There are a few key difference between a fully insured plan and a self-funded plan.
With a fully insured plan, the insurance company takes on all of the financial risk for the plan. This means that they are responsible for paying out claims, regardless of how much the claims cost. In exchange for this, the insurance company charges the employer a monthly premium.
With a self-funded plan, the employer takes on the financial risk for the plan. This means that the employer is responsible for paying out claims, regardless of how much the claims cost. In exchange for this, the employer is not charged a monthly premium. Instead, they simply pay for claims as they come in.
One key advantage of a self-funded plan is that the employer can often save money if their employees do not have a lot of medical claims. This is because they are only responsible for paying for the claims that come in, rather than paying a monthly premium regardless of claims.
One key disadvantage of a self-funded plan is that the employer can lose a lot of money if their employees have a lot of medical claims. This is because they are responsible for paying for all of the claims, regardless of how much they cost.
Which plan is better for an employer depends on a number of factors, including the size of the company, the health of the employees, and the amount of money the company is willing to risk.