What are Fully Funded and Self-Funded (also known as ASO) Group Health Plans?

With a fully funded plan, the employer works with an insurance company to offer employees health benefits. The employer then pays the insurance company a fixed cost (usually monthly) for the duration of the policy or contract (usually a year).

The employer and the insurance company sign a contract. The contract or policy details the health care services the insurance company covers. It also includes the fixed amount the employer pays, employee premiums and member cost sharing like deductibles, copayments and/or coinsurance.

With this funding option, the insurance company pays each medical bill or claim according to the terms of the contract.

You can check with your employer's HR department or benefits administrator. If you are a Blue Cross and Blue Shield of Illinois member, your ID Card may show the text highlighted in yellow in the image below: A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an independent licensee of the BlueCross and BlueShield Association.

The image is an example of the back of a hard copy member ID card.* Members also have a digital ID card through the mobile app or an online account.

With a self-funded plan, the employer offers employees health insurance benefits. The employer then funds or pays for their portion of each medical bill or claim instead of paying a monthly fixed cost. 

The employer usually works with a consultant to develop the policy or contract they offer to employees. The policy details the health care services an employer covers. It also includes the employee premiums and member cost sharing like deductibles, copayments and/or coinsurance. 

With this funding option, the employer pays each medical bill or claim according to the terms of the policy.

Employers don't manage the day-to-day operation of their self-funded plans. They hire an insurance company or a third-party administrator to handle administrative tasks, such as processing claims and paying doctors and hospitals. That's why these plans are called Administrative Services Only or ASO plans.

You can check with your employer's HR department or benefits administrator. If you are a BCBSIL member, your ID Card may show the text highlighted in orange in the image below: “BlueCross BlueShield of Illinois, an independent licensee of the BlueCross and BlueShield Association, provides claims administration and claims are self-funded.” In this example, BCBSIL acts as the TPA for an employer.

The image is an example of the back of a hard copy member ID card.* Members also have a digital card through the mobile app or an online account.