New products and trends have emerged in the insurance industry over decades, such as the increased flexibility of a Health Spending Account (HSA), but there has been one constant: traditional, fully-insured group insurance. Group insurance offers benefits coverage to a defined group of individuals, such as employees of a company, members of an association, or union members. This type of insurance safeguards against the financial risks associated with illness or death.

What is Traditional, Fully-Insured Group Insurance?

Basically,  it refers to everything you have to expect from a benefits plan for employees or group members.  It is one of the most common benefits of funding options.

In traditional, fully-insured group insurance, employers pay a set monthly premium. This amount is determined by looking at the group’s past claims history. For new groups without a claims history, insurers use standard rates known as “book rates.” At the end of each benefit year, the policy is reviewed for renewal.

If the group’s claims and costs over the past year were roughly what the insurance company expected, the group will likely see only small changes in their premium rates for the next year, assuming their claims history remains consistent. This means that as long as the group’s health claims and insurance usage stay stable, they shouldn’t expect significant swings in their insurance costs from one year to the next.

This model offers employers financial predictability and simplified benefits management, while transferring the risk of claim coverage to the insurer, though employees bear a portion of the service costs.

Advantages of a Fully-Insured Group Insurance

The benefits of opting for traditional fully-insured group insurance are numerous and cater to various needs of an organization:

Scalability: As a business evolves, so can its benefits plan. Traditional insurance offers flexible and stable benefits, perfect for businesses with three or more employees, allowing for adjustments in coverage and benefits as needed.

Reliability: The long-standing presence of fully-insured plans underscores their reliability and the wisdom in the saying, “if it ain’t broke, don’t fix it.”

Simplicity and Familiarity: The majority of small employers favor traditional insurance because it’s straightforward and well-understood, representing a common choice for insurance coverage.

Stability: For businesses with a consistent number of employees and a stable history of claims, fully-insured plans ensure steady, comprehensive coverage, removing uncertainties and surprises in plan management.