Which type of medical insurance is regulated by ERISA?

The correct answer is related to the regulation of self-funded plans under the Employee Retirement Income Security Act (ERISA). ERISA provides federal guidelines for the management and operation of employee benefit plans, including health insurance programs. Self-funded plans are those where an employer assumes the financial risk for providing health care benefits to its employees, rather than purchasing an insurance policy from an outside carrier. Since these plans are primarily established and maintained by employers for their employees, ERISA applies to them, ensuring that the plans comply with specific standards concerning reporting, accountability, and fiduciary responsibilities.

In contrast, fully funded plans are typically insurance policies purchased from an insurance company, which means they fall under state jurisdiction and are governed by state insurance laws rather than ERISA. State funded plans are also managed at the state level and do not fall under ERISA regulations. Health Maintenance Organizations (HMOs) often operate on a fully funded basis or may be regulated under different provisions depending on their structure, which also keeps them outside the scope of ERISA when applicable. Thus, self-funded plans are the only type that ERISA regulates directly.