Glossary · Benefits
Self-Insured (Self-Funded) Health Plan
A health plan in which the employer assumes the financial risk of providing benefits, typically with stop-loss insurance to cap exposure.
In a self-insured arrangement, the plan sponsor pays claims directly rather than paying premium to an insurer. Stop-loss insurance limits exposure to large individual claims (specific) and aggregate plan-year claims (aggregate).
Many PEO master health plans are structured as self-insured or level-funded arrangements, which can deliver more favorable economics for healthier risk pools and richer plan flexibility — at the cost of greater claim-cost variability.
Related terms
- Level-Funded Health PlanA self-funded plan structured with predictable monthly payments that cover expected claims, administration, and stop-loss premium.
- Fully Insured Health PlanA health plan in which the employer pays a fixed premium and the insurance carrier assumes all claim-cost risk.
- Master Health PlanA single health insurance plan sponsored by a PEO that aggregates risk and purchasing power across all of its client employers.
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