Jay joined Ovation in 2004 and has been in the employee benefits arena for 16 years. He leads a team with specialties in municipal benefits, health and productivity planning, and self-funding arrangements. Jay’s primary objective is to create customized employee benefit strategies and cultures based on a personalized focus to each customer’s industry forces and business goals.
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The Affordable Care Act (ACA) has dominated our employer conversation for two years (if not more) with strategic planning, reporting solutions/management, and ongoing education. Currently, the conversation is fueled by changes in the rating system for employers with 50-99 eligible employees and the endless annual reporting requirement calendar. However, the most costly and time consuming changes are surrounding the 6055 and 6056 reporting.
As employee benefits consultants, our job is to simplify the complex world of employee benefits and the ever-changing health care system. This includes assisting human resource and finance departments by sitting in on calls with their payroll companies, offering quotes from reporting specialty companies, or installing a proprietary HRIS based self-service platform designed to provide solutions in the wake of the 6055 and 6056 reporting storm. Continue reading Is Your Carrier Invested in Your Company’s Strategy?→
Alternatively funded medical plans: Level-Funded, Minimum-Premium and Self-Funded, make more sense today than ever for all size employers. At one time Self-Funded programs were earmarked for larger employers (250+), or smaller companies, working with Third Party Administrators that were willing to take risk, often with strong cash flow. The market continues to develop and learn from the maturation of alternative funded products and now offers options other than fully-insured to all size employers.
We all know when setting up our self-funded insurance plan that we are contracting with an administrator, network and stop loss carrier. There is also typically information about case and disease management, prior authorization, out of network charges and other various fees. Did you and your broker really ever understand them? When was the last time you did a thorough market analysis, and truly understood how the administrator and your broker are compensated? I recently spoke with a prospect who asked me to perform such an analysis and here are the results: Continue reading Self-Funding – It’s Supposed To Save You Money, But Are You Still Paying Too Much?→
As PPACA takes form, we continue to see more and more employers look to self-funding as a means for providing their health benefits. Carriers and third party administrators (TPA) are offering new products to enhance this opportunity for large employers, and more significantly employers with 50 to 200 employees, to enter the self-funded market.
Your individual stop loss (ISL) contract is one of the most significant and complex components of your self-funded plan. ISL essentially insures the self-funded plan from paying claims on each individual above a pre-determined claim threshold, insulating the plan from significant losses due to individual catastrophic claim activity. One of the most important contract features employers need to understand is a provision known as specific advanced funding.
Specific Advanced Funding:
Specific Advanced Funding (SAF) allows an employer to pay up to their selected individual stop loss per member after which the stop loss insurer immediately pays the remainder of claims. If Specific Advanced Funding is not included in a contract, an employer is often responsible for paying the entire claims for a member, and later requesting reimbursements for amounts over the stop loss level.
Employer is paying for a $100,000 stop loss on any one member
Employer has a claimant that incurs $420,000 during the contract period
Specific Advanced Funding included
Employer pays the first $100,000, and the insurer pays the remaining $320,000 as it is incurred.
No Specific Advanced Funding
Employer pays the entire $420,000, and then submits the remaining $320,000 either itself or with the assistance of the administrator or broker for reimbursement
This reimbursement can often take 2 to 6 months, creating potential concerns for cash flow of the health benefits plan
There are essentially two ways to purchase Stop Loss – Bundled or Unbundled; as follows:
Typically national insurance carriers (Blue Cross, United, CIGNA, and Aetna) often operate as both administrator and stop loss insurer.
Carrier will typically, but not always, provide SAF under a bundled approach
Operates seamlessly as the insurer and administrator are the same or co-owned entities
If an external stop loss provider is elected (unbundled), SAF provisions are often forfeited, despite being stated in the contract
Carriers often charge additional fees up to $500 per month for reporting to external stop loss insurers
Typically regional insurance carriers and third party administrators
These contracts will typically include specific advanced funding
Regional insurance carriers will often have preferred relationships with a few insurers, that will allow for the plan to take advantage of the SAF provision
If a preferred relationship does not exist between the regional insurance carrier and stop loss insurer, the SAF provision is often forfeited
TPA will also have preferred relationships with a few stop loss insurers
In addition, TPA will be able to maintain the SAF provision, with the majority of external stop loss insurers
Employers who in the past have been concerned about the risks of self-funding are now forced, as PPACA rolls out, to re-consider the increased savings and value of this approach. Your broker needs to play the role of guide as you begin to unravel the complexities of self-funding. Understand how to construct an ISL contract as well as how to capitalize on provisions such as specific advanced funding–and you have a significant head start on realizing savings from a self-funded plan.
Joseph “Jay” Fiorello, Senior Consultant, Ovation
Jay joined Ovation Benefits Group in 2004 and has been in the employee benefits arena for 16 years. He leads a team with specialties in municipal benefits, health and productivity planning, and self-funding arrangements. Jay’s primary objective is to create customized employee benefit strategies and cultures based on a personalized focus to each customer’s industry forces and business goals.