Group Health Insurance coverage is a policy that is purchased by an employer and is offered to eligible employees, and often employee’s family members, as a benefit of working for that company.

There are three main methods for funding group health insurance plans: fully insured plans, self insured plans, and a hybrid plan approach.

Fully Insured Plan

A traditional fully insured plan is a group health plan under which the benefits are provided by the employer through the purchase of health insurance coverage from an insurance company. In exchange for premium payments, the insurance company bears the full risk for the cost of the benefits provided.

Self Insured Plan

A self insured plan is a group health plan under which the risk for the cost of the benefits provided is the responsibility of the employer. Typically, a self-insured plan will purchase stop-loss coverage to limit its financial liability to a certain level.

The employer often hires a third party administrator to perform such services as paying claims, collecting premiums or supplying other administrator services but the actual coverage benefits are funded by the employer.

Hybrid Plan

A hybrid plan is a way for your company to receive the financial benefits of a self insured plan along with the many upside benefits of a fully insured plan.