This question comes up a lot as more and more employers explore the self-funding structure for their company-sponsored health benefits.
The Department of Labor (DOL) and its Employee Retirement Income Security Act of 1974 (ERISA) serve as the main governing body for self-funded plans. A federal law, ERISA was created as a way to protect plan participants and their beneficiaries through a series of standards that plan managers must follow. It is meant to ensure fiduciary duty, transparency and accountability, and provide plan participants with important information about their benefits.
In addition to the DOL’s ERISA law, there are many other federal regulations that self-funded plans must comply with. Some of these include HIPAA, ADA, COBRA and the IRS’s employer shared responsibility provisions.
One thing that’s important to point out is that self-funded plans differ from fully insured plans in the role state mandates have. With self-funding, there is no insurance carrier, so these plans are generally only subject to federal laws. This can be beneficial to employers who have multi-state operations and want to offer consistent health benefits from location to location.
For more information on how self-funded plans are regulated, third party administrators can be a great resource. You can also find some helpful guidance from the DOL: https://www.dol.gov/general/topic/retirement/erisa.