# Self-funded health plan

> A self-funded health plan pays claims with an employer's own money, under federal ERISA law. Why that matters when it seeks repayment from a settlement.

Canonical page: https://accidentclaimfacts.com/glossary/self-funded-plan/  
Last reviewed: October 29, 2026 by the Accident Claim Facts editorial team  
General information, not legal advice. Talk to a licensed attorney in your state.

## Quick answer

A self-funded (or self-insured) health plan is an employer plan that pays workers' medical claims from the employer's own money instead of buying a policy from an insurance company. These plans are governed mainly by ERISA, the federal law for private-industry benefit plans, rather than by state insurance law.

## In a car accident claim

The difference shows up when your health plan paid crash-related bills and then asks to be repaid from your settlement. Many states limit how much an insurer can take back through subrogation. A self-funded plan may not be bound by those state limits: in *FMC Corp. v. Holliday*, the US Supreme Court held that self-funded employer plans are not subject to state insurance laws, so a state ban on repayment from a car-crash recovery did not apply.

For ERISA plans, the plan document carries great weight. In a later case, the Court said the plan's own terms govern, and the double-recovery and common-fund rules cannot override a clear reimbursement clause. That is why people dealing with a plan's repayment claim often ask for the full plan document, not just the summary. The guide to [medical liens and subrogation](https://accidentclaimfacts.com/money/medical-liens-and-subrogation/) explains how these claims are negotiated, and [who pays medical bills](https://accidentclaimfacts.com/money/who-pays-medical-bills/) covers the order of payment.

## Example

> **Example:** An injured driver's health coverage comes from a large employer that pays claims itself. After the driver settles, the plan demands full repayment of what it paid for crash treatment. The driver's state has a rule limiting repayment, but because the plan is self-funded, the plan argues that federal ERISA law controls instead.

## Related terms

- [Subrogation](https://accidentclaimfacts.com/glossary/subrogation/)
- [Lien](https://accidentclaimfacts.com/glossary/lien/)
- [Made-whole doctrine](https://accidentclaimfacts.com/glossary/made-whole-doctrine/)
- [Common fund doctrine](https://accidentclaimfacts.com/glossary/common-fund-doctrine/)

## FAQ

### How can you tell if your health plan is self-funded?

Many people ask the plan or the employer's benefits office, in writing, whether the plan is self-funded or insured, and for a copy of its reimbursement terms. The answer decides whether state insurance law or federal ERISA rules apply.

### Do ERISA rules cover government or church plans?

No. The US Department of Labor says ERISA does not cover group health plans set up by government employers or by churches for their employees. Those plans follow other rules.

## Sources

- [U.S. Department of Labor, Employee Retirement Income Security Act (ERISA)](https://www.dol.gov/general/topic/health-plans/erisa) — which private-industry plans ERISA covers; government and church plan exclusions
- [Cornell LII, FMC Corp. v. Holliday, 498 U.S. 52 (1990), syllabus](https://www.law.cornell.edu/supct/html/89-1048.ZS.html), checked October 29, 2026
- [Cornell LII, US Airways, Inc. v. McCutchen, No. 11-1285 (2013)](https://www.law.cornell.edu/supremecourt/text/11-1285), checked October 29, 2026