Self-Insured VS Fully Insured - The pros and cons explained - and more

Employers providing health benefits or workers' compensation packages for their employees have to choose between fully insured and self-insured plans. There are marked differences between the two and and the decision of which option to choose will generally depend on the number of employees, the risks involved, the particular industry being served and previous claims history. There are numerous requirements that vary by state, which may also be contributing factors in determining which option is the most cost-effective.

In a fully insured scenario, the insurance company is the one assuming the risk for paying all claim-related expenses, including the cost of plan administration. As a result, the employer has limited its risks by either paying out only premiums - or premiums plus a predetermined deductible amount. If no or little claims are paid out, the insurance carrier will stand to benefit by increasing the premium profits.

In a self-insured plan, the owner of the plan - which is managed by a hired TPA (Third-Party Administrator) - pays the claim costs himself, instead of the insurance company. As such, the client assumes the risk, but if no or little claims are paid out, the client will stand to benefit by saving any money they would have paid in premiums over the amount their claims cost. Depending on the type of rating, insurance carriers will make various determinations in rating premiums that will allow them to cover projected risk and still have a substantial profit margin.

Broad Coverage Service works with every client to evaluate whether a fully insured or self-insured plan will best meet their needs, based on their specific combination of factors including but not limited to demographics, industry, previous loss history, state guidelines, and number of employees. When a self-insured plan is appropriate, Broad Coverage Service will assist the client in choosing a suitable TPA to manage the plan in the most cost-effective manner and oversee the entire process. When a fully insured plan is required, Broad Coverage Service will work with clients to choose the appropriate carriers and plans that meet their specific needs - all at the lowest price possible.

Please click on the links below to better understand the differences of fully insured and self-insured plans for both group coverage and workers' compensation packages.

Self-Insured Health Plans Group Coverage Read more


Fully-Insured Health Plans Group Coverage Read more


Self-Insured Plans Workers' Compensation Read more


Fully Insured Plans Workers' Compensation Read more