{"id":5177,"date":"2021-07-22T10:00:00","date_gmt":"2021-07-22T10:00:00","guid":{"rendered":"https:\/\/sonusbenefits.com\/?p=5177"},"modified":"2021-07-22T10:14:08","modified_gmt":"2021-07-22T10:14:08","slug":"fully-insured-and-self-funded-plans-the-pros-and-cons","status":"publish","type":"post","link":"https:\/\/sonusbenefits.com\/fully-insured-and-self-funded-plans-the-pros-and-cons\/","title":{"rendered":"Fully Insured and Self-Funded Plans: The Pros and Cons"},"content":{"rendered":"

In our blog published a couple of weeks ago, we delved into the three different types of group health insurance plans: fully insured, level-funded, and self-funded. As you\u2019re researching the best kind of group health insurance plan for your business, let\u2019s focus on the two opposite ends of the spectrum and see how they compare: fully insured group health plans and self-funded group health plans.<\/p>\n<\/p>\n

Defining the plans<\/h3>\n

Fully insured<\/p>\n

As a reminder, a fully insured plan is what people typically think of when<\/span> they think of employer-provided health insurance. Employers purchase the plan from an insurance company (carrier) and pay a premium to the insurance company. When employees make a claim, the insurance company writes a check to the healthcare provider. Employees pay all the deductibles and co-pays.<\/p>\n

Self-funded<\/p>\n

In a self-funded plan, the insurance company provides all the administrative services, with a fixed cost for administrative fees. Self-funded plans are fully funded by the employer, who pays for employee claims from a bank account or trust fund set up for that purpose.<\/p>\n

The pros and cons of fully insured health plans<\/h3>\n

Pros<\/p>\n

Employers looking to keep their costs consistent will have fewer cost\/rate variances month to month because of fixed premium costs.<\/p>\n

All claims are managed by the insurance provider, which keeps the employer\u2019s involvement in the day-to-day management at a minimum (and this also makes fully insured plans faster to implement). Employers also benefit from the insurance company taking on all the costs associated with employee medical claims. Employers and employees alike can feel confident knowing their premiums during the plan period will not change even if there are many claims in any one year.<\/p>\n

Cons<\/p>\n

While costs are consistent from month to month, employers must either accept the community rate if they\u2019re a small group and or negotiate their rate with insurers each year if they\u2019re a large group. Rates are determined with the following criteria in an underwriting process:<\/p>\n