Indianapolis has seen the introduction of several new group health products designed for companies with between 10 and 250 employees. What makes these plans intriguing is that they are self-funded health insurance vehicles.
In a traditional self-funded plan, the employer pays for its own medical claims directly. Meanwhile, a third-party administrator administers the health plan by processing claims and performing other tasks. Self-funded plans usually include stop-loss insurance, which limits an employer’s annual claims responsibility.
A self-funded health plan has several advantages, including the following:
- · The employer pays only for claims incurred after the network discount
- · The employer can track the types of claims being incurred
- · The employer can offer the same plan throughout Indianapolis because self-funded plans are not subject to state mandates
- · Self-funded plans can be tailored
- · The employer receives fewer billing surprises, because claim data is accessible all year
The newest Indianapolis health plans are a hybrid of self-funded and fully insured, also called level funding plans, which enable Indianapolis companies the opportunity for future savings. Companies can realize these savings if group claims are down. When claim levels are reduced, the employer may receive a portion of the aggregate claims liability account – also known as a claim pre-fund or claims funding. Some plans are designed to return up to 50 percent of the account, which could be equivalent to about 25 percent of the overall premium.
The stop-loss protection is what enables the plan to work like a fully insured contract. Even if your medical claims are higher than your claims funding, you won’t pay a higher premium, thus removing much of the risk from the traditional self-funded plan. You can predict your monthly payments.
The value of a level-funded plan is that you have access to claims activity. When it’s time to renew your policy, you have the knowledge to target and modify specific areas of the health plan.
Self-funded, group health insurance isn’t new in Indianapolis. Level-funded vehicles have been around for some time, too. So why are companies launching these new plan designs?
Companies are offering new products in anticipation of the healthcare reform community ratings set to take effect in 2014. With community ratings, the rates for sick and healthy groups are essentially the same. Underwritten groups will no longer exist and everyone will pay similar rates.
Level-funded plans have been successful in community rated states. Health groups or low utilization groups are scoring huge savings from these types of plans. Because the plans are consider self-funded, providers have more room to operate under the health care reform law. As a result, companies have greater control of the health benefits.
Indianapolis health insurance plans begin with as few as ten people enrolled. Are you responsible for selecting the insurance options for your company? If so, please contact me today. I’d be happy to provide you with a quote.