What Are Fully Insured Equivalents (FIE)? Self-Funded Plan Pricing Guide

What Are Fully Insured Equivalents (FIE)?

A Fully Insured Equivalent (FIE) is the self-funded health plan’s version of a monthly insurance premium. It represents the total monthly cost to operate your self-funded plan and provides an apples-to-apples comparison to traditional fully insured carrier premiums.

Understanding FIEs is critical for employers because it reveals the true cost of your self-funded plan and enables accurate budgeting and financial planning.

Need help calculating your FIE? Call Memberly at (631) 905-6555 or email dom.maggiore@memberlybenefits.com for a complimentary analysis.

Components of Fully Insured Equivalent Calculations

The FIE calculation includes four primary cost components:

1. Monthly Aggregate Factors (Claim Funding)

The projected per-employee-per-month amount needed to cover expected medical claims based on your group’s demographics and claims history.

2. Monthly Stop-Loss Premiums

Insurance premiums for both specific stop-loss (per-claimant protection) and aggregate stop-loss (total claims protection).

3. Administrative and Network Fees

TPA fees (typically PEPM), network access fees, repricing fees, and related administrative costs.

4. Vendor Service Fees

Additional costs for PBM (pharmacy benefit manager), case management, telemedicine, wellness programs, and other ancillary services.

Formula:

Monthly FIE = Monthly Agg Factors + Stop-Loss Premiums + Admin/Network Fees + Vendor Fees

This total creates your monthly plan cost, which can be compared directly to fully insured premiums for budgeting and decision-making.

Understanding Monthly Aggregate Factors: The Foundation of FIE Pricing

Aggregate factors (commonly called “agg factors”) are per-employee-per-month claim projections provided by your stop-loss carrier. They represent the amount of money that must be funded each month to cover expected medical claims.

How Aggregate Factors Work

Agg factors are NOT arbitrary numbers. They are calculated based on:

Your group’s census data – Age, gender, location, industry
Claims experience – Historical claim patterns and utilization
Plan design – Deductibles, copays, coinsurance, out-of-pocket maximums
Demographic risk – Family composition and dependent coverage

Key Characteristics of Monthly Aggregate Factors

Tiered by Coverage Level Agg factors vary by enrollment tier:

EE (Employee Only) – Lowest agg factor
EC (Employee + Children) – Typically less expensive than ES
ES (Employee + Spouse) – Higher than EC due to adult dependent
FAM (Family) – Highest agg factor

Group-Specific Pricing Unlike fully insured plans with standardized rates, agg factors are customized to your specific group’s risk profile.

Must Equal Minimum Aggregate Attachment The sum of all monthly agg factors over the 12-month plan year must equal your group’s annual aggregate deductible—the point where aggregate stop-loss protection begins.

Example: If your aggregate attachment is $1,200,000 annually, your monthly agg factors across all tiers must sum to $100,000 per month ($1.2M ÷ 12 months).

Step-by-Step: How to Calculate Monthly FIE

Calculating your Fully Insured Equivalent requires five steps:

Step 1: Determine Monthly Enrollment by Tier

Count the number of enrolled members in each coverage tier:

Employee Only (EE)
Employee + Spouse (ES)
Employee + Children (EC)
Family (FAM)

Step 2: Apply Monthly Aggregate Factors

Multiply each tier’s enrollment by its corresponding monthly agg factor:

Tier EE: 50 employees × $400 agg factor = $20,000
Tier ES: 20 employees × $800 agg factor = $16,000
Tier EC: 15 employees × $650 agg factor = $9,750
Tier FAM: 15 employees × $1,100 agg factor = $16,500
---
Total Monthly Claim Funding = $62,250

Step 3: Add Monthly Stop-Loss Premiums

Include both specific and aggregate stop-loss insurance costs:

Specific Stop-Loss Premium = $8,500/month
Aggregate Stop-Loss Premium = $3,200/month
---
Total Stop-Loss = $11,700/month

Step 4: Add Administrative and Vendor Costs

Include all TPA, network, and vendor fees:

TPA Admin Fee (100 employees × $12 PEPM) = $1,200
Network Access Fee = $500
PBM Admin = $800
Other Vendor Fees = $300
---
Total Admin/Vendor = $2,800/month

Step 5: Calculate Total Monthly FIE

Add all components together:

Monthly Claim Funding:        $62,250
Stop-Loss Premiums:           $11,700
Admin & Vendor Fees:           $2,800
---
TOTAL MONTHLY FIE =           $76,750

This $76,750 is your true monthly plan cost and can be compared to fully insured premium quotes.

Want to calculate your exact FIE? Visit memberlybenefits.com/self-funded-ppo-plans to schedule a detailed cost analysis.

Composite vs Tiered Aggregate Factors: Why Plan Design Matters

Some stop-loss carriers provide composite aggregate factors—a single PEPM factor applied uniformly across all plan designs. However, this approach has significant limitations.

