Self-insured (SI)

  • In a self-insured plan, the employer assumes financial risk for providing benefits to employees.  
  • Employers pay each claim (through a bank account), rather than paying monthly premium
  • Since the employer bears the financial risk, profit and risk fees (about 1-6% of premium) are significantly reduced.
  • Unlike FI plans with fixed monthly premiums, the employer's costs go down if claims are lower than expected but increase if claims come in higher than anticipated.
  • Claim administration and membership eligibility functions are performed by commercial carriers or Third Party Administrators (TPAs). 
  • A SI plan using a TPA often pays a fee to use an already-established network of providers.
  • Employers have the ability to customize plan design.
  • SI plans are not subject to state mandates, premium tax, or the ACA insurer tax.
  • Employers often purchase stop-loss insurance (aka reinsurance) to protect against catastrophic losses.
  • Individual or specific stop-loss limits the employer's liability for each member to a defined threshold or deductible such as $100,000.
  • Aggregate stop-loss limits the employer's liability for all members combined, to a defined threshold or attachment point, expressed as a percentage (e.g. 125%) of expected claims.
  • Premiums for stop-loss insurance offset some of the Self Insured savings.
  • Although self-funding has traditionally been used by large employers, employers with 25-250 employees increasingly use level-funding arrangements to avoid selected regulatory requirements under the ACA as well as to reduce premium taxes and the ACA insurer fee.  
  • Small group self-insured plans use very low stop-loss attachment points to mitigate risk but are still considered self-insured for regulatory and tax purposes.
  • To qualify as self-insured in NH:
    • Individual stop-loss limits can be as low as $20,000.
    • Aggregate stop-loss limits can be as low as 100% of expected claims (120% for <51 members).
  • With this arrangement there is no premium tax or ACA insurer fee except on the stop-loss premium.
  • The annual settlement compares the sum of the 12 monthly payments to expected incurred claims plus all fixed costs to determine if there is a surplus.  A portion of any surplus (e.g., 50%) is returned to the employer.
  • Often this surplus can only be used as a future premium credit and would be forfeited upon policy lapse. 
  • The NHID does not regulate self-insured plans.  
  • Self-insured plans are regulated under Employee Retirement Income Security Act of 1974 (ERISA).
  • The Employee Benefits Security Administration (EBSA) is responsible for administering and enforcing the fiduciary, reporting and disclosure provisions of Title I of ERISA.
  • To learn more about the EBSA follow the link below to the  U.S. Department of Labor website:

Trends in benefit richness (average actuarial value) for NH self-insured plans.

What level of specific and aggregate stop-loss is purchased in NH?