I fully agree. It is much easier now since small group reform ushered in GI in the under-50 markets. I am not saying that all smaller/mid-size groups should adopt self-funding, but when structured correctly and when the owners/HR people understand it, there should not be too many problems.
Level Funded Health Plans
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I fully agree. It is much easier now since small group reform ushered in GI in the under-50 markets. I am not saying that all smaller/mid-size groups should adopt self-funding, but when structured correctly and when the owners/HR people understand it, there should not be too many problems.
Small employers should buy a fully insured $10,000 HDHP & fund an HRA if they want the advantages of self funding.
I had one Medicare enrolled spouse file the claim with Medicare. Medicare paid the claim and dumped it back on the employer 3 years later after an audit. Federal law says that the employer is responsible.
Employer had was a fully insured contract so the carrier negotiated with Medicare and paid it. The claim was filed outside the stop loss dates (say 12/12 or 12/15) and the employer would have had to pay it. The claim was small but it could have been a heart, cancer or joint replacement. ASO doesn't work so well there.
I know of 1 case that doesn't buy even aggregate SL only admin. They say it has always worked. They use PHCS which has fewer & smaller discounts than the majors. You can't help everyone.
Junkman, I don't necessarily disagree with your strategy, but to say that small employers should adopt that strategy is questionable at best.
Your strategy is limited to a select few groups in that market size range. The level premium s/f, with terminal protection, is a much safer approach to s/f than your solution. So while the employer pays a little more (load) they sleep better at night. Your outlined strategy can be a good fit for groups that have a better understanding of self-funding and willing to take more risk.
Each of the alternative risk strategies (level premium/spagg, agg only, cost+, Captive, etc.) available offer different risks/rewards and could work well within this market.
Your strategy is limited to a select few groups in that market size range. The level premium s/f, with terminal protection, is a much safer approach to s/f than your solution. So while the employer pays a little more (load) they sleep better at night. Your outlined strategy can be a good fit for groups that have a better understanding of self-funding and willing to take more risk.
Each of the alternative risk strategies (level premium/spagg, agg only, cost+, Captive, etc.) available offer different risks/rewards and could work well within this market.
Leevena, people get into trouble with lots of plans. The Medicare claim I noted above was small and the employer could easily have handled it. It could also have easily been a large claim filed after the stop loss ended. Many employers don't have an extra $100,000 laying around to cover an old claim that should have been covered by insurance.
Federal law says that the claim is the Employer's responsibility if the employer is primary. Many businesses can understand stop loss AND they can also get caught.
I've seen TPAs promote self funding and claim that the ability to have a higher spec on a sick individual is a benefit. They also use networks that don't have as muck discounts as say BC, UHC or Cigna. When this is the case, admin may be low but that doesn't make up for paying 15% more on claims.
Blue Cross gives 100% credibility to claims on groups with ~ 800 members. I calculate only ~ 65% creditable using a calculated rolling 12 month claim/member.
Unfortunately, all of the carriers simply trend from the end of the most recent claim year. That results in continual under and over pricing next year's plan.
When an employer says they had a good year and received a flat renewal, I say they paid too much last year. Renewal calculations bear this out.
The only way I've figured out to beat it is self funding and paying claims as incurred. That brings the iinherent problems with self funding. Carriers all prefer to collect their admin fees and let the client take the risk.
You can use the HDHP as a spec & agg SL but most carriers don't go high enough on max deductible. Employees don't know how to negotiate with providers so agreed: that strategy only works in certain instances.
I read where average family premium is $18,000. Our agency keeps it at $7,000 here. Last year 1 member incurred $100,000 in claims and paid $4000 OOP. Pretty good since this year they'll only have about $500.
Federal law says that the claim is the Employer's responsibility if the employer is primary. Many businesses can understand stop loss AND they can also get caught.
I've seen TPAs promote self funding and claim that the ability to have a higher spec on a sick individual is a benefit. They also use networks that don't have as muck discounts as say BC, UHC or Cigna. When this is the case, admin may be low but that doesn't make up for paying 15% more on claims.
Blue Cross gives 100% credibility to claims on groups with ~ 800 members. I calculate only ~ 65% creditable using a calculated rolling 12 month claim/member.
Unfortunately, all of the carriers simply trend from the end of the most recent claim year. That results in continual under and over pricing next year's plan.
When an employer says they had a good year and received a flat renewal, I say they paid too much last year. Renewal calculations bear this out.
The only way I've figured out to beat it is self funding and paying claims as incurred. That brings the iinherent problems with self funding. Carriers all prefer to collect their admin fees and let the client take the risk.
You can use the HDHP as a spec & agg SL but most carriers don't go high enough on max deductible. Employees don't know how to negotiate with providers so agreed: that strategy only works in certain instances.
I read where average family premium is $18,000. Our agency keeps it at $7,000 here. Last year 1 member incurred $100,000 in claims and paid $4000 OOP. Pretty good since this year they'll only have about $500.
Sorry for confusion. My concern was not with the medicare issue, rather buying the HDHP and HRA without any agg for ALL groups. I thought you were advocating for all. Not a big deal. Have a good day.
Michelle Chase
Expert
- 22
I worked for a Stop Loss Carrier from 2000-2015 on the sales side. We too tried a Mini-Med Plan and just like the others ran terribly and sold it off.
The company I am working for now has created Plans that mirror a traditional Health Plan and is customizable. We are the only company that offers this. I would love to share this with the forum as not many really know about us. We have been in business since 1991. We create and customize plans and fully administer them. Our customer service is like no other.
The company I am working for now has created Plans that mirror a traditional Health Plan and is customizable. We are the only company that offers this. I would love to share this with the forum as not many really know about us. We have been in business since 1991. We create and customize plans and fully administer them. Our customer service is like no other.
Michelle Chase
Expert
- 22
I didnt say I sell self funded. I said I worked in the industry for 15 years. We have Metallic Plans that provide cost savings and relief to their traditional medical plan and level funded plans for small companies who logistically cant be self funded.
Think of it as a band-aid, just pull it off quickly and avoid the pain. Lol
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Michelle Chase
Expert
- 22
I totally understand your skepticism. Its truly frustrating especially in your position. I have friends that have been in the industry 25 years there are just waiting to retire. There is no fix anytime soon with the way things are currently. I am here to try and help as many as I can. I learn something new everyday from people like you. There is no obligation or contracts. Send me your worst headache case...I will help you see what we can do. I do not need any PHI info...just current plan design and tier breakout.
