Is your plan self-funded? Why it changes your appeal rights

Your health plan through work denied a claim. When you look up your rights, you keep reading that "it depends on whether your plan is self-funded." Most people have never been told which kind they have.

This guide explains the difference, why it matters for an appeal, and how to find out. It's part of our guide on how to appeal an insurance denial.

What's the difference between a self-funded and a fully insured plan?

A fully insured plan is one your employer buys from an insurer. Your employer pays premiums, and the insurer pays the claims.

A self-funded plan, also called self-insured, pays claims with your employer's own money. Many employers hire an insurer to run the plan. That company processes claims and provides the network, so its name is on your card. But it isn't the one paying.

Self-funded plans are common. KFF's 2025 survey of employers found that 67% of workers with job-based coverage were in self-funded plans. At firms with 200 or more workers, it was 80%.

Some smaller employers use a level-funded plan. KFF describes it as a small self-funded plan paired with stop-loss insurance, which limits the employer's risk.

Why this happens: what changes when a plan is self-funded

A federal law, the Employee Retirement Income Security Act (ERISA), covers most private employer health plans. ERISA lets states regulate insurance companies. But it doesn't let states treat an employer's own plan as an insurer.

The Department of Labor puts it plainly. Private-sector job-based plans that self-insure aren't subject to state health insurance laws. Here's what that changes:

• State coverage rules. A state law requiring plans to cover a certain treatment may not apply.
• State consumer protections. Some state rules on insurance practices may not reach your plan.
• Outside review. Your external review usually follows a federal process instead of your state's.
• Who can step in. Your state insurance department generally can't act on a self-funded plan.

Federal protections still apply either way. Both kinds of plans follow the same internal appeal rules. Both must offer external review for denials that involve medical judgment, unless the plan is grandfathered. And the No Surprises Act covers both self-funded and fully insured job-based plans.

How do appeal rights differ?

The first step is the same. You have at least 180 days from the denial notice to file an internal appeal. Your plan must decide within 72 hours if it's urgent, 30 days for care you haven't gotten, or 60 days for care you got.

The next step is where the plans differ.

• Fully insured plans usually use your state's external review process. Your state often assigns the reviewer.
• Self-funded plans usually use a federal process. You ask your plan, and it sends your case to an independent review organization (IRO). The plan must contract with at least 3 IROs and rotate cases among them, or use another unbiased method. It can't charge you a fee.
• Some states let self-funded plans join the state process instead. Your plan's final denial letter says which process you use.

Either way, you have 4 months after the final denial to ask. Our guide to external review for health insurance walks through each step.

After you finish an ERISA plan's appeals, you may also have the right to sue. ERISA lets you file suit in a state or federal court over a claim that's denied or ignored.

Plans for state and local government workers and church plans follow different rules. Ask your plan which rules apply to you.

What to do: find out which kind of plan you have

1. Check your summary of benefits and coverage (SBC). Find the section called "Your Grievance and Appeals Rights." If your plan is insured, this section must list your state's department of insurance. If it lists only the Department of Labor, your plan may be self-funded.
2. Read your summary plan description (SPD). Federal rules require it to name any insurer that pays or runs your plan. It must also say whether your benefits are backed by an insurance policy. Look for phrases like "self-funded," "self-insured," "administered by," or "claims administrator."
3. Ask human resources in writing. Ask, "Is our health plan self-funded or fully insured? Who pays the claims?" A written answer is easy to keep with your appeal records.
4. Ask for the plan documents. Under ERISA, you can ask the plan administrator in writing for the documents that govern your plan. The administrator may charge a reasonable fee for copies.
5. Look up the plan's Form 5500. Many plans file this yearly report with the Department of Labor. You can search filings on the department's EFAST2 website. A Schedule A lists insurance information. Small plans with fewer than 100 participants that are fully insured or paid from the employer's own funds often don't have to file.

Say Priya's employer plan denied a $5,200 claim for an outpatient procedure. She got the denial on March 2, 2026. She has met her deductible, and her coinsurance is 20%.

Date	What happened	What it means
March 2	The denial arrived.	Her 180 days to appeal began. Her deadline was August 29.
March 4	Her SBC listed the Department of Labor but no state insurance department.	Her plan was likely self-funded.
March 6	Human resources confirmed in writing that the plan is self-funded.	Federal rules would guide any outside review.
March 13	She filed her internal appeal with her doctor's letter.	Her plan had 60 days to decide, since the care was done.
May 11	Her plan's final denial arrived.	She had 4 months, until September 11, to ask for external review through her plan.

If an IRO reverses the denial, Priya's plan pays 80% of $5,200, which is $4,160. She owes her 20% share, which is $1,040.

If your denial came before the care, see what to do when prior authorization is denied. If you're not sure why a claim was denied, start with insurance didn't pay a medical bill.

When to get help

You can find out your plan type and file an appeal on your own. It's worth getting help when:

• Your plan won't tell you whether it's self-funded or won't send your plan documents.
• Your plan says your denial can't go to external review, and you disagree.
• A state law you read about seems to protect you, but your plan says it doesn't apply.
• You lost your appeals and are thinking about a lawsuit.

For employer plans, the Department of Labor's Employee Benefits Security Administration answers questions at 1-866-444-3272 or askebsa.dol.gov. If your plan is fully insured, your state insurance department or consumer assistance program can help. For a surprise bill, call the No Surprises Help Desk at 1-800-985-3059.

A medical bill advocate can handle calls and letters for you. For a lawsuit over an employer plan, talk with an attorney who handles employee benefits cases.