Who Regulates My Plan?
The most essential part of figuring out which authority regulates your employer-provided health care plan is to learn whether your company is fully insured or self-funded. Many people aren’t even aware of this distinction or what it means, so pay attention because it makes a substantial difference.
Employer-based healthcare that is fully insured works like this: your company pays premiums to a health insurance company who in turn provides benefits for employees and assumes the claims risk. These plans are still regulated at the state level. However, the ACA requires small businesses that offer fully insured healthcare to choose insurance companies that fulfil certain standards.
If a company is large enough (generally at least a few hundred employees), it has another option: it may insure its group benefit plans out of pocket, either in part or their entirety. Companies who choose this method will sequester away a certain amount of money instead of paying premiums to an insurance company, then assume the risk for health claims themselves. This process is known as self-funding, and the plans it affects are regulated by the federal Department of Labor.
