A traditional and reliable option for employee health benefits
When it comes to offering health coverage to employees, many businesses choose a fully-insured group health plan for its simplicity, predictability, and stability. It’s the most common type of group health insurance—and for good reason.
What is a fully-insured group health plan?
A fully-insured health plan is a traditional group insurance arrangement where the employer purchases a health insurance policy from an insurance carrier. In this setup, the carrier assumes all the risk and is responsible for paying employees’ medical claims, regardless of the total cost.
The employer pays a fixed premium each month, and in return, the insurance company:
- Provides access to a network of doctors, hospitals, and other providers
- Pays covered healthcare claims for employees and their dependents
Handles administration, billing, and compliance tasks
How does it work?
- Premiums: The employer pays a monthly premium, typically based on the number of employees enrolled and expected healthcare usage.
- Coverage: Employees use the plan for medical services—like doctor visits, prescriptions, and hospital care—according to the plan’s benefits.
- Claims: The insurance company pays covered claims directly to providers. The employer is not financially responsible for high or unexpected claims.
- Renewals: At the end of the policy term (usually one year), the carrier may adjust premiums based on the group’s claims experience and health trends.
Benefits of fully-insured plans
- Predictable budgeting: Monthly premiums are fixed, making it easy for employers to plan and manage costs.
- Minimal risk: The insurer takes on all claims risk, even if one employee has very high medical costs.
- Administrative simplicity: The insurance carrier handles claims processing, network management, and compliance requirements.
- Wide access to care: Most fully-insured plans offer broad provider networks and established benefits.
- Compliance support: Fully-insured plans help meet ACA and state requirements, reducing the burden on the employer.
Is a fully-insured plan right for your business?
A fully-insured plan may be a strong fit if you:
- Prefer a hands-off approach to health plan administratio
- Want predictable monthly costs without the risk of unexpected claims
- Have a small to mid-sized business and need a straightforward insurance solution
- Need access to national or regional provider networks
Things to keep in mind
- Less flexibility: Plan design options may be more limited compared to self-funded or level-funded alternatives.
- Premiums may rise: Annual increases may occur based on the group’s health trends and overall claims usage.
- No refund for low claims: If your group uses less care than expected, there’s no financial return—your premiums remain fixed.