An employer that pays employee medical claims directly out of its own funds, rather than purchasing a fully insured group policy, is using:

a.A Medicare Advantage plan that the employer chooses to administer on its own
b.A fully insured plan whose premiums vary each month with the actual claims paid
c.A guaranteed-renewable individual plan issued separately to each covered employee
d.A self-funded (self-insured) plan, often paired with stop-loss/reinsurance

Explanation

In a self-funded (self-insured) plan, the employer assumes the financial risk for claims and typically buys stop-loss (reinsurance) coverage that caps the employer's exposure per individual claim and on an aggregate annual basis. Self-funded plans are generally governed by ERISA at the federal level.

Law Reference: Plan funding – self-funded vs. fully insured

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