National Benefits Consultants

National Benefits - Group Products

Health Insurance Self-Funding Advantages-

1.  Cash flow benefits – employers fund and manage their own claims account.

2.  No pre-payment for claims – all money stays in client’s account and only goes out when claims are processed.  The employer has the ability to build reserves.

3.  When claims experience is lower than projected, plans can build reserves to help cover future costs. In a fully insured arrangement if there are savings, the insurer keeps those funds.

4.  Lower administrative costs than a fully insured equivalent.

5.  Reduced premium tax – an employer only pay taxes on the reinsurance amount, not on the claims dollars.

6.  Ability to customize the health plan.

7.   ERISA qualified plans offer consistent benefits to all employees regardless of location and avoid burdensome state mandates.

8. Ancillary service flexibility.  MGUs and TPAs typically negotiate with multiple PBMs, PPOs, Case Management Companies, etc., to get the best possible services for the dollar. 

9.  Fully insured carriers “bundle” services and force a group to take services which may not be market competitive with other vendors on a stand alone basis.

10. The flexibility to make well informed benefit changes based upon full reporting of claims experience.

11. The group benefits directly from favorable claims experience, managed care programs, and other cost control measures.

Why suggest self-funding to your clients?

Most employer groups make the change because they become disappointed with their fully insured plan-

Ø       Fully insured plan designs remain relatively inflexible in terms of mandated state benefits

Ø       Effective cost-containment programs are not always available

Ø       Employee specific claim details is not available to effectively manage risk

Ø       The employer group is unable to create a uniform strategy to effective manage risk

Ø       Fully insured plans tend to consume dollars that could be better spent elsewhere.

How many Employer Groups Self-fund?

Ø       In 2008, 45 percent of workers with health insurance were covered by a fully insured plan

Ø       55% of workers with health insurance were covered by an employer self-insured plan

**Kaiser Family Foundation

Is It Time To Try Self-Funding?

Level Funding

Level funding is an alternative funding option. A variation of self-funding, this solution is one-of-a-kind in the marketplace. Level funding features preset monthly payments, with a high level of information and control for the client.

How level funding works

With a level funding solution, monthly payments are preset, based on the number of plan participants and total related costs (i.e., claims funding, premium and administrative fees), allowing the client to better budget their resources. Many employers enjoy the greater plan control of level funding and the opportunity to benefit from a positive claims experience through a year-end administrative fee credit.

Advantages of level funding

- Potential administrative fee credit with a positive claims experience.
- Consistent monthly payments for easy budgeting.
- Robust reporting to show group utilization and plan performance.
- Flexibility to accommodate utilization trends, Human Resource needs and inflation.
- Stop-loss insurance to limit liability.
- No state mandates mean clients can provide multiple locations with the same coverage.

Who benefits most from level funding?

A good fit for clients with employees in multiple markets that place a high value on predictable monthly budgeting and still offers the opportunity to save from a favorable claims year. The high level of reporting helps you keep an eye on how health care dollars are spent so you can adjust your plan as the economy shifts and your business grows.

Graded Funding

Graded funding, also a type of self-funding. This solution delivers robust reporting for a hands-on experience, full benefit design control and stop-loss protection to limit exposure.

How graded funding works

With graded funding, clients pay only for actual claim costs incurred and agreed upon administrative costs. If claims exceed the plan's stop-loss limits, the insurance company’s stop-loss insurance covers your claims, providing immediate protection and preserving your cash flow.

Advantages of graded funding

- Pay only for claims incurred.
- Robust reporting for a comprehensive view of health care benefit costs.
- Flexibility to accommodate for utilization trends, Human Resource needs and inflation.
- Stop-loss insurance to limit liability.
- No state mandates mean clients can provide multiple locations with the same coverage.

Who benefits the most from graded funding?

A good fit for clients who want to pay only for actual claims, but with full protection. They rely on the detailed reporting provided to analyze plan utilization and make adjustments to meet their changing needs.

Fully Insured

Fully insured is another way for our clients to fund their health care plan. Fully insured funding arrangement offers predictable monthly premiums, guaranteed protection for all covered claims and simplicity - with no additional costs.

How fully insured funding works

With a fully insured plan, the client pays the same monthly premium, regardless of the plan’s claim costs, and receives full protection, regardless of their claim status for the year.

Advantages of fully insured

- Predictable monthly premium for easy budgeting
- A strong proprietary nationwide network of health care professionals
- Award-winning health and wellness programs
- Full protection for covered claims

Who benefits most from fully insured?

A good fit for clients who like to keep it simple, and who favor predictable monthly costs, for easy budgeting. Fully insured funding is simple, easy to understand, with no surprise costs and the protection clients demand.