Fully-insured plans
Fixed premium, carrier carries the risk
The most straightforward way to offer group health coverage, and the right answer for a great many small employers.
How it works
You pay a set premium per enrolled employee each month. The carrier pays the claims. If your group has a terrible year, that’s the carrier’s problem; if it has a wonderful year, the savings stay with the carrier too.
Rates are set at renewal based on a mix of factors, which for smaller groups is heavily driven by the wider market rather than your own claims.
Administration is minimal, compliance obligations are lighter, and budgeting is simple because the number doesn’t move mid-year.
Suits employers who
- Have fewer employees and limited administrative capacity
- Want a predictable number for the budget
- Can’t absorb a bad claims year financially
- Prefer simplicity over the chance of savings
- Are offering group coverage for the first time
The trade-off
Predictability costs something. You are paying the carrier to take the risk, and in a good year you’ll have paid more than your group’s claims warranted.
You also get limited visibility into your own claims experience, which makes it harder to know whether a renewal increase is genuinely justified.
For many small employers that’s an acceptable trade. For a group with a healthy population and steady headcount, it’s worth at least pricing the alternatives.
Compare it against level-funded
For a healthy group, the difference over a few years can be substantial.