Fully-insured health plans quietly add hidden costs for employers

Paul H. Flowers Jr. says many small and mid-size employers are overpaying in fully-insured health plans because carriers keep any surplus when claims come in below premiums. He argues the shift to self-funded or level-funded plans can help employers see claims data and retain more of the savings.

Why it matters: - U.S. employers spent an average of $26,993 per family on health insurance premiums in 2025, up 6% from 2024, according to the KFF 2025 Employer Health Benefits Survey. - For a company with 150 employees on family plans, that works out to more than $4 million a year in health costs alone. - Flowers argues that, in fully-insured plans, a large share of those dollars never reaches employees' care and instead helps carriers protect profit margins.

What happened: - Paul H. Flowers Jr., founder of PHFJ Enterprises and CEO of Superior Insurance Advisors, used a June 23, 2026 release to argue that fully-insured health plans function like a hidden tax on employers. - Flowers said employers pay fixed monthly premiums to a carrier, the carrier pays claims from that pool, and any surplus stays with the carrier. - Flowers said companies often only see a renewal notice each year, not the underlying claims data or carrier margin.

The details: - In Flowers' example, a 200-employee company paying $18,000 per employee in annual premiums sends $3.6 million to a carrier each year. - If claims run at 70% to 80% of premium, that leaves $720,000 to $1.08 million in surplus in a typical year. - Over five years, Flowers said the amount that leaves the company could total $3.5 million to $5.4 million. - Flowers said that surplus becomes the carrier's money in a fully-insured arrangement. - KFF says 67% of covered U.S. workers are now enrolled in self-funded health plans. - Under self-funded coverage, the employer pays claims directly and keeps money not spent on care. - Stop-loss insurance can cap downside risk, while third-party administrators handle administration. - Through Superior Insurance Advisors, Flowers works with mid-size employers to evaluate self-funded and level-funded plan structures, identify carrier margins and other cost drivers, build plans that return surplus to the company, and pinpoint top controllable claims categories. - Flowers cited 75-employee manufacturers, 200-employee logistics firms, school districts, hospitals, and family-owned businesses as examples of companies making the switch. - Flowers said employers can request a complimentary review at paulhflowersjr.com.

Between the lines: - The pitch is less about eliminating insurance than about shifting employers from renting a plan to owning the economics of the plan. - The argument also reflects growing scrutiny of broker incentives, PBM markups, and carrier pricing inside employer health benefits. - Flowers' message is aimed at CFOs and HR leaders who want more visibility into claims and more control over plan costs.

What's next: - Flowers says the first step for employers is to ask their broker to show claims data and explain how much surplus the carrier kept last year. - If a broker cannot answer within 48 hours, Flowers says that is a sign the plan lacks transparency. - Employers looking to reduce costs may continue shifting toward self-funded or level-funded structures as they compare risk, savings, and control.

The bottom line: - Flowers is framing fully-insured health coverage as a costly black box, and he says employers can recover value only by seeing where the money goes.