Historically, the only employer groups interested in self-funding their health insurance policies were the ones that could absorb the costs of a catastrophic health event—in other words, companies with Fortune 500-level bottom lines.

But the shifts in the health care and insurance industries, and the ability to write plans that don't need to accommodate state insurance mandates, have now made self-funding an attractive option for a wider range of employers.

“One of the trends that we're seeing is that more employers at the small-employer level are thinking seriously about self-funding,” says Sarah Bassler Millar, partner at law firm Drinker Biddle & Reath and vice chair of the company's employee benefits and executive compensation practice group.