Transition Guidance
The obligations that shift to you the moment the carrier stops holding the risk — and the six pitfalls that trip employers up first.
Executive Brief
Each item below is a failure mode we see in the first year. Treat them as a due-diligence checklist before you sign anything.
Fully insured plan sponsors lean on their carrier for HIPAA, ACA, and ERISA compliance. When you go self-funded, those obligations shift entirely to the employer-plan. Sponsors who don't reassign responsibility face immediate gaps.
Stop-loss is not insurance in the traditional sense — it reimburses the plan, not participants. Specific and aggregate deductibles, run-in vs. run-out provisions, and laser exclusions must be structured carefully to avoid catastrophic exposure.
A self-funded plan must have a written plan document and a Summary Plan Description distributed to every participant. Without them, participants can't understand their rights and the employer has no legal basis for coverage decisions — opening the door to litigation.
ERISA preempts most state insurance mandates for self-funded plans — but not all. State continuation (mini-COBRA), prompt payment laws in certain contexts, and network adequacy requirements may still apply. Some states have no-fault provisions that catch self-funded employers off guard.
Unlike premium payments, self-funded claim payments are unpredictable. Employers that don't establish a dedicated benefit trust account — or who rely on operating cash to pay claims — run into liquidity problems during high-utilization months.
The Third Party Administrator is the operational backbone of a self-funded plan. Weak claims adjudication, poor data reporting, and inadequate appeals handling can create enormous liability. TPA contracts must clearly define the employer's fiduciary role vs. the TPA's administrative role.
We map your compliance obligations, identify gaps, and create a transition roadmap that avoids costly pitfalls.
