Fully Insured vs Self-Insured vs Level-Funded | Fringe Benefit Analysts

Small employers have a number of options when searching for group health insurance policies. Three options to consider are fully insured, self-funded or level-funding plans. But what’s the difference between these options? Allow us to Explain.

“Fully Insured” is what most people picture when they think of insurance. The individual (or their employer) pays a premium to the insurance carrier. In return, the carrier is responsible for paying medical claims that are covered.

“Self-funded” insurance is almost the complete opposite of fully insured. Here, the company provides all the funds to pay for expected employee healthcare claims. In essence, the employer forms an “insurance pool” with participants consisting of their employees. Self-funding may save employers the monthly premiums of a fully insured plan, but leave most of the risk with the employer.

“Level-funding” can aid employers in their self-funded budgeting efforts and help mitigate some of the risk. Level-funding attempts to combine the best of both worlds between less risky fully insured and more time-consuming and risky self-funded plans. With level-funding, the company pays an insurance carrier a set amount each month to manage its “self-funded” plan. The insurance carrier ensures the “insurance pool” is properly funded, pays claims and performs other important administrative tasks.

Ultimately, the right group health insurance option for small employers varies from company to company. For more information please visit our website: https://www.fbabenefits.com/?utm_sour...

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