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Guide To Understanding Subrogation

posted by The Phia Group

on March 30, 2021

Fully Funded Traditional Insurance vs. Self-Funded Health Plans

Most Americans don’t know the difference between “traditional” fully-funded insurance, and a self-funded benefit plan. Yet, more than 60% of people receiving health benefits from their employer are participating in a self-funded plan. When an employer pays a premium – a fixed amount – to an insurance carrier, and the insurance carrier pays more (if insured individuals are sick or hurt) or pays less (if insured individuals are healthy), that is “traditional” fully funded insurance. With “traditional” fully-funded insurance, individuals and employers pay a fixed premium to an insurance carrier, and the carrier takes on the risk. With a self-funded health plan, an employer sets aside some of its funds to pay for employees’ medical expenses. Employees then contribute to the plan rather than pay traditional premiums.

This white paper represents the views of the author, not America’s Health Insurance Plans (AHIP).  The publication, distribution, or posting of this white paper by AHIP does not constitute a guaranty of any product or service by AHIP.