Is the cost of health benefits the same regardless of being fully-insured vs. partially self-insured?


If your health plan is fully-insured, the rates are fixed, premiums paid monthly and adjusted (at renewal) once a year.  If your health plan is partially self-insured, the rates are also fixed, but only the actual health care claims that are processed are paid monthly and the rates serve as a limit or cap.  So again, both funding arrangement establish and fix the rates for twelve months – the difference – pay as you go or pay in advance. The renewal rating works the same for a fully-insured plan, but for a partially self-insured plan the year-over-year cost is based on actual usage, not rates.  The fully-insured plan does not account for lower than expected claims in a given month; the partially self-insured plan does.  Both the fully-insured and partially self-insured plans work the same if your paid claims utilization is above average every year.  On average, a group will experience higher than expected claims two out of every five years.  When a group is partially self-insured, they take advantage of paying less in those years when better than expected claims occur – a time period in which your membership population is experiencing good health.