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Does self-funding lower the cost of health coverage?
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Yes. Reduction and administration costs, hands on management, the redirection in premium taxes, cash flow management and proper plan design, all lead to savings. Insurance companies have the advantage of size and often times are more efficient in the costs of administration. This efficiency is more than offset by large company overhead (home office costs, advertising, etc.). The end result is that the self-funded plans administered by hands-on TPAs will be less expensive. |
What size employers use self-funding?
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While most people think only large employers use self-funding, the truth is that the greatest need for self-funding has been among the smallest employers. They are the ones who need the cost efficiency. |
Why does self-funding work so well for small employers?
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The growth and maturity of the TPA and stop-loss insurance market has provided a very cost-effective way for small employers to use the advantages of self-funding. |
How many people receive coverage through self-insured plans?
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According to a 1998 report by the Employee Benefit Research Institute (EBRI), approximately 50 million employees and their dependents receive benefits through self-insured health plans sponsored by their employers. This represents 33% of the 150 million total participants in private employment-based plans nationwide. |
What is the minimum number of lives you'll insure?
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Our carriers have provided coverage for groups with as few as 15 enrollees, but preferably 35 or more employees participating. |
Q. With 150 employees is a self-funded health plan something that I should consider?
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A. Yes. A properly designed self-funded health plan, in conjunction with a well-designed employee benefit program can save employers money. Employers with as few as 35 employees can also enjoy the savings that these programs can create. Implementation is relatively easy and the availability of large Preferred Provider Organizations (PPO) creates a health plan that is readily acceptable at numerous well-recognized medical facilities while passing on substantial medical cost savings to the employer. In addition, self-funded health plans usually deliver better, more personalized service to employees. |
Q. What laws must self-insured health plans comply with?
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A. Self-insured plans come under all applicable federal laws, including the Employee Retirement Income Security Act (ERISA), Health Insurance Portability and Accountability Act (HIPAA), Consolidated Omnibus Budget Reconciliation Act (COBRA), and the American with Disabilities Act (ADA), and the Age Discrimination in Employment Act (APEA). |
Will Self-Funding require a redesign of my existing health Plan?
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No change will be required. If any health plan changes are made they must be set forth in a Plan Document. |
Will other benefits, such as Life Insurance, be affected by Self-Funding the health Plan?
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No. Life Insurance and other benefits will not be affected. |
How do I handle employee contributions in a Self-Funded Plan?
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Employees can pay for medical coverage on a pre-tax basis by payroll deduction. Employers will handle employee contributions the same as if they were fully insured. |
What are the perceived disadvantages of Self-Insurance?
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A well-managed Self-Insured medical program should result in cost savings and the implementation of a health Plan program better tailored to suit the needs of your industry. Poor advice or poor claim administration can have adverse consequences. Any attempt to administer internally poses several problems, including HIPAA privacy issues. There could be an over-utilization of internal personnel and systems. Internal job performance evaluation of those performing such a specialized and technical function could be extremely difficult. Additionally, Stop Loss coverage only reimburses an employer, so catastrophic claims must first be paid by the employer within the Plan year. |
I just received a huge premium rate increase from my present insurer. Can self-funding help me save money?
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The answer depends on why you received the increase. If you simply have a lot of claims, you are probably just as well off where you are now. On the other hand, if your group is in better than average health and your good claims experience was distorted by a catastrophic loss, self-funding may be for you. Even groups that simply have a lot of claims may benefit from self-funding because of more timely and comprehensive claims reports. Excessive utilization of certain benefits can be promptly corrected and immediately implemented. |
Are there any industries that are excluded from Self Funding?
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No. |
Are the carriers you represent financially sound?
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Yes. All of our Reinsurance carriers are financially sound and “A” rated or higher. |
What documentation is required from the Administrator for a specific claim?
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Proof of eligibility, individual name, date of service, amount billed, proof of amount paid, service codes, enrollment form and sometimes payroll report. |
Is aggregate liability reduced by specific stop-loss payments by the reinsurer?
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No, specific reinsurer stop loss payments are not applied toward the aggregate liability. |
What is your average turnaround time for payment of Specific and Aggregate Reinsurance claims?
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A Specific claim should take 7-14 days. An aggregate claim can take up to 45 days from the end of the plan year. A monthly accommodation aggregate claim can take 7-14 days for reimbursement. Quality reinsurers reimburse claims promptly and reliably. |
What is the role of the employers plan document?
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The employer's plan document defines the benefits offered to the employees and is critical in determining liability under the stop-loss plan. Because the employer has such great latitude in designing the plan, there may be elements in the document that are not included under the stop-loss coverage. The plan document must be approved by the underwriter, for the carrier, in order to affect the stop-loss coverage. Changes in the plan document after its initial approval must be agreed to by the parties before their inclusion in the stop-loss coverage. |
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