I enjoy eating at an Italian buffet restaurant here in Kansas City. While I like the pasta and grilled veggies, my favorite part is the desserts. I enjoy having the ability to try a variety of desserts, instead of just one.

This is the way I view self-insured health plans. There's a great deal of flexibility, and I have to say, there's nothing better than having leniency with plan design.

The definition of "lenient" reads as follows: "exerting a soothing or easing influence; relieving pain or stress."

According to latest survey by The Kaiser Family Foundation, over 158 million people are covered under health care plans, and 55% of them are in a self-insured plan. The tasty part of a self-insured plan is that ERISA provides pre-emption from state laws relating to employee benefit plans. Thus, you don't have to worry about state-mandated benefits, premium taxes, consumer protection regulations or state insurance laws.

Look out chocolate — more employers have found a stress-reduction alternative.

According to The Council for Affordable Health Insurance, there are more than 1,900 mandates dictating who and what health plans must cover. Maryland, for example, requires up to $100,000 in coverage for in-vitro fertilization. Various states require coverage for providers such as dieticians, naturopaths, denturists and massage therapists. Arkansas mandates covering athletic trainers. New Jersey even requires insurers to offer coverage to unmarried dependents up to age 30. Man, I hope my kids are out of the house way before then.

CAHI estimates that these mandates can boost the cost of a policy between 20% and 45%. That's a whole lotta cannoli, if you ask me.

Basically, a self-insured plan only needs to comply with ERISA-mandated benefits, which include continuation of coverage (COBRA), eligibility as defined by the Health Insurance Portability and Accountability Act (HIPAA), Women's Health and Cancer Rights Act (WHCRA), standard benefits relating to the Newborns' and Mother's Health Protection Act, The Mental Health Parity Act and the new Michelle's Law, which becomes effective in October.

Beyond that, self-insured plans have a great deal of flexibility. You can put a dollar cap on the amount paid on cancer or physical therapy, or limit the amount of visits on a specific treatment. You can exclude certain drugs on the plan or flat-out refuse to pay, say, more than $1,000 a year on anyone covered under the plan. Realistically, not many employers want to cap a treatment for cancer or put small limits on a health plan, but it certainly is legal under the ERISA umbrella.

This flexibility becomes an advantage with savings to the bottom-line, and it can help with high-turnover industries. Let's say you're in the restaurant industry, and you've been plagued with high turnover. You can first offer a plan that caps a smaller dollar limit, then after a year of service, move members into a plan with enhanced benefits. Thus, self-funding can help protect from the risk during the first year of employment.

Nice.

Eligibility definitions can be defined creatively, if necessary. In our plan, we outline eligibility to include a health risk assessment every year. If a member doesn't complete the assessment, then that person is no longer deemed eligible, and we drop him or her off the plan. It's a brave step toward creating a healthier workforce, besides telling everyone to eat less dessert.

You even have flexibility with contribution rates. For example, when we implemented our wellness program, we offered a lower contribution rate for nonsmoking families.

I recall a conversation I had with an employee's spouse, who was a smoker. She was rather upset that others on the plan paid less. She started quoting the state insurance regulations to me on the phone, pointing out that I had a lot more work to do, and my discount program was illegal. Her communication escalated to a record-breaking pitch when I explained that our plan was self-insured, and we were exempt from those rules. I offered the phone number to the Employee Benefits Security Administration and never heard from her again.

Not everyone, though, is a fan of self-insurance. State policymakers have a valid concern that employers may design health plans that prevent participants from receiving adequate care.

Say, for example, you decide to put a dollar limit on dialysis treatments. Those individuals who max out will most likely turn to public programs for necessary medical care. It's a bold approach to cost-shifting the burden to the state, and a tight economy has forced some employers to consider this bitter option.

Another advantage is the right to recovery and subrogation. The self-insured plan's reimbursement right exists even if state laws prohibit such an attachment.

The U.S. Supreme Court unanimously affirmed a self-insured health plan's right of reimbursement in its decision in Sereboff v. Mid Atlantic Medical Services, Inc. Thus, if a defendant is handing over a kettle of cash to a plaintiff, the health plan has the right to put its hand in the pot, too.

Of course, I'd strongly suggest considering the adverse publicity that could result if you decide to seek payments from accident victims. This could definitely lead to a sour stomach.

I really enjoy managing our plan with a variety of choices and protections. If you've not considered self-insurance as an option, you might take another look. Wouldn't the world be sweeter if the Italian buffet could pre-empt me from gaining weight? If only life could be so simple.

Contributing Editor Karrie Andes, SPHR, is the director of human resources for Deffenbaugh Industries, Inc. and Affiliates in Kansas City, Kan. She also is the creator and chairperson for The Savvy Self-Funding Healthcare Conference and Expo. She can be reached by e-mail at karrie@savvyemployerconference.com.