Workforce Management Community Center: Benefits & Compensation

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Benefits & Compensation
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance. (Please note that this forum is dedicated to workforce-management professionals only, and not for employees.)

Workforce Management Community Center Forum Index � � Benefits & Compensation � � Self Funded Medical Insurance

Author	Self Funded Medical Insurance
JamesPSullivan Joined: Oct 17, 2006 Posts: 27	Posted: 2007-06-01 12:36 We are looking for alternatives to fully insured medical benefits. We are tired of double digit premium increases and are looking to save on costs without lowering the level of benefits, or charging the EE's to cover part of the benefits. What can you tell me about your experiences with self funded, or partially self funded programs, or other ways of achieving this objective? Thanks in advance.
howard7 Joined: Sep 13, 2001 Posts: 2615	Posted: 2007-06-01 14:34 The primary driver of costs is normally your plan participants using the benefits you have provided not the cost of administration. If you have a large number of employees (> 250)self funded plans can be effective. If you have a generous plan design and your employees use the benefits the costs will go up regardless of whether or not you are self funded. Of course the cost of medical practictioners and medical facilities will also continue to rise and your plan has no sway over these costs. For some companies, Blue Cross/Blue Shield can be cheaper than self insuring. It depends on many factors. Finally if your employees are not paying any portion of the plan costs how do expect to inject any cost containment or consumerism into their purchasing decisions. Without this and without a high cost of using out of network services, you have no chance of controlling your costs.
ellymae Joined: May 06, 2006 Posts: 181	Posted: 2007-06-04 09:50 My company is self funded, and it works quite well for us. We are not a huge company, but not small either, with approximately 10,000 employees, only about 2500 of which are full time and eligible for full time insurance. We have been able to keep our premium increases down to single digits for several years. Of course, some months are better than others. We do have good stop loss coverage as well. Elly
mroberts7 Joined: Apr 11, 2002 Posts: 952	Posted: 2007-06-14 08:09 Simply changing your funding method from fully-insured to self-insured isn't going to solve your healthcare problems. You'll probably save about 2% in premium taxes and you'll gain a cash flow advantage, but you still need to get to the heart of what's driving your utilization. And if you're a small company (100 employees or less), it might not make any financial sense since your admin rates could be quite high when coupled with stop loss insurance.
JamesPSullivan Joined: Oct 17, 2006 Posts: 27	Posted: 2007-06-14 08:26 Thank you for your responses. We are small (35 employees) and our claims must be low because our Rate Adjustment Factor is .90. Still, Blue Cross has raised our rates 17% this year and the same last year. We are considering self funding to control our costs. The problem is that Blue Cross will not give us specific claims information for our group, so we don't know the risks of self funding. We are looking at a proposal that factors in 45% of our group not using the insurance at all. This seems high, yet the sales agent says its the norm. We are probably going to stick with traditional insurance even though the rate increases are outrageous.
rrupert Joined: Feb 15, 2006 Posts: 1612	Posted: 2007-06-14 11:18 James, what we did this last year was to increase the deductibles/OOP and "self-insure" the difference. The increase was $500 an employee and $1500 for the family. As of today, no employee has claimed the difference. But we are only 1/2 way through the year. It would take almost all employees hitting the new deductible to wipe out the premium cost savings. (The employer I work for pays 100% of the premiums for both the employee and family coverage). This allowed us to keep premiums constant over last year. I analyzed all sorts of combinations of premiums vs deductible/OOPs and this one had the least risk to the er with the most return to the er. Compare to keeping the same D/OOP, we should save about $30k for the same size group that you have. This year we are looking at all sorts of other "outside the box" options. We are investigating self-funding, but am finding the same perspectives as have already been shared. In Texas, we are a small group and go into the sm group risk pool, so we too can't see our claims information. I suspect however that a good half of our employees don't use the insurance beyond a checkup here and there. At the very least we will be discussing having the employee pay part of the family premium. rr
mroberts7 Joined: Apr 11, 2002 Posts: 952	Posted: 2007-06-14 12:56 Rupert brings up a good point. For companies that fall into the small group pool, typically the higher deductible plans are subsidized, i.e. receive articifically low rates from underwriting to spur movement to them. "Self-funding" the deductible will typically be significantly less expensive than staying pat on the conventional plan. The only caveat is that this isn't going to be a real solution for groups that are larger and have close to 100% credibility. Any adjustments made to copays, deductibles, coinsurance, etc. are going to be reflected by "non-subsidized" underwriting.
Lyssandre Joined: Sep 13, 2001 Posts: 47	Posted: 2007-06-29 15:57 There is another option to just offering a consumer-driven plan. Have you looked into signing on with a PEO, like Administaff, Gevity or TriNet?
mroberts7 Joined: Apr 11, 2002 Posts: 952	Posted: 2007-07-02 13:56 Whatever you do, do not sign up with a PEO. If you're a group of 3, then that's one thing, but you have 35 employees. I hear far more negative experiences than positive experiences with them. Remember, you end up being just one more group in a large pool, so service tends to suffer. Plus, you give up the ability to choose your own plan design. If you are only going to shift employees to an HSA, that will not change the total cost (employee premiums + employee out-of-pocket costs + employer premiums) of your health plan. Depending on what type of plan you have, you may end up being better of by changing your contribution formula.
mroberts7 Joined: Apr 11, 2002 Posts: 952	Posted: 2007-07-02 13:56 Whatever you do, do not sign up with a PEO. If you're a group of 3, then that's one thing, but you have 35 employees. I hear far more negative experiences than positive experiences with them. Remember, you end up being just one more group in a large pool, so service tends to suffer. Plus, you give up the ability to choose your own plan design. If you are only going to shift employees to an HSA, that will not change the total cost (employee premiums + employee out-of-pocket costs + employer premiums) of your health plan. Depending on what type of plan you have, you may end up being better of by changing your contribution formula.
mroberts7 Joined: Apr 11, 2002 Posts: 952	Posted: 2007-07-02 13:56 Whatever you do, do not sign up with a PEO. If you're a group of 3, then that's one thing, but you have 35 employees. I hear far more negative experiences than positive experiences with them. Remember, you end up being just one more group in a large pool, so service tends to suffer. Plus, you give up the ability to choose your own plan design. If you are only going to shift employees to an HSA, that will not change the total cost (employee premiums + employee out-of-pocket costs + employer premiums) of your health plan. Depending on what type of plan you have, you may end up being better of by changing your contribution formula.
victor2028 Joined: Apr 14, 2005 Posts: 1	Posted: 2007-07-11 12:28 After watching Sicko which depicted the essence of National Health Care Programs in Canada, Great Britain, and France, I find this whole disussion acutely reflecting the abomination of our system. The spiraling and never ending costs we face, despite whatever plans are put in place, will, I am sure, go on ad infinitum. I wonder if our country embraced a national system that took the best practices of the above countries how it would impact employer costs? Seems to me corporate taxes would not increase to the level we are experiencing with health care. Which leaves me with a final thought: What would it take to have a major non-partisan study commission evaluate the feasibility of a national system? We need to get outside the box before it smothers us. And if it does the cost of resuscitation may be prohibitive.