Escalating health care premiums over the last 20 years have compelled employers to look for creative solutions for controlling costs.[1] Managed care was 1 response to these rising costs; self-funded or self-insured plans are another. Nearly one half of employers participate in self-funded health plans, which are more prevalent among large employers because they can spread claims risks over a large employee population. Self-funded plans are exempt from state mandates of health benefits, and they are less expensive because of lower administrative costs than fully insured plans. Employers are able to customize the benefit structure based on the needs of the employee base, which can also achieve some costs savings if certain services are not offered. Important for pediatricians, exemptions from state benefit mandates means that they do not need to provide coverage of preventive care visits and immunizations (the so-called ERISA exemption, from the Employee Retirement Income Security Act of 1974). Because employers retain control over health care reserves, they can maximize interest income, which is another benefit. In these plans, the employers took all the risk of the health care expenses for their employees rather than paying a premium to an insurer to assume this risk. Employers usually contract with health insurance companies to act as 3rd-party administrators to contract with physicians, hospitals, and other providers and process the claims, which makes the status of the plan as self-funded versus fully funded transparent to workers and their families.