With self-funding, an employer pays employee medical claims directly rather than buying a fully insured plan, usually adding stop-loss insurance to cap large losses. It can reduce cost and add flexibility but moves claims risk onto the employer.
Yes, by choice. Texas balance billing law applies to TDI-regulated plans, but Texas lets ERISA plans elect into the state’s independent dispute resolution process by filing TDI’s opt-in form; otherwise federal No Surprises Act rules govern a self-funded plan.
It handles provider pushback for the employee: explaining the plan’s payment, negotiating with the provider, settling disputed amounts where the contract allows, and in some programs defending the member if a bill goes to collections. Contract terms vary widely, so read them before buying.
It depends on whether the plan ensures adequate access. Federal guidance says a non-grandfathered self-funded plan may treat only providers that accept the reference price as in-network for the out-of-pocket maximum only if it uses a reasonable method to ensure adequate access to quality providers at that price; otherwise those costs must count.
Unless the provider agreed to the plan’s price or a federal or state protection applies, the provider can bill the member for the difference. That balance-billing risk is why an RBP plan needs a balance-bill defense and member advocacy vendor in place from day one.
It can improve pricing visibility and control, but it adds coordination work. Before carving out, confirm the TPA allows it, that deductibles and out-of-pocket maximums will accumulate across both vendors, that stop-loss covers the PBM’s claims, and that net savings hold up after fees.
Today it depends on the PBM contract. Under the Consolidated Appropriations Act, 2026, for contracts entered into or renewed for plan years beginning on or after August 3, 2028, a PBM must remit 100% of rebates, fees and other drug-related remuneration to the group health plan quarterly, with records open to audit at least once per plan year.
With spread pricing, the PBM charges the plan more for a drug than it pays the pharmacy and keeps the difference. A pass-through model charges the plan what the pharmacy was paid and earns a stated fee instead, but the contract definitions, not the label “transparent,” decide what the plan actually pays.
Compare the services actually included, the network and PBM arrangements, data access, claims accuracy and service, stop-loss coordination, licensing, and all fees including indirect compensation, and document the comparison, because choosing the TPA is itself a fiduciary decision.
Generally yes. Texas requires administrators to hold a TDI certificate of authority under Insurance Code Chapter 4151 unless an exemption applies, and TDI will not decide whether an exemption applies. License status can be checked through the Sircon business search.
The old self-funded plan does. The new insurer covers services received after its effective date, so the employer must fund and administer run-out claims, and stop-loss covers them only if their paid dates fall within the policy’s window or a terminal liability extension.
Under ordinary reimbursement, yes: the plan pays the claim and then files for reimbursement. Options such as specific advance funding (coordinated reimbursement) and monthly aggregate accommodation can ease that cash-flow strain, if the policy includes them.
Ask specifically about a no-new-laser provision, a cap on renewal increases, renewal without a new signed disclosure, and how run-out or terminal coverage depends on renewing. Each is a separate promise with its own conditions, and none should be assumed from another.
It is an extra layer the employer keeps above the ordinary specific deductible: claim dollars over the specific deductible go into a fixed-dollar fund the employer pays, and reimbursement starts only after that fund is used up. It lowers premium in exchange for more risk and is not the same as aggregate stop-loss.
The plan still owes the benefit to the employee, and the employer pays it without reimbursement. That is why the stop-loss policy should mirror the plan document, and any plan change or exception should be approved in writing by the stop-loss carrier first.
Terminal liability is an option that extends specific and/or aggregate stop-loss for a run-out period after the policy ends, commonly 3 or 6 months, so claims incurred before the end and paid shortly after are still insured. It usually must be elected before the contract ends.
Run-in claims were incurred before the new policy started but paid during it; run-out claims were incurred during a policy but paid after it ends. If the old policy has no run-out and the new one has no run-in, a large claim incurred in December and paid in February can be covered by neither.
The first number is the months of incurred claims the policy recognizes and the second is the months in which those claims must be paid. A 12/12 covers claims incurred and paid in the same 12 months, a 12/15 or 12/18 adds 3 or 6 months of run-out, and a 24/12 adds 12 months of run-in for claims incurred before the contract started.
A laser is a stop-loss term that gives one known high-cost person a higher specific deductible (or an exclusion) under the employer’s policy. It changes how much of that person’s claims the employer funds, not the employee’s benefits, and the plan still may not cut that person’s eligibility or charge them more because of their health.
The insurer starts from expected claims and adds a corridor, a percentage set in the quote, then usually turns that into monthly aggregate factors multiplied by actual monthly enrollment. The employer pays eligible claims up to that total before aggregate reimbursement begins.
Only within HIPAA’s limits. Before the plan gives identifiable health information to the employer, the plan documents must be amended, the employer must certify it will not use the information for employment decisions, and only the employees named in the documents may see it.
A self-funded or level-funded plan can have its TPA, PBM or other service provider attest for it under a written agreement, but the legal duty stays with the plan, so the employer should confirm in writing that each filing was made by December 31.
Generally no. Federal law bars a group health plan from agreeing to contract terms with a TPA, network or provider that restrict its access to de-identified claims data or provider-specific cost and quality information, so a contract that leaves the plan’s data access to the vendor’s discretion is a prohibited gag clause.
Generally yes for non-grandfathered plans. A self-funded plan that is not subject to a state external review process must provide the federal external review process, which uses independent review organizations at no cost to the claimant.
The appeal goes to the plan’s named fiduciary for appeals, which may be the employer or a TPA the plan designates, and it must be someone other than the person who made the denial or that person’s subordinate. With one level of appeal, the decision is due within 72 hours for urgent care, 30 days for pre-service claims and 60 days for post-service claims.
Not automatically. If employee contributions helped fund the plan, part of a surplus or refund may be plan assets that must be used for participants, so the employer should get advice before treating the whole check as company money.