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Choosing Between Fully Funded and Self-Funded Health Coverage

If you’re a small business owner looking to buy health insurance, you may be torn between fully-funded and self-funded health coverage. Even though fully-funded plans have traditionally been the go-to option, self-funded plans have become more popular in recent years. Before you decide, there are a few key things to be aware of.

Self-Funded Options Let You Operate Your Own Health Plan

With self-funded health plans, the employers are in charge of operating the plan. This can come with regular fixed costs, including:

  • Stop-loss premiums
  • Administrative fees
  • Set fees per each employee

There may also be some variable fees involved, such as those involving healthcare claims. For some employers, however, the flexibility of being in charge is worth the extra costs.

Fully Funded Plans Require a Premium Payment

Should you choose a fully funded plan, also known as an employer-sponsored health plan, your company will have to pay your insurance carrier a premium. The good news is, these premiums are usually fixed for a year and won’t change unless the number of employees enrolled changes.

When you’re looking for the right health insurance option for your business, it’s best to be informed about your choices. Depending on your company’s needs, both fully funded and self-funded health coverage plans can offer you and your employees the coverage you need.