Self-Funding vs. Fully Insured: The Key Differences Employers Must Know

Understanding the True Cost of Health Insurance 

The cost of receiving health care is NOT the same as the cost of health insurance.  

Think of health insurance like a gym membership. Just because you have one doesn’t mean every workout, class, or personal training session is free. It helps with costs, but what you actually pay depends on what you use and how your plan is set up.   

Employer sponsored health plans usually come in two forms:  

1. A fully insured plan 

2. A self-funded plan 

   
   

What’s the Best Choice for Employers? 

I’ve been in the industry for 35 years and have heard every side of the debate of fully insured vs. self-funded.  

So... Which is best?  

I believe that once both options are clearly explained, each employer should decide what works best for them. But this decision shouldn’t be based on price alone (though it often is). The problem is that employers don’t always see the full cost of each plan. They just look at the lowest number on a price comparison chart, without realizing that it may not reflect the true total cost of the plan. 

Let’s break it down a little more. 

What Is a Fully Insured Health Plan? 

A Fully Insured Plan is like paying for an expensive all-inclusive gym membership. You pay the same amount every month, no matter how often you go. Your gym (the insurance company) keeps all the money, even if you barely use the equipment. The employer has no extra costs beyond the premium, but they also have no control over where the money goes. On top of that, hidden costs, like fees for premium exercise classes or extra charges for personal training, aren’t always explained upfront. Similarly, fully insured carriers may keep other costs hidden, like pharmacy rebates that they pocket for including some medications on their approved list of drugs that they cover, or high out-of-pocket costs for employees.  

What Is a Self-Funded Health Plan? 

A Self-Funded Plan is more like a pay-as-you-go gym. Instead of paying a fixed fee, you only pay when you or your employees actually use healthcare services. To avoid a huge bill after an unexpected "injury" (big medical claim), the employer buys stop-loss insurance, which works like a financial safety net for catastrophic claims. If claims are low, employers save money. If claims are high, stop-loss insurance helps cover the extra cost.  

Fully Insured vs. Self-Funded Plans: A Side-by-Side Comparison

Why Self-Funding with Apta Health Makes Sense 

Comparing fully insured and self-funded plans based only on premiums and worst-case costs doesn’t tell the whole story. Self-funding offers greater flexibility, cost control, and long-term savings potential. But the real advantage comes when employers partner with Apta Health. 

Apta Health gives employers access to pass-through pharmacy rebate savings, turnkey plan designs, detailed claims insights, and powerful cost-saving programs. All of which help lower healthcare costs while improving employee health. Industry trends show that self-funded employers save money about four out of every five years, making it a smarter financial choice over time. 

Ready to build a smarter, more cost-effective health plan together? We can help guide you and your consultant through every step of the process, ensuring you make the best decision for your business. Contact us at info@apta-health.com to learn more about self-funding strategies from Apta Health.