How is Fully Health Insurance Plans Different from Self Insurance Plans

How is Fully Health Insurance Plans Different from Self
Insurance Plans?

The difference in a fully-insured financial arrangement
and a self-funded financial arrangement has to do with
who assumes the insurance risk, plan characteristics,
employer size and market share.
Fully Insured
Risk: In a fully-insured plan, the employer pays a peremployee
premium to an insurance company, and the
insurance company assumes the risk of providing health
coverage for insured events.

Plan characteristics: In fully-insured arrangements,
premiums vary across employers based on employer size,
employee population characteristics, and health benefit
use. Premiums can also change over time within the
same employer because of changes in the demographics
of the employed group as well as benefits used.

http://www.thebenefitadvisors.com/group-benefits/financial-arrangement/

Self Insured
Risk: In a self-insured plan, instead of purchasing health
insurance from an insurance company and paying the
insurer a per-employee premium, the employer acts as
its own insurer.
In the simplest form, the employer funds the projected
claims and fixed costs and has a Third Party
Administrator (TPA) that pays the claims directly to the
providers. The employer bears the risk associated with
offering health benefits.

Self Insured
Plan characteristics: In a self-funded arrangement,
there are no premiums to pay other than the monthly
fixed costs for administration and reinsurance. The
employer’s responsibility is to fund the actual claims paid
that week/month through the TPA.
Deciding which financial arrangement is right for the
employees at your North Carolina company can be
complicated. Choose Independent Benefit Advisors
when it comes time to decide on a financial arrangement
for your group in Raleigh, Durham, Asheville, Winston-
Salem, Wilmington and elsewhere in North Carolina.

Contact Independent Benefit Advisors
Phone: (919) 303-9690
Toll Free: (888) 303-9690
Fax: (919) 303-9691
Email: john@thebenefitadvisors.com
Web: http://www.thebenefitadvisors.com