Fully-Insured Group Health Insurance Plans
Straightforward Health Benefits for Your Workforce
What Are Fully-Insured Group Health Insurance Plans?
A fully-insured group health insurance plan is a traditional form of coverage in which an employer contracts with an insurance company to provide health benefits to employees. These plans are regulated at the state level and must comply with specific requirements under the Affordable Care Act (ACA), such as providing essential health benefits and limiting out-of-pocket costs.
Types of Fully-Insured Plans
Fully-insured group health insurance plans come in several forms, each catering to different needs and preferences:
Exclusive Provider Organization (EPO): EPOs are a hybrid of HMOs and PPOs. They provide a network of providers but do not require referrals for specialists. However, out-of-network care is not covered, except in emergencies.
Health Maintenance Organization (HMO): HMOs are known for their affordability and strict network limitations. Policyholders must choose a primary care physician (PCP) who coordinates all medical care and provides referrals for specialists. Services outside the HMO network are typically not covered except in emergencies.
High-Deductible Health Plans (HDHP): HDHPs are designed for cost-conscious individuals and are often paired with Health Savings Accounts (HSAs). These plans feature lower premiums and higher deductibles, making them ideal for those who are generally healthy and can afford the upfront costs of medical care.
Point of Service (POS): POS plans combine elements of HMOs and PPOs. Policyholders need a primary care physician and must obtain referrals for specialists, but they can also see out-of-network providers at a higher cost.
Preferred Provider Organization (PPO): PPOs offer greater flexibility by allowing policyholders to see any healthcare provider. Unlike HMOs, PPOs do not require referrals for specialists, making them popular for those who value freedom of choice.
Benefits of Fully-Insured Plans
Fully-insured group health insurance plans offer several benefits:
Comprehensive Coverage: Fully-insured plans typically include essential health benefits such as preventive care, maternity coverage, mental health services, and prescription drugs, covering most employee needs
Predictable Costs: The fixed monthly premium for both employers and employees simplifies budgeting and reduces financial uncertainty for all parties.
Reduced Administrative Burden: The insurance company or carrier manages claims, compliance, and customer service, centralizing all questions to one avenue of support.
Regulatory Compliance: All fully-insured plans meet legal requirements and follow federal regulations.
What to Consider When Choosing
Despite their advantages, fully-insured plans have some drawbacks:
Higher Costs for Larger Employers: For organizations with a large workforce, fully-insured plans may be more expensive than self-insured alternatives due to profit margins and administrative fees included in premiums.
Less Control Over Data: Employers have limited access to claims data, making it harder to analyze healthcare utilization and implement cost-saving measures.
Limited Customization: Fully-insured plans often have less flexibility in coverage design compared to self-insured plans.
Premium Increases: Premiums can rise significantly year-over-year due to claims history, inflation, and changes in the regulatory landscape.
When to Enroll
When employers enroll in health insurance is dependent upon a few factors, but it is usually one of the following:
Fiscal Year Enrollment Period: This enrollment season is tied to the company’s fiscal year, which could differ from a calendar year. During fiscal year enrollment, employers could enroll in coverage whenever it aligns with the end of their fiscal year.
Main Open Enrollment Period: For most companies with a fiscal year that aligns with the calendar year, the enrollment season is the main one in October and November. For most states, OEP begins November 1st and runs through December or January 15th