Your health insurance may not be as good your state requires — and it’s perfectly legal

In 2017, the Massachusetts state Legislature passed a law to ensure ease of access to birth control. It says there should be no copay for hormonal birth control prescriptions. It also allows women to fill a 12-month prescription at once. Infertility care has similar protections. The state mandates that plans cover “medically necessary expenses of diagnosis and treatment of infertility” if the insurance provides other pregnancy-related benefits. This includes comprehensive coverage of even costly treatments such as in vitro fertilization.

However, health plans covering 57% of Massachusetts residents, and a similar rate nationally, don’t have to comply with state laws like these. Why? Because many companies are “self-insured.”

If you get your insurance though your job at a big company, there’s a good chance that includes you. A health plan is self-insured if the company you work for collects the premiums and takes on the ultimate responsibility of paying employees’ and dependents’ medical claims. A third party may actually manage those processes, however, so you might not even realize it.

I’m a health researcher, and yet even I was stunned to find out I wasn’t eligible for protections I knew had passed in the Statehouse when I came up against this. When I asked my insurer (through my husband’s work), Allways Health Partners, about the coverage that I knew was mandated by Massachusetts state law, the reply was: “[This] health plan is self-insured and is therefore governed by ERISA which means that we are exempt from State mandates. Therefore, we are not required to comply with the regulations you listed below.”

ERISA — the Employee Retirement Income Security Act of 1974 — set minimum standards for how retirement plans and other workplace benefits are administered. This law protects employees by, for example, requiring employers to provide plan information and establish grievance processes.

As far as ERISA is concerned, when a company self-insures, it isn’t paying for a health insurance policy — it’s providing an employee benefit (paying your medical bills). For patients, this is a distinction without a difference. But the upshot is that self-insured plans are not required to provide state-mandated health care benefits, only those required by federal law.

It seems most people only learn about this oddity when it affects them. It’s been the subject of a lot of jurisprudence all the way up to the Supreme Court, though it tends not to receive attention outside of specialized circles. It’s also not easily fixed. Congress could amend ERISA, but that might just create new consequences.

In my home state of Massachusetts, about 16% of women between ages 15 and 49 use hormonal contraception, like birth control pills, adding up to hundreds of thousands of women in the state. Getting a year’s supply of birth control at once is more convenient, and it also is safer and less expensive for all involved — patient and insurer — because it makes missing pills less likely. Infertility treatments can cost tens of thousands of dollars. About 10% of women in the U.S. experience infertility and they or their families can easily wind up deeply in debt. But the laws already enacted by the legislature to help residents, whether to access contraceptive care or infertility care, do not apply to more than half of insured state residents.

Not all large companies self-insure, but most — about 80%, according to the Employee Benefit Research Institute — do. The way an employer chooses to finance its benefits should not prevent states from regulating health care to improve residents’ lives. A Massachusetts House bill would make it more transparent to employees when their health plans are self-insured. That’s a start.

In states that mandate fewer protections, ERISA may benefit workers because it provides minimum standards for employer-funded benefits, such as requiring the plan to provide information about the benefits and giving rights around suing if the plan breaches their duties. But these standards should serve as a floor, not as a ceiling; in states that offer more rights or protections, many people cannot benefit from them.

More clarity about health care rights in general would help, too. Patients and providers alike often don’t know what they are entitled to. In 2020, three years after the access to contraception law was passed, of the 1.2 million people eligible, only 300 obtained a 12-month supply of birth control.

Employees can also ask their self-insured employers to adhere to these state laws regardless of ERISA. Employers might want to, if not out of the goodness of their hearts, then maybe because: Dispensing contraception for a year decreases unintended pregnancy by one-third and saves health systems money. Or because it’s far more convenient for their employees. Or because infertility treatment is the only way some people can become pregnant and health plans are supposed to help equalize the different hands we are dealt medically. But so far, I have not had luck convincing my health plan to voluntarily make these changes. That’s likely why the legislature passed the laws.

Let’s not allow the unanticipated consequences of 50-year-old laws meant to protect workers infringe on their health care rights today.

Shira Fischer is a physician policy researcher at the nonprofit, nonpartisan RAND Corporation. Her research focuses on health information technology research and policy.