SECTION10. PLANFUNDING Section10 PlanFunding Manyfirms,particularlylargerfirms,choosetopayforthehealthservicesoftheirworkersdirectlyfromtheirownfundsrather thanbypurchasinghealthinsuranceforthem. Thisiscalledself-funding. Federallaw(theEmployeeRetirementIncome Security Act of 1974, or ERISA) exempts self-funded plans established by private employers from most state insurance laws, includingreserverequirements,mandatedbenefits,premiumtaxes,andconsumerprotectionregulations. Sixtypercentof coveredworkersareinaself-fundedhealthplan. Self-fundingiscommonamonglargerfirmsbecausetheycanspreadtherisk of costly claims over a large number of workers and dependents. Manyfirmswithself-fundedplansalsouseinsurance,oftencalledstoplosscoverage,tolimittheirliabilityforverylargeclaims oranunexpectedlevelofexpenses. Aboutthree-fifthsofcoveredworkersinfullyorpartiallyself-fundedplansareinplans withstoplossinsurance. • Sixty percent of covered workers are in a plan that is completely or partially self-funded, similar to last year [Figures 10.1 and10.2]. – Thepercentageofcoveredworkersenrolledinself-fundedplanshasbeenstableinrecentyearsacrossfirmsizes [Figure 10.2]. – Asexpected,coveredworkersinlargefirmsaresignificantlymorelikelytobeinaself-fundedplanthancovered workersinsmallfirms(79%vs.15%). Thepercentageofcoveredworkersinself-fundedplansincreasesasthe numberofworkersinafirmincreases. Eighty-onepercentofcoveredworkersinfirmswith1,000to4,999workers and91%ofcoveredworkersinfirmswith5,000ormoreworkersareinself-fundedplansin2017[Figures10.1and 10.4]. The Kaiser Family Foundation and Health Research & Educational Trust / Page 163