Why would an employer select a fully insured health plan?

Employers often choose a fully insured health plan to minimize financial risk. In this type of arrangement, the employer pays a fixed premium to an insurance carrier, which assumes the financial risk associated with providing health benefits to employees. This means that the employer does not have to worry about the unpredictability of employees' healthcare costs; the insurer is responsible for covering claims up to the limits of the policy.

By using a fully insured plan, the employer can effectively budget for health care expenses, as the premiums are known and fixed over a specific period. This predictability in costs aids in financial planning and stability for the organization. If the health care costs are lower than anticipated, the employer does not benefit directly; however, the primary advantage remains that they are shielded from significant, potentially catastrophic financial liabilities that could arise from unexpectedly high claims.

In contrast, other options like increasing employee workload or enhancing corporate image do not directly relate to the fundamental financial dynamics of health insurance plans. Additionally, unlimited coverage is not typically a feature associated with fully insured plans, as these usually have defined limits on benefits and coverage. Hence, selecting a fully insured health plan centers on cost predictability and managing potential financial exposure.