Funding Arrangement · Fully-Insured

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 →

Best fit5–30 EEUnpredictable claims, no HR infra
Typical monthly cost$1,250–$2,083 / EEVaries by location, age, industry
Risk on bad year$0Carrier absorbs all claim spikes
Renewal volatility5–50%Healthy years calm, big-claim years brutal

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 yearCarrier (you pay fixed)Capped at 110-125% expectedYou bear it all to stop-loss
Surplus on good yearCarrier keeps it50/50 split or 100% return100% yours
Claims data accessLimited, delayedMonthly, full detailReal-time
Plan design flexibilityCarrier templatesCustomizable within carrier frameworkFully customizable
ERISA compliance burdenCarrier owns itShared (you're the plan sponsor)Fully on you
Cash flow predictabilityFixed monthlyFixed monthlyVariable claims-as-paid
Renewal volatility5-15% typical, up to 50%Smooths over multi-yearDriven 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.

$22k $20k $18k $16k $14k Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Fully-Insured Level-Funded Self-Funded

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:

Worked example · 18-EE creative agency in NY

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.

Quoted level-funded annual cost
$326,000
Quoted fully-insured annual cost
$358,000
Year-1 claims actual (employee on chemo)
$412,000
Net cost — fully-insured (capped at premium)
$358,000

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.

Model your own numbers

The Health Funding Projector compares fully-insured, level-funded, self-funded, and captive across a 5-year horizon based on your group's size, location, and claims history.

Run your projection

Takes about 4 minutes. No email required for the basic projection.

Open the Health Funding Projector →

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:

Level-Funded Self-Funded Self-Funded Captive ICHRA PEO-Integrated Taft-Hartley Compare all seven

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 the percentage of your premium that goes to the carrier's overhead, profit, reserves, and risk-buffer — everything other than actual claims paid out. For small groups (under 50 EE), it's typically 20-30%. For mid-market (50-200 EE), 12-22%. For large groups (200+), 8-15%. You usually can't see your specific load directly from the carrier — but you can estimate it. Request your group's claims experience report (carriers owe this on request, especially at renewal). Compare your group's annual claims paid to your annual premium paid. The gap is your effective expense load. If it's over 25%, level-funded is probably about to save you 8-15%; if it's under 12%, you're at scale where self-funding pencils out.
At what group size does fully-insured stop making financial sense?
The crossover point is usually somewhere between 30 and 75 employees, depending on claims stability. Below 30 EE, fully-insured is almost always cheaper than level-funded once you account for the volatility risk a small group creates. From 30-50 EE, level-funded starts to make sense if claims are stable (within 5% of expected for the prior 24 months). At 50-75 EE, level-funded is usually clearly cheaper. By 75+ EE, captive becomes worth modeling. By 100+ EE, full self-funding usually beats them all if compliance infrastructure exists. The honest version: stay fully-insured as long as your renewal increases stay under 8-10% per year. The moment they break double digits, model the alternatives.
Can I see my actual claims data on a fully-insured plan?
Limited — and usually delayed. Most carriers provide a quarterly or annual claims experience report, typically with member identifiers redacted, showing claim counts and aggregate dollar amounts by category (medical, pharmacy, dental). You won't see real-time claim activity, individual claimant detail, or provider-level breakdowns. The reports often arrive 60-120 days after the period closes, which is too late to act on emerging trends. This is one of the strongest arguments to leave fully-insured once you can: every other arrangement (level-funded, self-funded, captive) gives you significantly more data, and that data is what unlocks cost-containment moves.
Why did my fully-insured rate go up 18% this year when our claims were fine?
Three possible reasons. First, your carrier's underlying medical trend rose more than your group's claims did — they price book-of-business trend, not just your group's experience, especially for small groups. Second, your group is too small to be experience-rated meaningfully, so your renewal moves with the carrier's pool of similar-sized groups. A bad year for the pool hits everyone. Third, the carrier identified a high-cost claimant in your group's prior year and is repricing forward expectations, even if your annual total claims were flat. Below 50 EE, you should expect 5-15% renewal increases regardless of experience; above 100 EE, your own claims drive most of the renewal math. If the increase exceeds 20%, request the carrier's actuarial justification — and start modeling level-funded.
How long does it take to switch from fully-insured to level-funded or self-funded?
From decision to live coverage, typically 60-90 days for level-funded, 90-120 days for traditional self-funded. The work breakdown: 2-4 weeks gathering claims data and demographics for underwriting, 3-4 weeks getting carrier quotes back, 2-3 weeks for plan design and contract review, 2-3 weeks for employee enrollment and ID card issuance, then live. The biggest blocker is getting your prior carrier's claims experience report — they're contractually obligated to provide it but often delay 30-45 days. Most employers transition at their plan-year renewal date so the calendar aligns with their existing benefits cycle. Off-cycle transitions are possible but disruptive to employees and accounting.
Are dental, vision, and life insurance always fully-insured even when health is self-funded?
Usually yes, and there's a sound reason. Dental, vision, and basic life have predictable claims patterns and small unit costs — there's almost no surplus to capture from self-funding them, but real administrative complexity if you do. Most employers self-fund medical (where the savings are real) while keeping ancillary lines fully-insured. The exception is large-group dental (200+ EE) where self-funding can save 5-10% if dental utilization is high. Voluntary lines (accident, critical illness, hospital indemnity) are almost always fully-insured because they're priced individually and there's no group surplus to share. Don't over-engineer: self-fund where the dollars are.
What's the smallest group that qualifies for fully-insured group health insurance?
Under ACA rules, a "small employer" is 1-50 employees in most states (1-100 in CA, NY, NJ, MA, VT, plus a few others). Small-group fully-insured plans are guaranteed-issue — the carrier must offer coverage and cannot deny based on health status. The practical minimum to enroll is usually 2 employees (some carriers will quote a single owner-employee but rates climb sharply). Below 50 EE, you'll typically buy through a state Small Business Health Options Program (SHOP) marketplace or a carrier's small-group product line. Above 50 EE you're "large group," which means more plan-design flexibility, higher rate sensitivity to your group's experience, and ACA employer-mandate reporting obligations.

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.

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