Does Anyone Know of a Health Carrier for an Association?

[RJT Consulting]

We have been approached by an association needing health insurance for their members. There is no employer/employee relationship here. They simply pay dues each month and are part of the association. They had this coverage via United but they have pulled out of Illinois. Anyone?

Bob

 

[somarco]

It is almost impossible to find a carrier willing to underwrite health insurance for an association. We used to do them all the time under a self funded scenario but some of them got in trouble and the entire deal blew up for everyone.

The few true group plans around for associations are pretty much limited to associations that have been around for a while, are white collar, and have a track record with claims history, enrollment, etc for the health plan.

What kind of association is this? Was the UHC plan group or individual policies?

 

[DS4]

Association business is adverse selection at it's finest. If the association offers group coverage to its members, the sickest and uninsurable will be the only enrollee's. Why? Because the people in good health will obtain underwritten personal plans for a lot less cost.
The only exception, like mention above, are certain white collar associations like CPA's, Lawyers, Realtors, etc.

 

[stuy119]

Do you mean UniCare?

 

[RJT Consulting]

Sorry, I meant Unicare. This is a horse breeders association. I have over 5000 covered self-funded lives and contemplated taking them down that road but the adverse selection issue is killing me. I only self-fund with BCBS and they want nothing to do with an association either fully or self-funded.

 

[somarco]

IF you can find a carrier willing to take over, you have to restructure the plan from the ground up. I did this with the NC Bar a few years ago and turned it around in a little over a year.

If you are not using age bands, make the switch. Use 3 yr rather than 5 yr bands.

Change the plan design to higher deductibles. Minimum $5,000. If you want options, offer two. A copay plan with very high copays ($50 doc, 3 tier Rx something like $10/$75/$150).

You also will need a two tier rate structure to encourage new entrants and use gatekeeper questions on the new entrant rates. Lower manual rates for new entrants, experience based rates on the existing group.

Rewrite the stop loss on a 12/15 basis for first year and renewal.

The only way to save a group like this is putting the existing members on a sound footing from an actuarial position and encouraging new blood.

 

[RJT Consulting]

Interesting points. I've thought about a few of those but not the 12/15 runout. The problem we have is that our health care in Illinois (Individual wise) is very competitive. I have numerous groups that I've taken over by moving them from group to individual. This particular association is right at 200 members to draw from and after participation, they have lost all credibility. We're talking 30% here. Blending that with manual rates creates a lot of rate uncertainty.

I understand that is simply one of the pitfalls here with trying to accomplish this but I am going to have to figure out where my money is in this. A per head fee is not going to work here. Not for the amount of work this is going to require.

 

[ABC]

You went from 5000 members to 200 on the health plan.

What happen?

If they are already self funded what about a TPA? I am sure you could find a "chop shop" that will take the case.

What kind of liability would you the broker take on designing a self funded plan for an association?
I see the reason for 12/15 all day long but I don't understand how you could design a plan that would not have risk of imploding?

 

[somarco]

The only way to preserve the integrity of the group and encourage new growth is by using two tier rates. One rate basis for the existing members, another, with lower (manual) rates for new entrants. You need to couple this with gatekeeper questions.

 

[ABC]

In my state about 10 years ago there was a construction trust that went bust. It was an association plan that was self funded. In the end the trust owed about $1.3 million in claims and could not pay for it.

The state ended up going after the agents that sold the product along with the guys that developed it.