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The Basics of Self Funded Health Plans for Small Employers 11084s1212 Edition 12.18.12 Brought to you by: Allied National February 2014.

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Presentation on theme: "The Basics of Self Funded Health Plans for Small Employers 11084s1212 Edition 12.18.12 Brought to you by: Allied National February 2014."— Presentation transcript:

1 The Basics of Self Funded Health Plans for Small Employers 11084s1212 Edition 12.18.12 Brought to you by: Allied National February 2014

2 Who is Allied? Why Self Funding Today? Affordable Care Act Impact What is Self Funding? Is Self Funding Right for YOU? What is ERISA? What is Funding Advantage? Underwriting Self Funding Next Steps Topics Covered Today

3 3 Allied National Overland Park, Ks. 2 nd generation family-owned business Founded 1970 Insurance Administrator Our Allied National Culture Innovation Stability Service

4 Why Would a Small Business Want to be Self Funded? 4 Projected Self Funding Costs

5 Increases Cost Adverse Impact of Affordable Care Act on Fully Insured Employers Community rating 3:1 age slope rating Pre-ex included Minimum essential coverage Coverage mandates Guarantee Issue Premium taxes 5

6 What is Self Funding? Fully Insured Risk bearer is the insurance company All RISK transfers to insurance company Self Funded Employer is the risk bearer! Claims paid from employers claims fund Employer hires/assigns a claims administrator to pay claims Employer purchases Stop Loss Insurance 6

7 Stop Loss Insurance Specific Stop Loss Claims paid by carrier when an individual’s claims exceed a set dollar amount Aggregate Stop Loss Claims paid by carrier when the group’s total claims exceed a set dollar amount Employer’s risk is minimized 7

8 Why Self Funding Long Term – it’s the most cost effective way to finance a group health plan Eliminates insurance company profit Eliminates state insurance premium taxes Allows employer to take control of group benefit plan Money not spent on claims belongs to the employer – not the insurance company Avoids many negative impacts of ACA 8

9 Sample Small Employer Self Funded Program – 55 lives

10 Self Funded Claim Payment Sample $60,000 Claim 10 Employers Specific Stop Loss Employers Claims Fund Employers Aggregate Stop Loss Employers Specific Stop Loss Limit - $25,000 $2,000 Paid by employee $25,000 Paid from employers claim fund $33,000 Paid by Stop Loss Carrier

11 Self Funding “on training wheels” 5 to 250 lives Self funding made “SIMPLE” Prepackaged plan docs, integrated specific and aggregate stop loss policy Level monthly payment plan Terminal liability coverage included Medically Underwritten What is Funding Advantage? 11

12 Funding Advantage Simplified Self Funding 12 Level monthly payments Protection against large claims or unfavorable claims experience No hidden fees of ‘pass through’ costs

13 13 Healthy groups Desires lower long-term costs Experiencing adverse premium impact from ACA Desires greater control and flexibility Needs better claims reporting Promotes health and wellness with employees Desires predictable cash flow Who is the ideal candidate

14 Self Funded Group Health Plans are subject to “ERISA” regulation. 14 What is ERISA? Employee Retirement Income Security Act 1974

15 ERISA enables self funding ERISA pre-empts the state’s ability to: Mandate health insurance contract terms and benefits Impose premium taxes Impose underwriting constraints and mandated premiums Directly control pre-existing condition limitation Limit employee benefit plan options 15

16 Role of Self Funded Plan Administrator 16 Assist with plan design Underwrite Stop Loss contracts Assist with plan communications Provide network access Claims payment Claims management Provider negotiations Reporting and compliance services

17 Allied National’s Unique Underwriting Philosophy 17 Traditional Underwriting TODAY Allied National Underwriting Price based on past health history, experience, industry trends, and industry loads Price based on future health care costs Past history Future costs

18 Allied National’s Unique Underwriting Methodology 18 Traditional Census & Plan Design Allied National Underwriting Individual Medical Applications Current Health Condition x Current Health Care Cost = Projected Costs Industry Trend + Group Experience + Underwriting = Renewal Rate

19 Self Funding Sample Case Study 19 85 Employees $6.5M Sales - pretax profit 12% Renewal Premium $612,000 Self Funded Program $610,000 Employer’s Loss Fund $366,000 Projected Refund 20% ($73,200) Net Cost $536,800 Refund = 9.3% of profit

20 Next Steps 20 1.Agent contacts Allied 2.Current census 3.Plan design & benefits 4.Current and renewal billing

21 Process 21 1.Initial Proposal (Indication) 2.Completed Applications 3.Final Proposal 4.Accept Terms 5.Install Self Funding

22 Thank you! For more information: Allied Sales Support 888-767-7133 Fax: 913-945-4396 Allied National, Inc. 4551 W. 107 th St. #100 Overland Park, KS 66207 This is an invitation to inquire about the Allied Funding Advantage plan. This is a limited description of the plans. See plan brochure and plan documents for complete details.

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