Fully Insured vs Self-Funded: The Question That Decides Your Rights
This single distinction decides which laws protect you, which agency oversees your appeal, and how long you have to file. Almost nobody knows which side they are on, and the insurance card gives no clue.
Two arrangements that look identical
In a fully insured plan, your employer pays premiums to an insurance company, and that company carries the risk and pays claims from its own funds. State insurance law applies.
In a self-funded plan, your employer pays claims out of its own money. It usually hires an insurance company to administer the plan — process claims, run the network, print the cards — but the money is the employer's. Federal law governs, and state insurance regulation is preempted.
Here is the trap: in both cases your card may say the same insurer, the network is the same, and the customer service line is the same. From the outside they are indistinguishable.
Why it changes your rights
State legislatures have built consumer protections on top of the federal floor. Some states run their own external review programs with their own timelines and their own regulators. Those protections apply to fully insured plans in that state.
They do not apply to self-funded plans. Federal law preempts state insurance regulation for them, which means a state's independent review program, its specific filing windows, and its consumer assistance mechanisms are simply unavailable to you. Your external review runs on the federal track instead.
Self-funded plans still owe you internal appeal and external review — those requirements are federal and apply to nearly all plans. What changes is which process, which timeline, and which agency.
The practical consequence
Sending an external review request to the wrong place does not just fail. It burns time inside a window that is running, and appeal windows do not pause while your paperwork sits at the wrong agency.
This is also why a state-by-state deadline table taken at face value can hurt you. If you are in a self-funded plan, your state's number is irrelevant no matter how prominently it is published.
How to find out in one call
The fastest route is a single question to your HR or benefits department: does the insurance company pay our claims, or does the company pay them? Benefits staff know this immediately.
If you would rather not ask, check your Summary Plan Description. Self-funded plans commonly state it directly — language along the lines of the plan being self-funded, or not being an insurance policy. A fully insured plan is issued as a policy by a licensed carrier.
Your denial letter may also name the process and the agency that oversees it, which tells you the same thing indirectly.
A rough prior, while you find out
Self-funding is common among large employers and unusual among small ones. If you work somewhere with thousands of employees, self-funded is the more likely answer. If you buy your own coverage on the individual market, you are fully insured and state rules apply to you.
But treat that as a guess to check, not an answer to act on. The cost of being wrong is a missed deadline.