What does a Fully Insured plan entail for an employer?

A Fully Insured plan involves transferring the financial risk of employee health claims from the employer to an insurance carrier. Under this arrangement, the employer pays a fixed premium to the insurance company, and in return, the insurance carrier assumes the responsibility for paying the claims that arise from covered medical services. This structure provides employers with predictability in budgeting, as they know their expenses upfront through the premiums, while also removing the uncertainty and financial burden of potentially high claims.

In contrast, the other options suggest alternative arrangements that do not align with the nature of a Fully Insured plan. For instance, paying claims directly to employees indicates a self-funded approach where the employer retains the risk, while managing internal claims processing further implies that the employer would handle risk and expenses directly. As for not needing to pay premiums, this contradicts the essence of a Fully Insured plan, where regular premium payments are a fundamental requirement for coverage.