep expertise and vast experience of the intricacies of resolving all types of medical bill and claim payment issues in ways that directly and positively impact her clientsʻ finances..and peace of mind.

(424) 999 4705 - F (424) 226 1330

@martine brousse 2023 @ the medical bill whisperer 2023

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