Health Reimbursement

Arrangement

Level Funding

Self-Funding

Medical Management

Reference Based Pricing

Prescriptions

Find out how Metro Area Group Insurance Consultants can impact your health care benefits bottom-line through cost-savings and expense management.

Get a Call Back

Strategies

 

 

 

Companies are Stepping Away from "One Size Fits All"

 

Choosing the right type of health plan is a crucial part of the growth and long-term success of your company or organization. Because of the broad scope of control provided, the most cost-effective approach is to partially, self-fund (which is often called self-funding) your health insurance plan.

 

Changing from a one size fits all, fully-insured plan to self-funding will help you:

  • Control costs

  • Enhance your cash flow

  • Provide cost saving as a result of reduced premiums

  • Offer more flexibility in designing your benefit plan

  • Understand each element of your healthcare spend

 

When using a traditional or fully-insured insurance, you pay a premium to an insurance carrier. The premium is usually fixed for the year and is based on the number of enrolled employees.

 

With a self-funded plan, you assume more financial risk and become responsible for paying the medical and prescription claims incurred by members of your health insurance plan. (Other benefits, such as Dental, Vision and Short-Term Disability are other benefits that can also be self-funded.)

 

For example, with a fully-insured plan:

  • Your company pays a premium of $2,000,000 for its health insurance plan.

  • At the end of the year your company only had $1,500,000 in claims and expenses.

  • The insurance company keeps the $500,000 difference.

 

With a self-funded plan:

  • Your fixed costs for administering the plan is $500,000.

  • The insurance company projects your total claims will be $1,500,000.

  • Your company’s total claims end up being total $1,000,000.

  • Your company keeps the $500,000 difference.

 

While the largest employers have sufficient financial reserves to cover virtually any amount of health care costs, you can protect yourself against unpredicted or catastrophic claims by purchasing reinsurance, better known as stop-loss insurance. It reimburses you for claims above a specified dollar level.

 

All insurance plans come with associated drawbacks, under a fully-funded plan, you face large carrier fees, state regulation, and carrier profits. Similarly, under a self-funded insurance plan, your organization faces higher risk and more responsibility. By purchasing stop-loss insurance your risk is significantly mitigated. We have clients with as few as 25 employees who maintain a viable self-insured health plan and saved hundreds of thousand of dollars over the years.

 

  • Customize your benefit plan to meet the specific health care needs of your workforce.

  • Maintain control over the health plan reserves, enabling maximization of interest income - income that would be otherwise generated by an insurance carrier through the investment of premium dollars.

  • Stop pre-paying for coverage, thereby providing for improved cash flow.

  • Become exempt from conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).

  • Keep state health insurance premium taxes and fees, which are generally 2-3 percent of the premium's dollar value.

  • Implement proactive, cost containment strategies to manage the healthcare supply chain, just like you do with every other aspect of your business.

 

What is Self-Funding?

 

With a self-funded health plan, employers fund the costs of their employee benefit program and assume the responsibility for paying employee claims. Typically, they retain a third party administrator (TPA) to assist in providing administrative services for the operation of the health plan including enrollment, eligibility, claims processing and payments, COBRA, appeals, and other similar services. Self-funded health plans typically provide an employer greater control over the design, administration, and funding of their health plan.

 

In addition, self-funded health plans are generally not subject to state insurance laws and regulations or most state health insurance premium taxes. Self-funded health plans are governed under Federal Laws and Regulations such as ERISA and HIPAA. This results in a potential savings of up to 4% over a fully insured health plan. Other savings are realized through flexibility in choosing plan design options, total access and control over plan data, and the ability to customize all aspects of the health plan.

 

 

Advantages of Self-Funding

 

Lower Employee Premiums - According to the Employer Health Benefits 2010 Annual Survey by the Kaiser Family Foundation, employees in companies that have a self-funded benefits plan pay lower single/family premiums than workers in firms that are fully insured.

