• Fully-insured plans are when an employer pays a predetermined amount of premiums to the insurance company, and the insurance company will pay the claims according to the plan the group selected. This is the most common type of insurance. 

Although these plans are technically self-insured plans, the employer only pays a predetermined amount of premiums and will never pay more regardless of claims.  Those premiums pay the insurance company for insurance and a claim reserve fund.  If the claims reserve fund has a positive balance at the end of the plan year, the employer can get money back.  Groups must medically qualify for these plans and could be cancelled if claims become poor. 

• Self-insured plans are when the employer pays most of their claims from their own funds. They also set the premiums charged to their employees based on claims, and they will need to fund their plan to ensure claims are paid in full.  Insurance is usually purchased to protect the employer from catastrophic claims. 

• ICHRA, or an Individual Coverage Health Reimbursement Arrangement, is a promise by the employer to pay a flat amount toward an employee’s health insurance that is purchased on an individual (non-group) basis. An employee can select an individual plan directly from a carrier or through a state or federal marketplace.  There are no limits to how much an employer can reimburse a class of employees.