Fully Insured Plans
Fully insured plans are the most common type of insuring arrangement. Employers pay a fixed premium and in return, the insurance company acts as the claims administrator, pays claims, and is the fiduciary of the plan.
Level-funded plans have become vital for small businesses with fifty and under employees and can also benefit some groups above fifty lives. These plans are modeled to feel like a fully insured plan from the client’s perspective, but are actually self-funded plans that are administered by the insurance carrier instead of the insured. Employers are the fiduciary on level-funded plans.
Self-funded plans are most common in groups with hundreds of employees and up. The larger the group the more accurately claims can be predicted and absorbed. The employer typically contracts out a third-party administrator to process claims and pays these claims out of their own bank account until they reach the stop loss limit that is purchased to protect them against catastrophic medical claims. Self-funded plans require more work for the employer and may require dedicated in-house employees to administer. Employers are the fiduciary on self-funded plans.
Association Health Plans
Association plans pool together similar employers, whose businesses have synergies, under one master plan sponsored by an association.