Fully Insured Health Plan

A fully insured plan is the model most people picture when they think of “group health insurance.” The employer selects a plan from a carrier and pays a set monthly premium per enrolled employee. In exchange, the carrier takes on 100% of the financial risk — if claims in a given year exceed what the carrier collected in premiums, that’s the carrier’s loss, not the employer’s.

Why employers choose it: cost predictability with no exposure to a bad claims year, broad carrier networks, and far less administrative complexity than self-funding — there’s no TPA to manage, no stop-loss policy to negotiate, and simpler compliance obligations.

The tradeoff: premiums are priced to include the carrier’s risk margin and profit, and renewal increases can be steep, especially for smaller groups with limited negotiating leverage. It’s this renewal volatility that often pushes growing employers to evaluate level-funded or self-funded alternatives.