Self Funded ERISA vs Fully Insured Priority
Self Funded ERISA vs Fully Insured Priority is not a national pay-order. 29 U.S.C. § 1144 states that ERISA shall supersede state laws that relate to an employee benefit plan, saves state insurance regulation, and states that a plan shall not be deemed an insurance company. KFF states that self-funded employers pay claims directly.
Last updated: September 9, 2026
Self Funded ERISA vs Fully Insured Priority
29 U.S.C. § 1144 / § 1132 / § 1002 are federal law. KFF and NAIC list the self-funded versus fully insured funding fork. North Carolina G.S. 44-50 rows are competing hospital-lien law on the same pot.
| Claim | Listed | Source |
|---|---|---|
| ERISA express preemption | “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” | 29 U.S.C. § 1144 |
| Insurance savings clause (fully insured fork) | “nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities” | 29 U.S.C. § 1144 |
| Deemer clause (plan not deemed insurer) | “shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company” | 29 U.S.C. § 1144 |
| Deemer applies to employee benefit plan | “Neither an employee benefit plan described in section 1003(a) of this title” | 29 U.S.C. § 1144 |
| Civil action to recover benefits under plan terms | “to recover benefits due to him under the terms of his plan” | 29 U.S.C. § 1132 |
| Civil action to enforce rights under plan terms | “to enforce his rights under the terms of the plan” | 29 U.S.C. § 1132 |
| Persons empowered to bring a civil action | “A civil action may be brought” | 29 U.S.C. § 1132 |
| Welfare plan may provide benefits through insurance or otherwise | “through the purchase of insurance or otherwise” | 29 U.S.C. § 1002 |
| Welfare plan covers medical/surgical/hospital benefits | “medical, surgical, or hospital care or benefits” | 29 U.S.C. § 1002 |
| KFF: self-funded = employer pays claims directly | “the employer pays enrollees’ medical claims directly” | KFF self-funded FAQ |
| KFF: fully-insured = buys from state-regulated insurer | “where the employer buys coverage from a state-regulated insurance company” | KFF self-funded FAQ |
| KFF: self-funded largely not required to comply with state insurance laws | “unlike fully-insured plans, self-funded coverage provided by private employers is largely not required to comply with state insurance laws” | KFF self-funded FAQ |
| KFF: identify via plan documents or HR | “check your plan documents or ask your human resources department” | KFF self-funded FAQ |
| NAIC: ERISA does not preempt state insurance laws | “ERISA, however, does not preempt state insurance laws” | NAIC ERISA topic |
| NAIC: self-funded exempt from state regulation | “pays directly out of plan assets (a “self-funded plan”), it is exempt from state regulation” | NAIC ERISA topic |
| NAIC: insured plan purchases insurance (state regulates contract) | “purchases insurance to cover some or all of its benefit obligations (an “insured plan”)” | NAIC ERISA topic |
| NAIC dual regulatory framework | “The result is a dual regulatory framework” | NAIC ERISA topic |
| KFF: most state insurance laws don’t apply to self-insured ERISA plans | “Most state insurance laws, including state benefit mandates, don’t apply to self-insured ERISA plans” | KFF regulation 101 |
| NC lien attaches to settlement funds | “A lien as provided under G.S. 44-49 shall also attach upon all funds paid to any person in compensation for or settlement of the injuries, whether in litigation or otherwise” | G.S. 44-50 |
| NC attorney’s fees not interfered with | “Nothing in this section or in G.S. 44-49 shall be construed so as to interfere with any amount due for attorney’s services” | G.S. 44-50 |
Sources fetched September 9, 2026: 29 U.S.C. § 1144, 29 U.S.C. § 1132, 29 U.S.C. § 1002, KFF self-funded FAQ, NAIC ERISA topic, KFF regulation 101, G.S. 44-50.
Frequently asked questions
What is Self Funded ERISA vs Fully Insured Priority?
Self Funded ERISA vs Fully Insured Priority is the funding fork between a self-funded ERISA plan and a fully insured plan. 29 U.S.C. § 1144 lists preemption, a state-insurance savings clause, and a deemer clause. KFF and NAIC state that self-funded plans pay claims from plan assets while fully insured plans buy state-regulated insurance.
What does 29 U.S.C. § 1144 say about preemption, savings, and deemer?
29 U.S.C. § 1144 states that ERISA shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. It also states that nothing in this subchapter shall be construed to exempt any person from any law of any State which regulates insurance, and that an employee benefit plan shall not be deemed an insurance company.
How does KFF define self-funded versus fully insured plans?
KFF states that in a self-funded plan the employer pays enrollees’ medical claims directly, and that fully insured coverage is where the employer buys coverage from a state-regulated insurance company. KFF also states that unlike fully-insured plans, self-funded coverage provided by private employers is largely not required to comply with state insurance laws.
What dual regulatory framework does NAIC list?
NAIC states that ERISA does not preempt state insurance laws. If a plan pays directly out of plan assets (a “self-funded plan”), it is exempt from state regulation; if it purchases insurance (an “insured plan”), state insurance regulation applies to the contract. NAIC states that the result is a dual regulatory framework.