Tips to Help You Understand and Appeal Health Plan Decisions When the Coverage is Self-Insured

If your coverage for health care is provided through your employer, it is very important to know if the coverage is self-insured or fully-insured. If the coverage is fully-insured, the Virginia Bureau of Insurance or other state insurance department may address any problems that you have. If the coverage is self-insured, then problems will need to be addressed by the Department of Labor (DOL), an agency of the federal government. The following information will help you determine if your coverage is fully-insured or self-insured.

KEY TERMS YOU SHOULD KNOW

Managed Care Health Insurance plan (MCHIP) – a health carrier, such as a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO), that designs arrangements to provide covered services in an efficient and cost-effective manner, to help control the cost of your coverage.

Group Health Insurance – health insurance provided by an employer to employees and in some cases family members, and paid for by the employer, the employees, or both; coverage may be through an MCHIP or other type of health insurance.

Fully-insured – group health insurance where an employer pays a premium to an MCHIP or other insurer and in return, the MCHIP or insurer assumes the financial risk of paying claims. There is an insurance contract between the employer and the MCHIP or other insurer.

Self-insured – group coverage where the employer acts as its own insurer, and uses an MCHIP, “insurer”, or administrator to administer the plan: establish a provider network, process claim payments, and conduct other tasks necessary to run the plan. There is no insurance contract between the employer and the administrator because the employer bears the risk for payment of claims.

ERISA – Employee Retirement Income Security Act that Congress passed in 1974 that provides exclusive federal jurisdiction over single employer benefit plans, including self-insured plans.

DOL – U.S. Department of Labor, part of the federal government and responsible for ensuring employers comply with ERISA.

To determine if your health care coverage is fully-insured or self-insured, check with the Benefits Administrator or Plan Administrator in your employer’s Human Resource office. You may also find clues in documents provided by the plan in any language that states the plan is only acting as an administrator or providing “administrative services only” to the employer.

Large companies frequently self-insure for a variety of reasons, including consideration of the costs involved. Some large companies offer both self-insured and fully-insured coverage, so be sure to check for your specific coverage.

If you have a dispute with a self-insured plan, state regulatory agencies like the Bureau of Insurance will not be able to formally assist you, because ERISA gives the federal government exclusive regulatory jurisdiction over self-insured plans. Since there is no insurance contract between the employer and administrator in a self-insured plan, the Bureau of Insurance cannot intervene because it only regulates insurance companies. The Bureau of Insurance does not regulate employers. You can seek assistance from your employer by contacting the Plan Administrator or Benefit Administrator. In addition, you can contact the DOL for assistance:

U.S. Department of Labor
Employee Benefits and Security Administration
Washington District Office
1335 East-West Highway, Suite 200
Silver Spring, Maryland 20910
(Phone: 301-713-2000)
(Toll-free: 866-444-EBSA (3272))
(Fax: 301-713-2008)
(Website: www.dol.gov/ebsa)

Self-insured plans also provide a way for individuals covered under the plan to file appeals through the internal appeal procedure available with that particular plan.

Along with exemption from regulatory jurisdiction by the Bureau of Insurance, self-insured plans are exempt from Virginia insurance laws, including those that pertain to mandated benefits, appeals, and consumer rights.