A self-funded plan is employer coverage where the employer pays the claims out of its own money and hires an insurance company only to administer them: to build the network, process claims, and put its logo on the card. The carrier is a third party administrator, not the insurer.

The card looks identical to a fully insured one. The law that governs it does not.

A self-funded plan is regulated under federal law rather than by the state, which means the New York layer of protection described throughout this site does not reach it. The federal floor still applies: the federal parity act, the No Surprises Act, federal external review.

In New York: what disappears is specific and worth listing, because each of these is a place where the state gives you a number to quote and the federal rule does not.

The external appeal through the Department of Financial Services, decided by a reviewer who does not work for your insurer. Self-funded plans use the federal external review process instead.

The parity additions: the rule that outpatient mental health at a state-licensed facility may not cost more than your primary care copay, and the ban on preauthorization for outpatient addiction treatment at an OASAS-certified in-network facility.

The insulin rule, which since January 1, 2025 bars all cost sharing on prescription insulin for state-regulated plans.

The surprise billing framework and its independent dispute resolution process, which matters most for ground ambulances, the gap the federal law did not close.

Where a complaint goes. Fully insured: Department of Financial Services, 800-342-3736, or the Attorney General’s Health Care Bureau, 800-428-9071. Self-funded: the US Department of Labor, 866-444-3272.

How to find out which you have, in one sentence to HR: “Is our health plan fully insured or self-funded?” Larger employers are more often self-funded, but that is a tendency and not a rule. The plan document is the other place to look: a self-funded plan’s summary generally names the employer as plan sponsor and the carrier as claims administrator.

None of this applies to coverage bought through NY State of Health, to Medicaid, the Essential Plan or Child Health Plus, or to Medicare, each of which runs on its own framework.

Also called: self-insured, ASO plan, ERISA plan. Full guide: Fully insured or self-funded, and why it decides everything.

More in Glossary of health coverage and billing terms

  • Network (in-network and out-of-network) — The set of doctors and hospitals your plan has contracted with. Outside it, you pay much more.
  • Formulary — A formulary is a plan's list of covered drugs, sorted into tiers that set your cost. What on-formulary means, how exceptions work, and New York's NYRx list.
  • Prior authorization — Prior authorization is a plan's approval before it pays for care. Who asks for it, what a denial says, where the deadlines are, and New York's appeal route.
  • Managed care — A plan that pays a private insurer a fixed amount per member to run your benefits, which is why a network and prior authorization exist at all.
  • Grievance — A complaint about how a plan behaved, which is a different process from an appeal about what it decided, and people file the wrong one constantly.

This page explains how the system works. It is not medical advice. More.