Moving right, you take on more claims risk. In exchange you see more of your data and keep more of what you don't spend.
A fully insured health plan is one where the employer pays a fixed premium to an insurance carrier, and the carrier assumes the financial risk for all covered claims.
How it works
You choose a plan from a carrier, the carrier sets a premium for each employee tier, and you and your employees split that premium however you decide. When someone goes to the doctor, the carrier pays the claim. If the year is expensive, that's the carrier's problem until renewal.
For small groups, these are usually ACA plans. Pricing is based on the ages of the people enrolled and the area, not on your group's health history, which can be a real advantage if someone on your team has a serious condition.
When it tends to make sense
Fully insured is common for small businesses and for any employer that wants a fixed cost and no claims exposure at all. It's also a sensible choice for a group with high expected claims, since ACA pricing doesn't penalize you for them.
For many small business owners it's the long-term answer, and we won't push you off it if it's working.
What you give up
Predictability comes at the cost of information. Fully insured employers usually get very little claims data, so it's hard to see what's driving the renewal. And when your group has a healthy year, the carrier keeps the difference.
Plan design is limited to what the carrier offers in your market, and because ACA rates are age-banded, a younger, healthier group can end up paying more than its claims would justify.
What PAKG does
We quote the carriers that are strong where your employees live, compare networks and drug coverage as well as price, and help you set contributions that keep the plan affordable for the people on it.
Each year we check whether your group would be better served by a level-funded plan. Sometimes it would. When it wouldn't, we'll tell you that and move on to renewal.
What changes from one approach to the next
Factor
Fully insured
Level funded
Captive
Self-funded
Who pays claims
The carrier
A claims fund inside your monthly payment
You, up to a set level, then the shared pool
You, up to your stop-loss limits
Monthly cost
Fixed premium
Fixed monthly amount
Fixed fees plus claims that vary
Fixed fees plus claims that vary
Claims reporting
Very little
Monthly reports
Detailed
The most detail
After a low-claims year
The carrier keeps the difference
A surplus may come back to you
You keep unused funds, and the pool may return some
You keep what you didn't spend
Plan design flexibility
Carrier plan menus
Some flexibility
Considerable
The most
General comparison. Actual terms depend on the carrier, the program and your group.
“PAKG was able to take our age-based small group plan to a level-funded plan that resulted in a massive cost savings to both our company and every single enrolled employee.”
Jessica G., Director of Operations
Common questions
What is the difference between fully insured and level funded?
With a fully insured plan, the carrier takes on all claims risk for a fixed premium. A level-funded plan also has a fixed monthly cost, but it is built on your group's actual claims, gives you more reporting, and may return a surplus if claims come in lower than expected.
How many employees do you need to self-fund?
PAKG generally starts evaluating self-funding for employers with 50 or more enrolled employees. Group health, cash flow and risk tolerance matter as much as headcount.
Is an ACA plan the same as fully insured?
ACA small-group plans are fully insured plans sold to small employers under ACA rating rules. Larger employers can also buy fully insured plans, which are priced differently.
