As health care costs and health insurance premiums continue to rise at an alarming rate, many employers have asked what other options are available. For some employers, self-insuring (or “self-funding”) might be an option to explore.

This type of program is called self-funding because it is a different method of paying for the health claims incurred in your plan. It differs from traditional fully-insured plans in several ways. One is the flexibility it offers employers in determining plan design. The plan can be a duplication of the current insured benefits, or it can be more “custom designed” to meet specific goals and needs.

The plan can be designed to lower claim costs and utilization by implementing targeted cost containment features, or it can offer a wider selection of benefit offerings than may be available “off the shelf”. Self-Funding also gives the plan sponsor greater control over the day-to-day activity of the plan. For employees, the funding mechanism used is transparent. They still seek medical care and the plan pays for the majority of the costs.

Typically, Plan Sponsors hire a Third-Party Administrator (TPA) to operate the plan. This involves all aspects of “running” a plan typically handled by an insurance company in a fully funded model (without accepting the risk); paying claims, reporting, maintaining eligibility, billing and collecting the premiums and fees. The TPA also prepares the Plan Document and Summary Plan

Descriptions, which contain all of the provisions of the plan including eligibility, coverage and termination as required by ERISA.

Excess Risk (Stop-Loss) insurance is typically arranged to protect the plan against extreme losses. Securing this coverage limits the company to a maximum cost. The amount of risk to be insured is usually a function of the size of the employer, nature of business, plan of benefits, the expected claims experience and the risk tolerance of the employer.

Stop-Loss insurance, available through a number of insurance and re-insurance companies, are offered in two forms:

Specific Stop-Loss Insurance – provides protection when covered claims during the policy year for any individual exceed an agreed limit (i.e. $50,000 per individual) thus “Stopping the Losses” for the plan.

Aggregate Stop Loss Insurance – provides protection when all covered claims during the policy year (all covered employees and eligible dependents) exceed the Annual Aggregate Stop Loss Limit.

Why You Should Consider Self-Funding Your Company’s Health/Dental Benefits

Cash Flow Considerations

• Fund your claims as they are incurred rather than through a monthly premium

• Your claims liability is capped on an individual member and on a total group basis through a reinsurance arrangement

• If claims are less than the expected amount, savings are accumulated in your accounts

• If claims are more than the expected amount, you are reimbursed by the reinsurer. Since you control your funds longer into the year, you could earn more interest on your money

Flexibility

• Plan Designs – Self Funding allows you the freedom to design your own plans. This gives a company the ability to exclude benefits (i.e. state mandated) and add benefits (i.e. wellness programs) as they see fit

• Monitoring – Know where your money is going by monitoring your own group’s experience by finding out how employees are filing claims and what type of claims are being incurred

Save Money

• TPA’s, third party administrators, charge less money to process your claims than insurance companies

• An insurance company requires a profit to take the risk in paying your claims. This profit is eliminated

• By designing your own benefit plan, you can avoid coverages that were required by either the insurance company or the state

Mayer Rispler, through American Plan Administrators LLC (APA) is a fully integrated TPA firm providing complete TPA services including:

Claims Processing – With implementation of our state-of-the-art claim management software, accurate and rapid claim processing is assured.

These include online repricing, auto-adjudication, and scanned/formatted claims. Our sophisticated electronic system detects and controls utilization by effectively screening provider billing practices. In turn, our clients realize significant savings.

Customized Plan Design – We tailor a plan to meet your unique needs. This flexibility means you can design a plan that works best for you and your employees, without the constraints imposed by traditional health insurance companies.

Local and National Networks – Today, PPO’s are the fastest developing healthcare choice of businesses of all sizes; they outpace even HMO growth.

Our experience in PPO network development provides an invaluable resource for clients who look to their network for cost savings. Our selection of the best-of-breed national and regional provider networks allows your employees access to care throughout the country while providing you with substantial discounts anywhere in the nation.

Cutting Edge Reporting Technology – The final step in benefit management comes from effective and useful reports. We have invested heavily in mainframe hardware systems and have developed software reporting technology that tracks the many complex transactions that make up healthcare costs.

Utilization Management – Our utilization management partners provide key services to reduce your costs and improve quality of care. These include clinical guidelines and large case and disease management.

Clinical Guidelines – The nurses who approve care during the precertification process use the most current clinical guidelines, avoiding unnecessary hospital admissions, improving referral management and protecting your employees from unnecessary invasive medicine. As a result, hospital days are reduced and the savings is passed on to you.

Reinsurers/Stop Loss Carriers – We work with many “A” rated reinsurers who can help protect you against risk from catastrophic and aggregate claims.

Our extensive claims management capabilities enable us to offer competitive premiums in this area.

Please call us at (888) 624-6300.

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