What does "fully-insured health plan" imply?

A fully-insured health plan refers to an arrangement where an employer pays premiums to an insurance company. In this model, the insurer assumes the financial risks associated with the health and medical claims of the employees. This means that the employer does not bear the burden of paying for each individual medical expense out of pocket; instead, they transfer this risk to the insurer by making regular premium payments. Consequently, when employees utilize healthcare services, the insurer is responsible for processing and paying the claims according to the terms of the policy.

This arrangement allows employers to predict and manage their healthcare costs more effectively, as they can plan for the fixed premiums rather than incurring unpredictable out-of-pocket expenses associated with individual medical claims. It also provides employees with access to a network of healthcare providers and benefits as determined by the insurance policy, enhancing their overall health coverage.