The Problem with Composite Agg Factors

Composite factors assume all plan designs generate equal claim costs, which is rarely accurate:

Low Deductible Plans

Generate higher paid claims (members have less cost-sharing)
Require higher agg factors to fund expected liability
Example: $500 deductible plan may need $450 PEPM agg factor

High Deductible Health Plans (HDHP)

Generate lower paid claims (members pay more out-of-pocket before plan pays)
Require lower agg factors
Example: $3,000 deductible plan may only need $280 PEPM agg factor

Mid-Level Plans

Fall between low and high deductible plans
Generally align closer to the group average
Example: $1,500 deductible plan may need $360 PEPM agg factor

Why This Creates Funding Issues

When offering multiple plan designs (common for groups 100+ employees), using composite factors can lead to:

❌ Underfunding high-utilization plans – Low deductible plans don’t collect enough to cover their claims

❌ Overfunding low-utilization plans – HDHPs collect more than needed, subsidizing other tiers

❌ Mid-year funding gaps – If enrollment shifts between plans, total funding becomes misaligned

The Solution: Plan-Specific Agg Factors

Properly calculated FIEs use tiered and plan-specific agg factors that weight funding by:

Coverage tier (EE, ES, EC, FAM)
Plan design (deductible level)
Actual enrollment in each plan/tier combination

This ensures monthly claim funding accurately reflects expected liability.

The Enrollment Shift Problem: Maintaining FIE Equilibrium

One of the biggest challenges in self-funded plan management is maintaining adequate funding when employees change coverage during the year.

What Happens During Mid-Year Enrollment Changes

Scenario: Employees move from low-deductible to high-deductible plans mid-year

Impact on Funding:

High-deductible plans have lower monthly agg factors
Total monthly claim funding decreases automatically
Fixed costs (stop-loss, admin fees) remain unchanged
Plan becomes underfunded relative to expected claims

The Critical Issue: Your minimum aggregate deductible does NOT adjust downward when enrollment shifts. This means:

✓ You’re collecting less monthly claim funding (due to lower agg factors) ✗ Your aggregate stop-loss attachment point remains the same ✗ You may not have enough total funding to reach the aggregate deductible

Real-World Example

January enrollment:

60 employees in Low Deductible Plan ($450 agg factor)
40 employees in HDHP ($280 agg factor)
Monthly funding: (60 × $450) + (40 × $280) = $38,200

July enrollment shift:

30 employees in Low Deductible Plan
70 employees in HDHP
Monthly funding: (30 × $450) + (70 × $280) = $33,100

Result: Monthly funding drops by $5,100, but the annual aggregate deductible hasn’t changed. The plan is now underfunded by approximately $30,600 for the remaining six months.

How to Solve Enrollment Shift Issues

Employers have three options when funding drops mid-year:

Contribute Additional Funds – Make up the shortfall with employer contributions to ensure aggregate deductible is met
Adjust Employee Contributions – Increase employee premium contributions for remaining months (difficult to implement)
Use Specialized Software – Deploy monitoring tools that track enrollment changes and alert plan sponsors when adjustments are needed

Pro Tip: Leading self-funded plan administrators use real-time monitoring software to calculate funding adequacy continuously and prevent underfunding situations before they become problems.

Need help monitoring your plan’s funding adequacy? Call (631) 905-6555 to discuss Memberly’s automated tracking solutions.

Why Fully Insured Equivalents Matter for Self-Funded Employers

Understanding and calculating FIEs correctly is critical for several reasons:

1. Accurate Budget Planning

FIEs provide predictable monthly funding targets, eliminating surprise costs and enabling CFOs to forecast annual benefits expenses accurately.

2. True Cost Comparisons

FIEs enable apples-to-apples comparisons between:

Self-funded plan costs vs fully insured premiums
Multiple TPA proposals
Different plan design options
Year-over-year cost trends

3. Regulatory Compliance

Proper FIE calculations ensure your monthly claim funding meets the minimum aggregate deductible required by your stop-loss contract, preventing coverage gaps.

4. Stop-Loss Contract Alignment

FIEs confirm that your funding strategy aligns with both specific and aggregate stop-loss attachment points, maximizing your insurance protection.

5. Financial Risk Management

Accurate FIEs help employers understand their maximum risk exposure and plan for worst-case claim scenarios.

6. Audit and Transparency

Clear FIE breakdowns enable employers to verify they’re not overpaying for bundled services and can identify opportunities for vendor cost reduction.

Common FIE Calculation Mistakes to Avoid

Mistake #1: Using Composite Factors for Multi-Plan Designs

Problem: Doesn’t account for different claim patterns across plan designs
Solution: Use plan-specific and tier-specific agg factors

Mistake #2: Ignoring Mid-Year Enrollment Changes

Problem: Funding becomes misaligned as employees switch plans
Solution: Implement quarterly funding reviews and adjustment protocols

Mistake #3: Not Including All Vendor Fees

Problem: FIE appears lower than actual cost
Solution: Include all fees: PBM, telemedicine, wellness, case management, etc.