 

Plan Control and Design - The employer retains full control and customization of their health plan's design. This allows employers to create a custom plan that best accommodates their employees' unique health needs and requirements.

 

Removal from State Mandated Benefits - Unlike fully-insured plans, self-funded employee benefit plans are governed under ERISA (Employee Retirement Income Security Act of 1974) and exempt from most state insurance laws and rules, mandated benefits, reserve requirements, and premium taxes.

 

More Cash Flow Control - Under a self-funded plan, monthly plan payments for claims are no longer “pre-paid” to carriers in the form of premiums and reserves. Claims are only paid as they are received by the TPA and billed to the plan. Employers therefore will have access to cash reserves they previously would have been unable to access. Furthermore, if claims are lower than expected, the employer retains every dollar of the savings, savings that would have previously gone to their carrier’s profits.

 

Better Data - Another benefit of a self-funded health plan is that an employer’s financial risk is limited to claims for its own members and not commingled with the carrier’s risk pool. In addition, rates and renewals are based on the plan’s own experience and not on national morbidity tables or pools used by most fully insured carriers.

 

Decreased Operating Costs - Administrative costs for self-funded plans are generally less than those for fully insured plans. The main reason is that the employer is no longer paying for the insurance carrier’s overhead and profit margin.

Self-Funding

MAGIC Health Insurance Solutions

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH

43074

(844) 800-MAGIC

(740) 965-3560

Strategies

 

 

 

Companies are Stepping Away from "One Size Fits All"

 

Choosing the right type of health plan is a crucial part of the growth and long-term success of your company or organization. Because of the broad scope of control provided, the most cost-effective approach is to partially, self-fund (which is often called self-funding) your health insurance plan.

 

Changing from a one size fits all, fully-insured plan to
self-funding will help you:

  • Control costs
  • Enhance your cash flow
  • Provide cost saving as a result of reduced premiums
  • Offer more flexibility in designing your benefit plan
  • Understand each element of your healthcare spend

 

When using a traditional or fully-insured insurance, you pay a premium to an insurance carrier. The premium is usually fixed for the year and is based on the number of enrolled employees.

With a self-funded plan, you assume more financial risk and become responsible for paying the medical and prescription claims incurred by members of your health insurance plan. (Other benefits, such as Dental, Vision and Short-Term Disability are other benefits that can also be self-funded.)

 

For example, with a fully-insured plan:

  • Your company pays a premium of $2,000,000 for its health insurance plan.
  • At the end of the year your company only had $1,500,000 in claims and expenses.
  • The insurance company keeps the $500,000 difference.

 

With a self-funded plan:

  • Your fixed costs for administering the plan is $500,000.
  • The insurance company projects your total claims will be $1,500,000.
  • Your company’s total claims end up being total $1,000,000.
  • Your company keeps the $500,000 difference.

 

While the largest employers have sufficient financial reserves to cover virtually any amount of health care costs, you can protect yourself against unpredicted or catastrophic claims by purchasing reinsurance, better known as stop-loss insurance. It reimburses you for claims above a specified dollar level.

 

All insurance plans come with associated drawbacks, under a fully-funded plan, you face large carrier fees, state regulation, and carrier profits. Similarly, under a self-funded insurance plan, your organization faces higher risk and more responsibility. By purchasing stop-loss insurance your risk is significantly mitigated. We have clients with as few as 25 employees who maintain a viable self-insured health plan and saved hundreds of thousand of dollars over the years.

 

  • Customize your benefit plan to meet the specific health care needs of your workforce.
  • Maintain control over the health plan reserves, enabling maximization of interest income - income that would be otherwise generated by an insurance carrier through the investment of premium dollars.
  • Stop pre-paying for coverage, thereby providing for improved cash flow.
  • Become exempt from conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).
  • Keep state health insurance premium taxes and fees, which are generally 2-3 percent of the premium's dollar value.
  • Implement proactive, cost containment strategies to manage the healthcare supply chain, just like you do with every other aspect of your business.

