Self-Funding Employee Benefits: Overview by Jeanne Nicholson of CBG Benefits
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Transcript of Self-Funding Employee Benefits: Overview by Jeanne Nicholson of CBG Benefits
EMPLOYEE BENEFITS | HR COMMUNICATIONS | PAYROLL AND HRIS
Jeanne NicholsonSr. Vice President, Benefit [email protected], ext. 230http://CBGBenefits.com
Employee Benefits
Considering the Options:Self-Funded Plans
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Why Should You Consider the Self-Funded Option?
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
You Should Consider Self-Funding, If:
You’d like to reduce your healthcare costs.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
You Should Consider Self-Funding, If:
You need a better way to deal with PPACA’s impact
• Modified Community Rating Factors• Reinsurance Fee• Health Insurance Industry Fee
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
You Should Consider Self-Funding, If:
You want more control over your health plan.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
You Should Consider Self-Funding, If:
You want to offer more customized Benefit Plan choices to employees.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
The Momentum is Building
According to a 2013 Kaiser study:• Sixty-one percent of covered workers are in a self-
funded plan
• As a result of the Affordable Care Act, a growing number of firms plan to move to a self-funded option.
According to a 2013 Munich Health North America study:• 82 percent of health insurance executives
experienced a growing level of interest among employers in self-funding their group over the past 12 months
SELF-FUNDED PLANS:WHAT YOU NEED TO KNOW
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Self-Funded: What Does it Mean?
Employer assumesa portionof the risk forhealth benefits.
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Self-Funded: How is the Plan Administered?
• Options Include:
Administrative Services Only (ASO)
Third Party Administration (TPA)
Cigna, UHC, Aetna, Tufts, Blue Cross Blue Shield
BBA, Health Plans Inc.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Important Question: How does the self-funded
employer protect their organization?
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Protection against Losses
Losses will occur: Severe accident, serious illness, etc.Here are two ways to protect your business:
Specific/Individual Stop Loss Aggregate Stop Loss
100% of covered losses you pay for any individual in excess of the individual policy year deductible will be reimbursed for the remainder of the policy year.
This is a precautionary umbrella insurance to protect the organization as a whole for losses that exceed 20%-25% above the expected claim liability.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Individual & Aggregate Stop Loss
The amount funded but not reimbursed ($25,000 in this example) will apply toward the Annual Stop Loss.
Example of how a $127,000 claim would be handled:
Employer pays the deductible amount: $25,000 If the individual
Stop Loss Deductible is $25,000…
…the Insurance Company pays the excess over the deductible amount: $102,000
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Specific Stop Loss
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
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Annu
al c
laim
Dol
lars
$30K Deductible –
Claims exceeding this level are covered at 100% by the stop loss carrier.
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
$-
$100,000.00
$200,000.00
$300,000.00
$400,000.00
$500,000.00
$600,000.00
$700,000.00
$800,000.00
$900,000.00
$1,000,000.00
Months
Claims
Janu
ary
Febr
uar y
Mar
ch
April
May
June
July
Augu
st
Sept
embe
r
Oct
ober
Nov
embe
r
Dec
embe
r
Aggregate Attachment Point
CarrierReimbursement
Employer Responsibility
Aggregate Stop Loss
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Self-Funding: Advantages
• Flexibility in Plan Design• Enhanced Risk Management• Tax Savings• Retention• Additional Cash Flow• Margins - Eliminated
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Self-Funding: Disadvantages
• Risk Assumption• Employer assumes risk between the normally anticipated claim level and
Aggregate Stop Loss Coverage level
• Fiduciary Responsibility • Employer is the named fiduciary of the plan
CBG Benefits | Copyright 2014 | http://CBGBenefits.com
Final Question
Is Self-Funding the right option for your business?Contact me to find out:Jeanne NicholsonSr. Vice President, Benefit [email protected], ext. 230