Indiana Self-Funded Health Plans (ASO)

With a self-funded plan, an Indiana employer pays employees actual claims instead of a fixed premium, hires a carrier or third-party administrator to run the plan, and buys stop-loss insurance to cap the risk. Healthy years mean real savings the employer keeps - which is why larger, stable Indiana groups move to self-funding.

How Self-Funding Works

Instead of paying a carrier a fixed premium, the employer funds a claims account and pays claims as they come in, using a carrier network and administrator (an ASO arrangement) to process everything. In a low-claims year the employer keeps what it did not spend. Stop-loss insurance protects against a catastrophic year.

Stop-Loss Protection

Two layers of stop-loss cap the risk. Specific stop-loss limits what the plan pays on any single member. Aggregate stop-loss limits the plan total across all members. Together they turn an unpredictable claims risk into a known maximum, which is what makes self-funding viable for mid-size Indiana employers.

ERISA and Indiana Mandates

Self-funded plans are governed by the federal ERISA law and the employer plan document - not by Indiana state insurance mandates. That means the employer sets terms such as step-therapy policy directly in the plan, and state rules like the IC 27-8-5.7 clean-claim requirement apply to fully insured plans rather than ERISA self-funded ones. It is more control and more responsibility.

Who Should Self-Fund in Indiana

Self-funding usually fits stable Indiana groups of roughly 51 to 100 or more with healthy, predictable claims and an appetite for data and control. Smaller or higher-risk groups often get most of the upside with less risk through level funding instead.

Self-Funded Carriers and Administrators