Fully-insured health insurance:
the carrier eats the risk — and the savings.
Pay a fixed monthly premium, send the carrier your enrollment, and never see a claims report. Fully-insured is the simplest health-plan funding arrangement, and for groups under 30 employees with unpredictable claims, it's almost always the right starting point.
This page is the long version. If you'd rather just model your numbers: jump to the Health Funding Projector →
The carrier-margin question fully-insured answers: "I don't have the time, expertise, or stomach to manage claims data — let someone else carry the risk and the complexity."
How fully-insured actually works
You and your employees pay a monthly premium to the insurance carrier. The carrier covers all claims that come in, regardless of whether the group's actual claims that month were $1 or $1 million. The carrier locks your rate for 12 months. At renewal, they look at your group's claim experience and adjust the rate up or down for the next 12 months.
The premium has three rough components: expected claims (the carrier's estimate of what your group will spend, plus a load for uncertainty), administrative fees (claims processing, network access, customer service, ACA reporting), and carrier margin (profit + reserve buildup, typically 20-30% of total premium for small groups, 8-15% for large groups). You don't see the breakdown. The carrier sees it; you see one number.
If claims come in below expected, the carrier keeps the surplus. If claims come in above expected, the carrier eats the loss — but raises your rate at renewal to recover. That's the whole arrangement: you trade visibility and surplus participation for predictability and zero administrative burden.
What you control vs. what you don't
The defining frame for any funding decision: who owns the risk, who owns the data, who owns the surplus, who owns the compliance burden. Level-funded sits in the middle of the spectrum — more control than fully-insured, less than self-funded.
| Dimension | Fully-Insured | Level-Funded | Self-Funded |
|---|---|---|---|
| Risk on bad year | Carrier (you pay fixed) | Capped at 110-125% expected | You bear it all to stop-loss |
| Surplus on good year | Carrier keeps it | 50/50 split or 100% return | 100% yours |
| Claims data access | Limited, delayed | Monthly, full detail | Real-time |
| Plan design flexibility | Carrier templates | Customizable within carrier framework | Fully customizable |
| ERISA compliance burden | Carrier owns it | Shared (you're the plan sponsor) | Fully on you |
| Cash flow predictability | Fixed monthly | Fixed monthly | Variable claims-as-paid |
| Renewal volatility | 5-15% typical, up to 50% | Smooths over multi-year | Driven by your data |
What this looks like over five years for a 75-employee group
Same group, same demographics. Year 1 fully-insured looks competitive; by year 5 the gap to level-funded and captive widens to ~22%. This is what the carrier doesn't volunteer.
By year 5, the level-funded path is roughly $4,100/EE/yr cheaper than fully-insured. On a 50-EE group, that's $205,000/year you're paying for predictability you may not need. Whether that's a smart trade depends on your claims volatility tolerance — not a universal answer.
Where BENEFITRA actually adds value on a fully-insured plan
Anyone can sell you fully-insured. The carrier wants every group on a fully-insured plan because it's where they make their margin. Here's what we do that most brokers don't:
- Carrier shopping that actually shops carriers. Most fully-insured renewals get one quote from the incumbent and called done. We pull market-aligned quotes from 4-6 carriers, score them on five-year renewal-behavior history, and present the comparison.
- Honest "you should leave fully-insured" calls. If your group has stabilized to where level-funded would save 8-12%, we tell you — even when our commission is higher on the fully-insured renewal. Most brokers don't.
- Renewal-spike mitigation playbook. When you get hit with a 25%+ renewal increase, there are 6-8 plays that can take it down — plan-design tweaks, network shifts, voluntary buy-up structures. We work them all before agreeing to the renewal.
- Annual claims-experience extraction. Your prior carrier owes you a claims experience report. Most brokers never request it. We do — automatically — so when you're ready to move to level-funded or self-funded, the data is already in hand.
What fully-insured looks like when it's the right call
Boutique creative agency, 18 enrolled employees, mostly under 35, no claims history (newly formed company). The owner had been quoted by a level-funded carrier and was tempted by a 9% advertised savings.
Without claims history and with one young employee diagnosed mid-year with cancer, the level-funded plan would have hit aggregate stop-loss but still cost more than fully-insured by year-end. Fully-insured was the right call. We told the owner that even though our commission would have been higher on the level-funded plan. Fully-insured isn't a failure mode — it's a fit for a specific risk profile.
