Fully insured health plans were common before the 1970s, but fully insured plans now fall into the minority of health insurance coverage types. This type of insurance provides the least amount of risk, but usually costs more than other plans.
Fully insured health plans are those in which the employer pays the entire cost of the insurance plan premium for each of its employees.
The employees of a fully insured plan must still pay any deductibles or co-payments as per the specifics of the policy.
In 2008, 45 percent of American workers had health coverage under a fully insured plan, according to the Employee Benefit Research Institute.
In a fully insured plan, companies are not subject to exact costs of the health care needs of their workers, only the premium, which is the same for all employees. This helps a company accurately predict its financial commitments.
Companies who purchase insurance plans instead of paying for employee health care themselves incur administrative fees and profit margins set by insurance companies--making total health care spending greater for a fully insured plan. In addition, employers who choose full insurance must abide by state laws on health plans.
PhysicianCare.com: Is Self-Funding or Fully Insured Right for Your Company?
Employee Benefit Research Institute: Health Plan Differences: Fully-Insured vs. Self-Insured
Centers for Disease Control and Prevention: Prevalence of Employer Self-Insured Health Benefits