A fully insured health plan is the more traditional way to structure an employer-sponsored health plan.

Under a fully insured plan, an employer remits premiums to an insurance company. Conventional fully insured benefit plans build items such as:

• Premium taxes
• Company overhead
• Profit margins
• Costs of state-required reserves as a part of the premiums they charge

In addition to these charges, the insurance company keeps the difference if claims for the year are less than the amount of the premiums submitted. Many of these costs are reduced or eliminated with a self-funded plan because employers do not purchase conventional insurance. Employers can pay claims as they occur, eliminating the need to set aside reserves. This frees up funds for other needs.

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