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Self-Insured vs. Fully-Insured Plans

At Diversified Group, we like to explain the difference between a self-insured plan and a fully-insured plan by comparing renting your health plan to owning your plan. A fully-insured health plan is like renting while a self-insured plan is like owning your plan because with a self-insured or self-funded benefit plan, you have control over the design of the benefits program, including exemption from state mandated benefit requirements.

Other Benefits of Self-Funding Include:

  • Lower Administrative Costs
  • Access to Valuable Data
  • More Flexibility

Below is a detailed comparison of fully-insured to self-funded plans.

Topic Self-Insured Fully-Insured Advantage
Full Administrative Costs Average $35 Average $65 Self-Insured
Claims Disclosure Full Disclosure at all Times Usually Not Available Self-Insured
State Statutes Only Federal All States & Federal Self-Insured
Monthly Costs Variable Fixed Fully-Insured
State Premium Tax Only on Stop Loss Taxed on Full Premium Self-Insured
Plan Design Total Flexibility Fixed Plan Design Self-Insured
Reserves Invested by Client Held/Invested by Insurance Carrier Self-Insured
Reinsurance Set by Client Usually $50,000+ Fully-Insured
Rates Increase Only on Stop Loss - Approx. 5-20% On Full Premium - 10-30% Self-Insured
PPO/HMO Network Regional & National Usually Only 1 Network Available Self-Insured
Client Control Full Control None Self-Insured
Run-Out of Claims Client Responsibility Insurance Carrier Fully-Insured
Managed Care Client Choice Insurance Carrier Self-Insured
Claims Experience Client on their Own Pooled or Experience Rated Self-Insured


For more information, or to obtain a quote, contact a Diversified Group Sales Representative at 888-322-2524 today.

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