Self-Funded vs. Fully-Insured Presentation
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Transcript Self-Funded vs. Fully-Insured Presentation
BENEFITS AND RISKS OF BEING
SELF-INSURED
LINCOLN COUNTY COMMISSIONER ROB COFFMAN
AGENDA
Understanding Health Plan Self-Funding
Advantages and Disadvantages of Self-Funding
Individual v. Joint (Multi-Employer) Plans
Healthcare Environment Post – ACA
Questions?
SELF-INSURINGSelf-Funding
HEALTH PLANS
Understanding
Self-Funding treats predictable claim cost as expenses rather than insurable risk.
Under a Self-Funded plan model an employer determines the amount of risk
appropriate for their organization.
Employers purchase Stop Loss Insurance to protect against unknown and
unpredictable catastrophic claims.
Self-Funded plans are governed by Federal ERISA instead of State insurance laws.
Governmental agencies like counties and municipals, however, are also subject to
rules from the State Risk Manager’s Office (RCW 48.62.011)
SELF-INSURING
HEALTH
PLANS
What
is Stop Loss
Insurance
Purpose:
To provide financial protection to a Self-Funded plan sponsor
Provides protection against a catastrophic event or from abnormally high
frequency/severity
Severe high dollar claims such as cancer, transplants and dialysis are considered
“shock loss” claims
The Stop Loss contract insures the Employer not the Employee
The medical plan established by the Employer accepts the responsibility for
paying providers claims but limits it’s risk with Stop Loss
Advantages & Disadvantages of Self-Funded
Health Plans
Not subject to premium taxes
Not subject to state benefit mandates
No insurer profit margin built into rates
No broker commissions on full plan
Pay only for desired services
Greater control over plan design
Employer maintains claims reserves
Access to claims data
Requires long-term commitment
More internal administration
More involvement in plan design decisions
Must contract for claims, other services
PPO discounts may be less than insurers'
Increased fiduciary liability
Variable financial risk
Still subject to ever increasing cost of healthcare claims
(no magic bullet)
Limits the number of experienced consulting brokers
Independent claims and disease management
available
TPAs offer more services than insurers
Full Credit for wellness savings
SELF-INSURING
HEALTH PLANS
Weighing
the Benefits
Risk Management – Charges, Commissions and Retentions
A Self-Funded health plan can allocate more of each dollar toward payment of
medical claims through eliminating commissions, risk charges and insurer profit.
Improved Cash Flow
Fully insured premiums are a form of pre-payment
Self-Funded plans pay as you go
Innovative Plan Document Design and Control
Freedom from state mandated benefit laws allows for flexibility in plan design
Benefits can be tailored to the working population
SELF-INSURING
HEALTH PLANS
Weighing
the Benefits
Plan Sponsor’s Experience
Employer is responsible only for the risks presented by members of the plan
Risk Control
Stop Loss coverage can limit the employers risk while allowing it to retain
control over claims and benefits
Value-Based Benefits and Wellness Programs
Flexibility to design health risk assessment & prevention and wellness tailored
to the groups demographics
Improved Claims Data History
Software and investigative techniques can help curtail spending
Savings Opportunities
Utilization of cost containment features increases savings opportunities
SELF-INSURING
HEALTH PLANS
Self-Funding
for Washington
Counties
Chapter 48.62 RCW provides authority for local
governments to individually or jointly self-insure health
care, accident, disability, death, and salary protection
benefits. RCW 48.62.011 requires prior approval for
the establishment of every individual and joint local
government self-insured employee health and welfare
benefit program. RCW 48.62.071 requires that specific
information is submitted to the state risk manager for
program approval.
Individual
v. JointHEALTH
(Multi-Employer)
Plans
SELF-INSURING
PLANS
Individual (Single-Employer) Self-Funding
Must hold 8 weeks of total expected plan expenses in reserve
Report annually to State – Report Form is located on the Local Government
Self-Insurance Program website
Aggregate Stop-Loss recommended
Joint (Multi-Employer)
Must hold 16 weeks of total expected plan expenses in reserve
Must also submit, as part of the Annual Report, prepared financial statement
In addition, audited financial statements must be provided to the State Risk
Manager
Aggregate Stop-Loss required
Changing
Landscape
of Self-Funding
SELF-INSURING
HEALTH
PLANS
According to Pricewaterhouse Coopers data, the percentage of Self-
Insured employers with fewer than 1,000 people in their health plan
programs has almost doubled – from 29% in 2008 to 48% in 2010
According to 2011 Kaiser/HRET survey of Employer/Sponsored Health
Benefits, 60% of companies Self-Insure their health benefit programs, up
from 49% in 2000
DOL Confirmed Staggering Savings under Self-Funding
Deloitte Advanced Analytical Consulting Group was quoted in a recent
Department of Labor (DOL) report that fully insured premiums increased by
$808 while self-funding only increased by $248, a difference of 326% in 2011
Current
Healthcare
Environment
SELF-INSURING
HEALTH
PLANS
Accountable Care Act
Health care reform was enacted March 23, 2010
Self-Insured plans are exempted from some ACA reforms that apply specifically
to insurers such as medical loss ratio (MLR) standards, rating restriction rules,
and insurer fees
ACA provisions specifically applicable to “small employers” range from: fewer
than 26 employees for tax credit eligibility to 100 employees or less to qualify
for exchanges
Self-Funded is cost effective at a time when traditional insurance is predicted to
become more costly due to ACA.
2014
What to Expect
SELF-INSURING
HEALTH PLANS
1.
State health insurance exchanges established
2.
Medicaid eligibility expands
3.
Large employers (50+ employees) must provide health plan or pay a fine
4.
Individuals must secure health coverage or pay penalty tax
5.
Automatic enrollment of full-time employees in an employer’s health plan required
(200+ employees)
6.
No pre-existing condition exclusion allowed
7.
Waiting period limited to 90 days
8.
Cost-sharing amounts capped and annual limits removed
9.
Maximum health premium discount for wellness program participation increased from
20-30%
10. Group health plan must report coverage by individual to IRS
11. Self-Insured plans will have to maintain certain levels of coverage in order to meet the
threshold of a qualified health plan
12. Non-discrimination rules will apply to fully-insured plans
Questions?
SELF-INSURING HEALTH PLANS
Rob Coffman
County Commissioner
Lincoln County
509-725-3031
[email protected]
Dan Fisher, CEO
EmSpring
877-550-0088
[email protected]