Mistake #4: Comparing FIE to Fully Insured “Employee-Only” Rates

Problem: Doesn’t account for actual tier enrollment mix
Solution: Compare total monthly FIE to total fully insured premium across all tiers

Mistake #5: Forgetting to Factor in Seasonal Enrollment

Problem: Schools, seasonal businesses have predictable enrollment fluctuations
Solution: Build monthly enrollment projections into FIE calculations

Memberly’s FIE Calculation and Monitoring Services

Calculating FIEs correctly requires expertise, especially when dealing with:

Multiple plan design options
Complex tier enrollment patterns
Mid-year enrollment shifts
Seasonal workforce changes

How Memberly Helps Employers Master FIE Management

Monthly Funding Projections We build detailed monthly funding models that account for plan design mix, tier enrollment, and expected changes throughout the year.

Real-Time Funding Adequacy Monitoring Our proprietary tools continuously track enrollment and alert you when funding adjustments are necessary to prevent underfunding.

“What-If” Scenario Modeling Considering plan design changes? We model the FIE impact of:

Deductible adjustments
Network changes
Adding/removing plan options
Employee contribution strategies

Stop-Loss Contract Validation We validate that your monthly funding aligns with minimum aggregate attachment requirements and maximizes your stop-loss protection.

Board-Ready Financial Reporting We deliver executive summaries and detailed reports suitable for CFOs, boards, and leadership teams showing:

Month-by-month funding adequacy
Projected vs actual claim spend
Surplus/deficit projections
Comparison to fully insured alternatives

Vendor Fee Optimization We break down every component of your FIE to identify opportunities for cost reduction without sacrificing plan quality.

Is Your FIE Calculated Correctly? Get a Free Analysis

Many employers discover they’ve been overfunding or underfunding their self-funded plans due to FIE calculation errors. Even small mistakes compound over 12 months.

Memberly offers complimentary FIE audits that include:

✓ Full breakdown of your current FIE components
✓ Verification that agg factors align with plan designs
✓ Comparison to market rates for stop-loss and vendor fees
✓ Funding adequacy assessment
✓ Recommendations for optimization

Ready to Get Started?

📞 Call us: (631) 905-6555
📧 Email us: dom.maggiore@memberlybenefits.com
🌐 Learn more: memberlybenefits.com/self-funded-ppo-plans
📅 Schedule your FIE audit: Contact Dom Maggiore, CEO of Memberly

Memberly will calculate your fully insured equivalent, break down your aggregate factors and stop-loss terms, and help you optimize your funding strategy for savings, compliance, and stability—even as enrollment shifts throughout the year.

Frequently Asked Questions About Fully Insured Equivalents

What is the difference between FIE and fully insured premiums?

A Fully Insured Equivalent (FIE) represents the total monthly cost to operate a self-funded health plan, including claim funding, stop-loss premiums, and administrative fees. A fully insured premium is the monthly payment to an insurance carrier that includes their profit margin, risk charges, and administrative overhead. FIEs typically run 10-30% lower than fully insured premiums because they eliminate carrier profit margins.

How often should FIE be recalculated?

FIEs should be recalculated monthly to account for enrollment changes. At minimum, conduct quarterly reviews to ensure funding adequacy. Annual reviews before renewal are critical for adjusting agg factors based on updated claims experience and demographics.

Can FIE change during the plan year?

Yes. FIE changes when enrollment shifts between coverage tiers or plan designs, when employees are added or terminated, or when vendor fees are adjusted. The aggregate factors themselves don’t change mid-year, but the total monthly funding requirement changes based on who is enrolled.

What is a good FIE compared to fully insured rates?

A competitive FIE typically runs 15-25% lower than equivalent fully insured premiums for healthy groups. The gap narrows for high-claim groups but self-funding should still show 10-15% savings. If your FIE is within 5% of fully insured rates, you may not be optimizing your self-funded plan effectively.

Do aggregate factors include stop-loss premiums?

No. Aggregate factors only represent projected claim funding. Stop-loss premiums are a separate component added to the FIE calculation. This separation is important because it allows employers to shop stop-loss carriers independently without affecting the claim funding calculation.

What happens if we don’t collect enough to meet the aggregate deductible?

If monthly claim funding falls short of the minimum aggregate deductible, the employer must contribute additional funds to cover the gap. Otherwise, aggregate stop-loss coverage won’t activate because the deductible threshold hasn’t been met. This can expose the employer to significant financial risk on high claim months.

How do high deductible health plans (HDHP) affect FIE calculations?

HDHPs have lower aggregate factors because members pay more out-of-pocket before the plan pays claims. This reduces monthly FIE costs, but requires careful monitoring. If too many employees choose HDHPs, total claim funding may drop below what’s needed to meet the aggregate deductible, creating funding gaps.

Should FIE include employee contributions or just employer costs?

FIE represents the total plan cost regardless of how it’s split between employer and employee. For budgeting purposes, many employers track both total FIE and the employer’s portion separately. When comparing to fully insured options, use total FIE to ensure accurate cost comparisons.

Memberly Benefits – Transparent Self-Funded Health Plans with Accurate FIE Calculations