When setting up your group health insurance plan, selecting the right funding option can help lower your health care costs while providing the best benefit plan for your employees. There are two common ways to fund a group health insurance plan: fully insured and self-funded. VistaNational can work with you to help you determine your funding options.
Fully Insured
With a fully funded health insurance plan, the employer pays a health insurance premium to the insurance carrier:
- The premium rates are based on the number of employees enrolled in the plan each month.
- The monthly premium only changes if the number of enrolled employees in the plan changes.
- The insurance carrier pays the healthcare claims based on the selected policy.
- The covered persons are responsible to pay any deductible amounts or co-payments.
Self Funded
With a self-funded (self-insured) health insurance plan, the employer pays the claims with its own funds rather than purchasing a fully insured plan from an insurance carrier. There are both fixed administrative costs and variable costs associated with this funding option. For example, healthcare claims costs will vary from month-to month based on use by the covered employees and dependents.
There are solutions that can help employers limit risk from claims that exceed a predetermined level.