Self-Funding vs. Fully-Insured Coverage
With a fully-insured product, an employer signs up for a rigid, fixed plan and pays a monthly premium, whether claims occur or not. Even if the employer does not use the amount of healthcare he paid for, the insurance company still retains the premiums, and therefore, the benefit dollars. The employer has little to no access to reports to justify their premium increases. Transparent reporting on all medical and pharmacy spending provides the plan administrator with information to educate employees and family members on the best outcomes and best value in healthcare.
In a self-funded plan, the employer creates a customized plan design and takes the responsibility for funding its own account. The employer assumes the risk up to certain limits. But at the end of the day, if claims are not incurred or paid out, the employer retains the money, and therefore, the benefit dollars. In self-funded plans, the employer has access to full reporting, allowing them to budget properly for potential future claims.