Fully Funded Health Insurance Plans

Fully Funded Health Insurance Plans: Employee Benefits, Health Savings Account, HSA, Flexible Spending Accounts, FSA, Self Insured

Russell Benefit Consulting, Indianapolis, Indiana, understands that health insurance can be a business's third highest cost, after inventory and payroll. We work diligently to find health and medical insurance programs that serve the needs of business,  personnel, and economics.

We help you explore various employer health insurance program options available, including health savings accounts and flexible spending accounts, as well as more traditional fully-funded group plans.

Fully-Funded Health Insurance Plans: Are They Headed for Extinction?

Self-funded or self-insured health plans are programs in which the employer assumes the financial risk to cover employees expenses by paying medical claims from its own resources. Advantages of this type of plan include:

• A fully-funded health insurance plan is purchased from insurance underwriters that assumes full risk for medical expenses.

• Policy costs are fixed and will not increase during the policy period as a result of the number or size of claims.

The problem with the fully-funded insurance market is the "pool" into which groups are placed. Traditionally, all employee groups of similar size and makeup are placed into a single large pool. The basic concept of insurance is the “Law of Large Numbers,” meaning the larger the group, the more predictable claims become. A “thousand life” group in the health insurance market is considered statistically valid and predictable.

• The insurance carrier then bases premium and renewal rates on the health and claim history of the entire pool.
  
  
• The health, age, fitness level, lifestyle or other factors of your workforce is not taken into consideration when determining premium costs.
  
  
• With a fully-funded health plan, the bad habits of another group can drastically affect and increase your rates.

Choosing the Right Insurance Program: Size Does Matter

The size of the employers' workforce is the most important factor when deciding what type of program to implement. Fully-funded health insurance is usually purchased by businesses with less than 50 employees, has limited financial resources and/or tolerance for risk.

Companies with 50 or more employees are twice as likely to self-fund (30% vs. 15%) than employers with fewer than 50 employees.

The percentage increases to more than 45% for companies with more than 250 employees.

While both self-funded and fully-insured plans cover things like prescription drugs at approximately the same rate, large companies that self-fund tend to offer more generous benefits than those that fully-insure, even though self-funded employers are not required to comply with state laws and mandates for particular benefits.

Rising Health Insurance Premium Costs: No Relief in Sight

National studies have shown a steep increase in health plan premium cost since the mid-1990’s, with no sign of the trend reversing. 

Monthly employer-sponsored health insurance premiums have consistently risen during past years, from 4.8% in 1999 to 12.7% in 2002, significantly outpacing the national rate of inflation.

In 2001, premium costs for individual employee coverage averaged 9.1% higher for fully-insured plans than for self-funded plans, but premiums for dependent coverage were 9.3% higher for self-funded plans. The proper choice depends on the demographics of the workforce.

Whether you have 2 or 200 or 2000 employees, we take the time to get to know you, your company and the needs of your employees. We will design a health plan, whether fully-funded, partially funded or completely self-funded, that will best benefit your employees and your bottom line. While differences exist in premiums between fully-insured and self-funded plans, premium costs for self-funded plans are not always lower than for fully-insured plans due to the differences in coverage.

We can then combine your health plan with a wide range of employer-sponsored and/or voluntary benefits to create a complete benefits package designed to retain your current employees and attract the most-qualified candidates for employment. We can even manage these programs for you as your virtual HR department, if needed.

Growing Companies Need to Investigate Their Growing Insurance Options

As our fully-insured clients grow and approach 100 employees, their health insurance options also grow. Russell Benefits Consulting will make sure your benefits program grows with your company to ensure continued medical coverage at a reasonable, affordable rate. We will help you:

• Re-evaluate your current fully-funded health insurance program and costs
  
  
• Investigate alternatives to traditional group coverage
  
  
• Determine the best options for your size and type of group
  
  
• Switch, if appropriate, to a more economical and flexible self-funded program

In general, once an employer's insurance program becomes self-funded, they usually won’t switch back. Barring unforeseen, catastrophic events among your group, self-funding is generally a more cost-effective option that allows you to offer more-attractive benefits.

Employee Benefits Administrator Groups

To remove the burden and cost from employers, we also administer these programs. Learn more at Employee Benefits Management / Administration

Learn More About Health / Medical Insurance

Self-Funded Plans
Health Savings Accounts
Health Reimbursement Accounts
Flexible Spending Accounts