Consider the following factors when determining the best health coverage model for your company:

Risk

Fully insured plan: All risk is assumed by the issuer.

Self-funded plan: Risk is assumed by the employer, however, risk is less of a factor with the purchase of stop loss insurance. A stop loss policy can protect your company from budget-breaking health expenses.
Budget

Fully insured plan: The employer gets more financial predictability with fixed monthly premiums1 during the contract period.

Self-funded plan: The employer gets more control over the monthly costs because employers determine how much is placed into their claims fund.
Plan design

Fully insured plan: The issuer creates a set portfolio of plan designs.

Self-funded plan: Employers have the flexibility to customize features that will allow them to better respond to their employees.

The differences between self-funded and fully insured plans

Choosing between a self-funded and fully insured health plan may be easier when you understand the differences.

Fully insured plan Self-funded plan
Employer cost With a fully insured plan, employers pay a fixed premium each month based on the number of employees and their dependents. The issuer assumes the risk and the administrative burden on behalf of the employer. The monthly cost can be more than a self-funded plan but offers more financial predictability. The cost of a self-funded plan is typically lower. The employer keeps the profit in years when the claims fund exceeds claims expenses.2
Plan funding The employer pays a fixed premium each month. The employer establishes and funds a claims account.
Risk and profit The insurer takes the risk. Employers are protected from the impact of cost variances for medical and pharmacy services. The employer takes the risk. Typically, employers purchase stop loss insurance, which kicks in when claims exceed a certain amount. This protects the company from the risk of large, unexpected claims.
Plan administration The insurer takes responsibility for most of the plan management, including claims processing and payment and providing customer service. The company is the plan administrator, managing all aspects of claims payment and customer service. However, some self-funded programs, including the program offered by Nationwide, include administrative services.
How claims are paid The insurer is responsible for all claims payments if the group remains in good standing on all monthly premiums. Employers determine how much to save in their claims account. They can save the same amount each month to cover anticipated claims (called level funding) or simply pay claims as they are incurred (traditional funding).
Transparency Because the risk is assumed by the issuer, claims data is not shared with the employer. It may be more difficult to see how making changes in plan selections can save you money. When employers pay their own claims, they have access to data that can help them better plan for future expenses and implement cost-saving changes to their plan.

With self-funding, you know exactly where your payments are going.

Fully insured premium
The full payment goes to the insurance company.
Payments for the Self-Funded Program through Nationwide
The payment is split among the program’s 3 components:
Plan administration
Stop loss insurance
Employer claims account

+ Receive money back from your claims account in years when claims are lower than expected.2

Health benefits are an important factor in attracting and retaining employees

Many employees value affordable, high-quality health benefits with a variety of options from their employers. Health coverage is often a key factor in job satisfaction and can influence decisions on whether to stay with their current employer or accept a new position. Today's workers may also value plans that help cover out-of-pocket expenses associated with illnesses or accidents.

Self-funding is becoming a popular option

According to the KFF 2022 Employer Health Benefits Survey, 65% of all employees who are covered by company-sponsored health insurance are in a self-funded plan.3 Self-funding is a common choice among large companies because they can spread the risk of costly claims over a larger number of people. Nationwide offers a wide variety of self-funded options, as well as top-level support to help you find the best fit for your company.

The Self-Funded Program through Nationwide

With the Self-Funded Program for small and midsize businesses, you pay only for claims that are actually incurred. In years when claims are lower than expected, you may receive a refund.2 This can add up to big savings — about 60% of our groups receive a refund.4

The program offers the same support and protections as fully insured plans, allowing you to focus on running your business instead of managing your insurance plan. All services are seamlessly combined into one solution:

  • Stop loss insurance: When your group has higher-than-expected claims, stop loss insurance kicks in. This protects your finances, so you know the maximum you will spend on claims each year.
  • Pharmacy benefits management.
  • Administrative support: All day-to-day administration, including customer service and claims processing, is handled for you by a third-party administrator.
  • Industry-leading cost-control programs help lower your claims expenses.
  • There’s a potential to receive a refund.2

The Self-Funded Program through Nationwide offers midsize employers (51 to 500 employees) even more choices:

  • Transparency: Some plans allow you to access claims data that can be used to identify opportunities for cost savings. In some cases, employers can track provider and prescription utilization. Employers may also have access to information about plan utilization and cost drivers to better understand what to expect for the next plan year.
  • Flexibility: If you have 51 or more group members, you may have a choice in how you pay your claims. With level funding, you make the same predictable payment every month, which gives you budgeting stability. With traditional funding, you pay claims as they are incurred, which keeps money in your pocket until it’s needed.
Want to learn more?
Call a sales representative at 1-877-877-0245.
Explore self-funded benefits

Related topics & resources

What is level funding?
What is stop loss?
4 reasons to pick our Self-Funded Program
How self-funding can help employers save
More self-funded resources
[1] Premium is subject to change if the number of insured employees changes.
[2] The refund applies only to level-funded plans. The refund is subject to any applicable Terminal Liability Coverage fee.
[3] "2022 Employer Health Benefits Survey," https://www.kff.org/mental-health/2022-employer-health-benefits-survey (Oct. 27, 2022).

[4] The 60% figure is based on the percentage of groups that received a refund for plan years 2017 through 2019.

The Self-Funded Program through Nationwide provides tools for employers owning small to midsized businesses to establish a self-funded health benefit plan for their employees. The benefit plan is established by the employer and is not an insurance product. Stop loss insurance policies are underwritten by Nationwide Life and Benefits Insurance Company, Columbus OH, in AK, AR, AZ, CT, IL, MA, PA, TX, WI; Integon National Insurance Company in NY; and National Health Insurance Company in CO, WA and all other states where offered. Product availability and specific provisions may vary by state.