It's Time to Finance Your Health Insurance Differently
Insurers provide little to no actionable data for smaller employers and defend the lack of disclosure arguing that small group claims can be easily deconstructed to identify actual employees which can be a violation of privacy rights. When claims data is released to smaller employers, it is often released as incurred claims and not actual claims paid less provider discounts and or employee cost share.
Health Insurance (PPO, HMO, Comprehensive Major Medical and Consumer Directed Health Insurance Plans)
Transparency and Cost Reporting: Monthly detailed reporting of all costs, by department or location, and by type of medical service is received.
Cash Flow Benefit: The employer's cash flow is improved when money formerly held by the insurance carrier in the form of reserves, for unreported and pending claims, is freed for use by the employer.
Carrier Profit Margin and Risk Charge Eliminated: The profit margin and risk charge of an insurance carrier are eliminated which results in direct savings to the employer.
Lower Cost of Administration: Employers find that administrative costs for a self-insured program's administered through a TPA are significantly lower (20-40%) than those included in the premium billed by the fully insured marketplace.
National Provider Network: The employer contracts nationally recognized PPO networks and pharmaceutical companies already used by the health insurance company.
Elimination of Most Premium Tax: There is no premium tax on the self-Insured claim expenditures. Premium tax is applied only to the stop loss premium, which is a fraction of the fully insured premium.
Control of Plan Design: The employer has complete flexibility in determining the appropriate plan design to meet the needs of the employer and employees. The employer can redesign its plan at any time.
Claims/Administration: The TPA provides fast, efficient claims service, customer support, disease and case management, wellness programs, and compliance management services.
Customer Service: The employer and employee will have access to a dedicated customer service team. Claims and eligibility information are available on-line.
Mandatory Benefits are Optional: State regulations mandating costly benefits are optional because self-funding is regulated by federal legislation only. An exception to this would be governmental entities.
Kingston Life and Health has a diverse background working with multi-state corporate clients and governmental entities. Please contact Kingston Life and Health to learn more about how alternate funding W may very well be your best solution going forward.
With the added constraints of new community rating in exchange based insurance for 2014, the smaller employer that is already seeing large increases will have limited ability to impact their own risks. As of 2011, small to mid-market groups are having premium increases averaging 11 - 13% medical trends and average overall increases in excess of 20%. Fully insured employers under 250 employees are essentially trapped in these risk pools and it may only get worse in 2014 as community rating and the uninsured are mixed into the pool of risk.
Benefits of Alternate Funding