How fully-insured stacks against the other six
Fully-Insured is one of seven funding paths Benefitra works with. Each has a sweet spot and an exit ramp. Pick the page that matters most for your situation:
Frequently asked questions about fully-insured health insurance
What's the carrier expense load on a fully-insured plan, and how do I see mine?
The expense load is everything in your premium that is not claims: the carrier's admin, profit, reserves, and risk margin. Under 50 employees it usually runs 20 to 30 percent. Between 50 and 200 it tightens to about 12 to 22 percent, and past 200 you might see 8 to 15 percent. Carriers won't hand you the number, so back into it. Pull your claims experience report at renewal, add up claims paid, and divide by premium paid. Whatever is left over is your load. Above 25 percent, a level-funded quote almost always beats it.
At what group size does fully-insured stop making financial sense?
Usually somewhere between 30 and 75 employees, depending on how steady your claims run. Under 30, stay put. Fully-insured is almost always cheaper once you price in how wildly a small group's claims can swing from one year to the next. From 30 to 50, a level-funded plan gets interesting if your last two years landed within about 5 percent of expected. By 50 to 75 it usually wins outright. Cross 100 with the staff to handle compliance, and self-funding tends to beat everything. The real trigger is not headcount, though. It is the year your renewal breaks double digits.
Can I see my actual claims data on a fully-insured plan?
Some, but less than you want and later than you need. Most carriers send a claims experience report once a quarter or once a year. You get claim counts and total dollars by bucket, medical, pharmacy, dental, with names stripped out. What you do not get is the useful part: who is driving cost, real-time activity, provider-level detail. And it lands 60 to 120 days after the fact, well after you could have acted on it. That blind spot is the quiet reason most groups eventually leave. Level-funded and self-funded plans hand you far more.
Why did my fully-insured rate go up 18% this year when our claims were fine?
Three things usually explain it, and none of them are about your actual claims. First, the carrier builds broad medical trend into every renewal, so rising costs across their whole book push your rate up even when your group behaved. Second, if you are too small to be rated on your own experience, you ride the pool of similar employers, and a rough year for them lands on you. Third, one big claimant last year can make them price defensively going forward. Under 50 employees, bumps of 5 to 15 percent are normal. Over 20 percent, ask for the actuarial memo behind it.
How long does it take to switch from fully-insured to level-funded or self-funded?
Plan on 60 to 90 days for level-funded, 90 to 120 for traditional self-funding, from decision to live coverage. Most of that is underwriting and paperwork, not the switch itself. Figure two to four weeks pulling census and claims data, three to four weeks waiting on quotes, then a couple of weeks each for plan design and enrollment. The part that stalls people is your current carrier's claims report. They owe it to you but often sit on it for a month, so ask early. Line the change up with your renewal date and the whole thing goes smoother.
Are dental, vision, and life insurance always fully-insured even when health is self-funded?
Almost always, and on purpose. Dental, vision, and basic life are cheap and predictable, so self-funding them frees up almost no money while piling on admin. The math only pays off on medical, where the real dollars sit, so most employers self-fund health and leave the rest fully-insured. One exception: big dental blocks, roughly 200 employees and up with heavy usage, can save 5 to 10 percent self-funded. Voluntary lines like accident and critical illness stay fully-insured because they are priced per person, with no group surplus to capture. Put the effort where the money actually is.
What's the smallest group that qualifies for fully-insured group health insurance?
Two employees, in practice, and the plan is guaranteed-issue, so nobody gets turned down over health history. Under the ACA, small group means 1 to 50 in most states, though California, New York, New Jersey, Massachusetts, and Vermont stretch it to 100. A single owner plus one employee can sometimes get quoted, but the rate climbs fast at that size. Below 50 you are shopping the small-group market or a state SHOP exchange. Cross 50 and you become large group: more freedom in plan design, rates that track your own claims, and ACA reporting you now have to file.
Want a fully-insured renewal that actually got carrier-shopped?
Send us your current renewal letter and your last 12 months of premium-paid history. We'll pull market quotes from 4-6 carriers — including level-funded comparisons so you see the full picture — and present the math in writing.
Schedule a free strategy call →