 

What is Self-Funding?

 

With a self-funded health plan, employers fund the costs of their employee benefit program and assume the responsibility for paying employee claims. Typically, they retain a third party administrator (TPA) to assist in providing administrative services for the operation of the health plan including enrollment, eligibility, claims processing and payments, COBRA, appeals, and other similar services. Self-funded health plans typically provide an employer greater control over the design, administration, and funding of their health plan.

 

In addition, self-funded health plans are generally not subject to state insurance laws and regulations or most state health insurance premium taxes. Self-funded health plans are governed under Federal Laws and Regulations such as ERISA and HIPAA. This results in a potential savings of up to 4% over a fully insured health plan. Other savings are realized through flexibility in choosing plan design options, total access and control over plan data, and the ability to customize all aspects of the health plan.

 

Advantages of Self-Funding

 

Lower Employee Premiums - According to the Employer Health Benefits 2010 Annual Survey by the Kaiser Family Foundation, employees in companies that have a self-funded benefits plan pay lower single/family premiums than workers in firms that are fully insured.

 

Plan Control and Design - The employer retains full control and customization of their health plan's design. This allows employers to create a custom plan that best accommodates their employees' unique health needs and requirements.

 

Removal from State Mandated Benefits - Unlike fully-insured plans, self-funded employee benefit plans are governed under ERISA (Employee Retirement Income Security Act of 1974) and exempt from most state insurance laws and rules, mandated benefits, reserve requirements, and premium taxes.

 

More Cash Flow Control - Under a self-funded plan, monthly plan payments for claims are no longer “pre-paid” to carriers in the form of premiums and reserves. Claims are only paid as they are received by the TPA and billed to the plan. Employers therefore will have access to cash reserves they previously would have been unable to access. Furthermore, if claims are lower than expected, the employer retains every dollar of the savings, savings that would have previously gone to their carrier’s profits.

 

Better Data - Another benefit of a self-funded health plan is that an employer’s financial risk is limited to claims for its own members and not commingled with the carrier’s risk pool. In addition, rates and renewals are based on the plan’s own experience and not on national morbidity tables or pools used by most fully insured carriers.

 

Decreased Operating Costs - Administrative costs for self-funded plans are generally less than those for fully insured plans. The main reason is that the employer is no longer paying for the insurance carrier’s overhead and profit margin.

Self-Funding

Health Reimbursement

Arrangement

Level Funding

Self-Funding

Medical Management

Reference Based Pricing

Prescriptions

Find out how Metro Area Group Insurance Consultants can impact your health care benefits bottom-line through cost-savings and expense management.

Self-Funding

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH

43074

(844) 800-MAGIC

(740) 965-3560

Self-Funding

Companies are Stepping Away from "One Size Fits All"

 

Choosing the right type of health plan is a crucial part of the growth and long-term success of your company or organization. Because of the broad scope of control provided, the most cost-effective approach is to partially, self-fund (which is often called self-funding) your health insurance plan.

 

Changing from a one size fits all, fully-insured plan to self-funding will help you:

  • Control costs
  • Enhance your cash flow
  • Provide cost saving as a result of reduced premiums
  • Offer more flexibility in designing your benefit plan
  • Understand each element of your healthcare spend

 

When using a traditional or fully-insured insurance, you pay a premium to an insurance carrier. The premium is usually fixed for the year and is based on the number of enrolled employees.

 

With a self-funded plan, you assume more financial risk and become responsible for paying the medical and prescription claims incurred by members of your health insurance plan. (Other benefits, such as Dental, Vision and Short-Term Disability are other benefits that can also be self-funded.)

 

For example, with a fully-insured plan:

  • Your company pays a premium of $2,000,000 for its health insurance plan.
  • At the end of the year your company only had $1,500,000 in claims and expenses.
  • The insurance company keeps the $500,000 difference.

