Self-funding

 

Why you should choose D. H. Evans Associates, Inc.

 as the Third Party Administrator for your health plan

 

 

Independently owned TPA.  Not controlled by a hospital or insurance company.

 

Entire administrative staff averages 15 years of experience administering employee benefit plans.

 

Very low employee turnover.

 

Claim turnaround is currently less than 5 business days for weekly funded accounts.

 

Client Services Manager who is a client contact for service issues.

 

Dedicated claims processor(s) assigned to each group.

 

Low document and set-up fees.

 

Relationships with quality reinsurers.

 

Multiple year rate guarantees available on administration fees.

 

Internet enrollment / claim lookup capabilities

 

Incoming calls answered by experienced staff and not by a machine

 

Our focus on Self-funding

    We are committed to the Self-funding concept because of the significant long term financial rewards that our clients have achieved. Following is a brief overview which will help you become more familiar with the concept of Self-funding.

 Decrease Your Employee Health Benefit Costs

    Thirty years ago, virtually all plans were fully insured and this type of funding was considered the norm.

    As traditional insurance premiums continue to climb, more and more employers are seeking alternatives for funding  health benefit plans.  Today, almost 70% of U.S. employers self-fund some portion of their health care plans.

What is a Self-funded Health Plan?

    A self-funded (or self-insured) health plan is one in which the employer assumes the risk for providing health care benefits to his employees.  The employer's risk is reinsured through the purchase of stop-loss coverage which limits the employer's funding exposure.  The employer takes control of the assets of his plan, invests them to his advantage, and eliminates the insurance company charges.  The plan is the employer's plan not the insurance company's plan.  It can be designed to meet the needs of each employer and his employees.

 

Why do employers Self-fund health plans?

    An employer doesn't pay state premium taxes, which usually range from 2 percent to 3 percent of the monthly insurance premium.

    The employer doesn't pay insurance company risk charges and retention charges on self-funded claim dollars.

    Control is retained over health plan reserves, which improves the employer's cash flow and provides an opportunity for employers to benefit from investing the reserves.

    Insurance companies are subject to state regulation; self-funded plans are primarily subject to ERISA federal regulation, thereby giving an employer more control of the plan design.

    The employer can contract with a Preferred Provider Organization that provides the plan with the best combination of discounts and number of providers.

 

Is your organization ready to Self-fund?

    According to a leading self-funding professional organization, you're probably ready to self-fund your health benefits if you can answer "yes" to these seven statements:

  1. We have an adequate number (more than 25) of employees among whom we can spread the risk of high claims, or otherwise feel we have the assets to withstand some year-to-year cost variance from claims.  We are financially able to withstand an occasional year when employee healthcare claims may be greater than anticipated.

  2. Our top management team is comfortable with this cost variance approach, as opposed to the set monthly fees established by our insured plan.

  3. Self-funding is of interest to us because we are committed to the idea of increased control of our employee benefits and the associated costs.  Our motivation goes beyond the minimal savings that may come by escaping the state premium tax an insurer might charge us.

  4. We have found trustworthy partners to help us handle the plan.  These include:

    • an employee benefit consultant, insurance or risk broker, or financial advisor who can help us objectively examine whether to be self-funded or fully insured;

    • an outside firm to handle administration of benefits; and

    • a stop-loss insurance carrier who can sell us affordable coverage.

  5. We have purchased (or will purchase) stop-loss coverage to insure against the chance that we may have an occasional year of higher than expected or unanticipated claims.  We have coverage against losses stemming from any one person's illness, known as "specific" coverage, as well as "aggregate" coverage, which protects us against an overall level of annual claims that may be higher than anticipated.

  6. We are aware that we have many options under our plan.  We know that we can pay the company's share of employee health claims as they come in, or we can set aside a fixed amount each month in a trust fund.  We also know that under a self-funded plan, we may direct employees to use a managed care network of doctors and hospitals, or allow them to choose any healthcare provider.

  7. We have thought through any concerns our employees might have about self-funding.  We are ready to explain the change to them thoroughly and to answer any questions they may have.  If we have a union, we have met any contractual obligations we have to involve the union in the process.

For more information about self-funding go to the Self-Insurance Institute of America website  www.siia.org

or  Contact  D. H. Evans Associates, Inc.ís self-funding specialists.