Employee Benefits: Health Insurance – Fully Insured and Alternative Funding Plans


Getting benefits for your company will work for your business because they help you attract and retain good employees. It is important to consider the different types of health plans available and not just decide on the first HealthInsuranceplan you come across. You should also find out how health plans will be structured for your company. There are a couple of ways to get your business under a structured group health insurance plan: you can either have their coverage fully insured or have it structured under alternative funding plans. If you are wondering what the differences are between plans that are fully-insured and alternative funded, here is what you need to know.

A fully insured health plan is more traditional in the way this type of employer-sponsored health plan is structured. With this type of plan, the company will pay a premium to the insurance carrier. The rates for the premiums are fixed for one year based on the number of individuals in the group plan for every month.

The premium monthly payment will only change during the year if the number of individuals who are enrolled in the plan changes. With this type of insurance plan, the carrier will collect the premium and pays for health care claims based on the policy purchased. The insured is responsible to pay a deductible amount for covered services included in the policy.

With a self-funded plan, also known as alternative funded plan, employers operate their own health plan. However, self-insuring may expose the company to risks in the event that more claims must be paid. There are two main costs to consider when getting a self-funded health plan: fixed costs and variable costs. You can get the definition of fixed and variable costs on a self-funded health plan when you call your local insurance company. You can also get a quick quote with comparisons from different insurance carriers when you visit their website.