The Benefits of Self-Insurance and ERISA’s Role in Employer Health Plans

In its 50th anniversary this year, the Employee Retirement Income Security Act (ERISA), continues to allow employers to self-insure their health plans, highlights Paul Fronstin, director of Health Benefits Research at EBRI.

Fronstin discussed ERISA and trends in employer self-insurance during a conversation with Managed Healthcare Executive recently.

While large employers tend to choose self-insurance for consistency across states, smaller and mid-sized employers are now adopting it since the Affordable Care Act.

However, some revert to fully insured models after poor experiences.

Employees benefit from self-insurance through consistent benefits nationwide, Fronstin said.

“(Employees) don’t have to think about a new plan, a different network, or changing prescription drugs,” he said.

While most large employers include state-mandated benefits such as IVF, exceptions exist, he said.

Overall, large employers tend to offer generous health plans. Fronstin concluded that understanding these dynamics remains key to evaluating the self-insurance model’s effectiveness.