Also known as a self-funded health plan. An employer-sponsored health plan that is funded using a method under which the employer assumes all (or most) of the cost of health coverage for benefits provided under the plan. In a self-insured health plan, the employer generally pays for each claim as it is incurred, instead of paying a premium to an insurer. Some self-insured health plans pay all claims out of the employer's general assets, while others insure against large claims by purchasing stop-loss insurance.

Employers that offer self-insured health plans are often large companies, because significant financial resources may be required for payment of claims in a self-insured health plan. Companies offering self-insured health plans generally:

The method an employer uses to fund its health plan (that is, insured, self-insured, or a combination of those arrangements) can have a significant impact on an employer's compliance obligations regarding the plan, and the extent to which the plan is subject to state insurance law (see Practice Note, ERISA Litigation: Preemption of State Laws).