Plan types & funding

Fully-Insured vs. Self-Funded

Who carries the risk — the carrier or you?

Michael Furman
Reviewed by Michael Furman, COO — 24 years in insurance · MDRT Top of the Table
NovaVida Group licensed team · Updated August 2026

Every group plan is funded in one of two ways. Fully-insured means you pay a fixed premium and the carrier takes on the claims risk. Self-funded means the business pays claims directly (with stop-loss protection), keeping any savings when claims are low.

Which Fits a Small Business

Fully-insured is simple and predictable — the traditional choice for most small groups. Self-funding can save money for healthier groups that use less care, since you keep what you don’t spend, but it carries more risk and administration. Level-funded plans (next) make a self-funded approach practical for small employers.

Fast Facts

  • Fully-insured: fixed premium, carrier bears the risk
  • Self-funded: employer pays claims, keeps the savings
  • Stop-loss insurance caps the employer’s risk
  • Level-funded blends the two for small groups

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Quick answers

Frequently Asked

Is self-funding only for large companies?

Not anymore. Level-funded plans bring self-funding’s potential savings to small groups by bundling a fixed monthly payment with stop-loss protection, capping your risk while letting you share in savings if claims are low.