 

With a self-funded plan:

  • Your fixed costs for administering the plan is $500,000.
  • The insurance company projects your total claims will be $1,500,000.
  • Your company’s total claims end up being total $1,000,000.
  • Your company keeps the $500,000 difference.

 

While the largest employers have sufficient financial reserves to cover virtually any amount of health care costs, you can protect yourself against unpredicted or catastrophic claims by purchasing reinsurance, better known as stop-loss insurance. It reimburses you for claims above a specified dollar level.

 

All insurance plans come with associated drawbacks, under a fully-funded plan, you face large carrier fees, state regulation, and carrier profits. Similarly, under a self-funded insurance plan, your organization faces higher risk and more responsibility. By purchasing stop-loss insurance your risk is significantly mitigated. We have clients with as few as 25 employees who maintain a viable self-insured health plan and saved hundreds of thousand of dollars over the years.

 

  • Customize your benefit plan to meet the specific health care needs of your workforce.
  • Maintain control over the health plan reserves, enabling maximization of interest income - income that would be otherwise generated by an insurance carrier through the investment of premium dollars.
  • Stop pre-paying for coverage, thereby providing for improved cash flow.
  • Become exempt from conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).
  • Keep state health insurance premium taxes and fees, which are generally 2-3 percent of the premium's dollar value.
  • Implement proactive, cost containment strategies to manage the healthcare supply chain, just like you do with every other aspect of your business.

 

What is Self-Funding?

 

With a self-funded health plan, employers fund the costs of their employee benefit program and assume the responsibility for paying employee claims. Typically, they retain a third party administrator (TPA) to assist in providing administrative services for the operation of the health plan including enrollment, eligibility, claims processing and payments, COBRA, appeals, and other similar services. Self-funded health plans typically provide an employer greater control over the design, administration, and funding of their health plan.

 

In addition, self-funded health plans are generally not subject to state insurance laws and regulations or most state health insurance premium taxes. Self-funded health plans are governed under Federal Laws and Regulations such as ERISA and HIPAA. This results in a potential savings of up to 4% over a fully insured health plan. Other savings are realized through flexibility in choosing plan design options, total access and control over plan data, and the ability to customize all aspects of the health plan.

 

Advantages of Self-Funding

 

Lower Employee Premiums - According to the Employer Health Benefits 2010 Annual Survey by the Kaiser Family Foundation, employees in companies that have a self-funded benefits plan pay lower single/family premiums than workers in firms that are fully insured.

 

Plan Control and Design - The employer retains full control and customization of their health plan's design. This allows employers to create a custom plan that best accommodates their employees' unique health needs and requirements.

 

Removal from State Mandated Benefits - Unlike fully-insured plans, self-funded employee benefit plans are governed under ERISA (Employee Retirement Income Security Act of 1974) and exempt from most state insurance laws and rules, mandated benefits, reserve requirements, and premium taxes.

 

More Cash Flow Control - Under a self-funded plan, monthly plan payments for claims are no longer “pre-paid” to carriers in the form of premiums and reserves. Claims are only paid as they are received by the TPA and billed to the plan. Employers therefore will have access to cash reserves they previously would have been unable to access. Furthermore, if claims are lower than expected, the employer retains every dollar of the savings, savings that would have previously gone to their carrier’s profits.

 

Better Data - Another benefit of a self-funded health plan is that an employer’s financial risk is limited to claims for its own members and not commingled with the carrier’s risk pool. In addition, rates and renewals are based on the plan’s own experience and not on national morbidity tables or pools used by most fully insured carriers.

 

Decreased Operating Costs - Administrative costs for self-funded plans are generally less than those for fully insured plans. The main reason is that the employer is no longer paying for the insurance carrier’s overhead and profit margin.

 

 

Employee Benefit Services

MAGIC Health Insurance Solutions

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH 43074

(844) 800-MAGIC

(740) 965-3560