Transcript Self-Funded Plans (Power Point)

Self-Funded Plans
Presented by
Insurance4Dallas
What Laws are Subject to Self-Funded Plans?
Self-Funded plans, unlike traditional health Plans, are
not subject to state laws. These plans are governed by
federal law through the jurisdiction of the US
Department of Labor under the “Employee Retirement
Income and Security Act of 1974” (ERISA).
Who Issues a Self-Funded Plan?
In most cases, Self-Funded Health plans are issued
through a Third Party Administrator (TPA), which
manages a three prong arrangement consisting of
fulfillment of benefits, monthly premium payments and
claim transactions which are transparent to the
Employer.
Self-Funded Plan Defined
In summary, a Self-Funded Health Insurance plan is an
arrangement between:
• A Health Insurance Company
• A Third Party Administrator
• The Employer
What is the Employer’s Responsibility?
The Employer will make regular monthly premium
payments to the TPA as they would normally for an
insurance policy. However, premium payments will be
allocated to three unique financial buckets overseen by
the Third Party Administrator.
The “Three Unique Financial Buckets”?
• Stop Loss Insurance Fund
• The Administrative Fund
• The Claims Fund
Claims Fund =
Administrative Fund +
Stop Loss Insurance +
Total
Premium
The Employer’s Responsibility
The Employer provides Health Benefits to their
employees with the Employer’s own funds, designated
or accumulated via monthly premiums to their Claims
Fund, one of the unique financial buckets managed by
the Third Party Administrator.
Employer’s Claim Fund
Do I Have Refundable Premiums?
In addition, money contributed to the Claim Fund’s
Bucket during the preceding year is refundable,
depending on how much of it was used to pay claims
after individual deductibles are used.
Business Owner
What is the Employer’s Risk?
The Employer’s risk is limited by the amount of money
accumulated or targeted by their annual contributions
to the Claims Fund ONLY!
Risk Management
How Does Stop Loss Insurance Work?
Medical Bills that accumulate beyond the amount of
savings in the Claims Fund, are covered by “Stop Loss
Insurance” (SLI) premiums. SLI premium is one of the
three unique financial buckets and absorbs all
additional costs not covered by the Claims Fund.
Stop Loss Premiums
How are Medical Claims Paid?
Medical Claims are paid through and managed via a
Third Party Administrator, of which the insurance
company has issued a contract to manage all of their
Self-Funded policies. This too is one of the three
unique financial buckets paid with premiums.
Third Party Administrator
Why Do Self-Funded Plans Cost Less?
All of the preceding arrangements combined reduces
the overall costs of health insurance to an employer. In
addition, unlike other plans issued via the Patient
Protection Affordable Care Act (PPACA), these Plans
may not include all the “Ten Essential Health Benefits”
and are medically underwritten, which reduce costs.
Unique Features of a Self-Funded Plan
• 1099 Employees are eligible
• Full Time work is 20 to 40 hours per week
• Can cover employees at multiple locations
• Four Tier Rates
• Number of Children Impacts Rates
What is the Maximum Cost on Claims ?
In Addition, ERISA managed policies mandate SelfFunded plans not exceed the maximum costs for claims
to consumers per calendar year, which is $6350 for an
individual and $12,700 for a family (in-network only).
This is the same mandate in the PPACA.
What are the Advantages of a Self-Funded Plan?
• May reduce Monthly Premium Costs
• May get Premium Dollars Back at the End of the Year
• Agents are free to be creative and offer other ways to
reduce cost, such as eliminating your deductible.
How Else May We Reduce Costs?
Ask Your Agent About Insurance4Dallas
John (Rick) Thornton
(972) 219-6004
[email protected]
• High Deductibles
• GAP Insurance