What is a fully insured health plan?
A fully insured health plan is one where the employer pays a premium to an insurance company for employee health coverage. The insurance premium is due in advance of the coverage and is actuarially projected to cover anticipated claim costs and the insurance company’s overhead, commissions, reserves, various risk charges and taxes. In exchange for the premium, the insurance company assumes the risk of providing health coverage and performs various tasks such as the printing of employee booklets. Thirty years ago, all plans were fully insured and this type of funding was considered the norm. But today, almost 70% of U.S. employers self-fund some portion of their health care plans.
