ERISA self-funded employer plan

What this plan type is

A self-funded health plan is one in which the employer (the plan sponsor) — not an insurance carrier — bears the financial risk of paying claims. The employer typically contracts with a Third-Party Administrator (TPA) or with a carrier's Administrative Services Only (ASO) division to process claims, manage the provider network, and handle customer service. Self-funded plans are governed by ERISA (the federal Employee Retirement Income Security Act of 1974) and are largely exempt from state insurance regulation under ERISA preemption.

Your appeal rights

ERISA §503 (29 U.S.C. §1133) and the implementing regulation at 29 CFR §2560.503-1 provide the federal floor: full and fair internal review, specific denial-notice contents, the right to all documents relied on, and tight decision deadlines (72 hours for urgent, 30-60 days for routine). For non-grandfathered plans, ACA §2719 layers on external review by an Independent Review Organization (IRO). Beneficiaries who exhaust internal appeal can sue under ERISA §502(a)(1)(B) in federal court.

Common denial patterns

• Medical-necessity denial citing the plan's internal coverage criteria
• Prior authorization absent or exceeded (CARC 197/198)
• Out-of-network reduction (NSA balance-bill protections apply)
• Step-therapy or fail-first requirement
• Plan exclusion (e.g., bariatric surgery, weight-loss drugs)

What's unique about this plan type

• STATE insurance department CANNOT regulate the plan — ERISA preempts. Complaints go to DOL/EBSA, not the state.
• External review is required by ACA §2719 even though state law would not otherwise reach the plan.
• Federal court enforcement under ERISA §502 is the ultimate remedy — different from state insurance bad-faith law.
• Plan documents control: the Summary Plan Description (SPD) and the Plan Document are the binding contract.