What attribute characterizes a "self-funded" health plan?

In a self-funded health plan, the employer takes on the financial risk for providing health care benefits rather than transferring that risk to an insurance carrier. This means that the employer directly pays for the costs associated with claims made by employees who use medical services, rather than relying on an insurance company to cover these expenses.

Employers typically establish a fund to pay for these claims and may also hire a third-party administrator to manage the plan's operational aspects, such as claims processing and provider networks. This approach allows employers greater flexibility in plan design and potentially lower costs, as they may avoid paying insurance premiums.

Additionally, under self-funding, employers can more easily implement tailored health benefits that meet their specific needs and the needs of their employees. This attribute is what distinctly characterizes a self-funded health plan compared to fully insured plans, where risk is transferred to insurers.