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self-funding health insurance
Benefits & Compensation
self-funding health insurance
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
I read an article where a parent company set up an LLC to manage their self-funded health insurance for their smaller subsidiaries. Has anyone had experience with this?
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Forums » Topic Forums » Benefits & Compensation » self-funding health insurance
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self-funding health insurance
posted at 10/1/2008 6:08 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
I have not heard of this, however, it wouldn't surprise me if it was done. Depending on the size of the company and the scope of the work, it could be less expensive and better managed/handled than hiring a consultant to do it. |
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self-funding health insurance
posted at 10/2/2008 6:16 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I wish it had more information on exactly WHY they formed an LLC to accomplish the task rather than leaving it as a corporate function. Or outsourcing it. It could be a liability issue....But the article doesn't really give the pros to setting up an LLC, just that this was what they did.
The HR individual states "Because of the LLC, the company is able to see large claims spread out across the group, thus smoothing out the claim costs across the business." Wouldn't centralizing the self-funded plan in the original company have accomplished the same purpose? That is spreading out the risk over the same group? My only other thought is that maybe it had to be done through a separate company based on how AES and its subsidiaries are setup. |
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self-funding health insurance
posted at 10/2/2008 11:34 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
A couple reasons as to why an LLC may have been set up:
1. Commissions - while the medical plan may be self-funded, you wouldn't self fund a life or long-term disability plan. I would assume this could be problematic since not just any company can receive commissions from insurance carriers. If the parent company is a non-profit, this could also complicate things. 2. Business Opportunities - perhaps the LLC will have the ability to solicit additional business other than the parent company's? I've seen this happen with a number of IT firms. They start off as a division of a larger company and eventually they get spun off. I didn't read the article, but just my 2 cents. |
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