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Small Group Self FundingA Winning Strategy For All
Stephen GalassoDistrict Sales Manager
National General Benefits Solutions- Kansas City
Self Funding is a STRATEGY
Fully Insured is a PRODUCT
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$18,600,000,000Stop loss insurance segment has doubled from $9.2B in 2013 to $18.6B in 2018
Of Private Sector Employees that have a workplace health plan, 60% are covered under a self funded contract.
Self Funded Provides
• Alignment in best interests
• Control
• Transparency
Self-funded is your strategy that encompasses all of these- EVEN FOR SMALL GROUPS!
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Fully Insured: THE PRODUCT
The Band -Aid
• Easy answer
• Easy to quote
• Rat Race
• It’s a trap!
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No Paralleled Incentive
• No transparency
• Direct provider contracts
• Renewal just low enough
• Fully Insured carriers are the real winners
Fully Insured Stock“Winning ”
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050
100150200250300350400
2013 2015 2017 2019
Fully Insured Stock Prices since Passage of the ACA
Carrer A Carrier B Carrier C
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Where is this money coming from?
Average Group
Small Group Self Funding
Self Funding OverviewTypes of Self FundingPlan ComponentsThe NEED for Level FundedACA vs. ERISAPros/ConsHow Do I Position?
Agenda
Self Funding OverviewA BRIEF HISTORY
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• 1974 Employee Retir ement Income Secur ity Act is pa s s ed (ERISA)
• Regu la tes the oper a tion of a hea lth benefit pla n if a n employer choos es to offer
• Feder a l “unifor mity”
• Tr a ditiona lly us ed by a nd cr ea ted for La r ge Cor por a tions in a tr ue ASO (Tr ue Se lf Funding)
Self Funded Example
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$0$200$400$600$800
$1,000
7900 5000 2500 500
Cost V Deductible
Cost V Deductible
$0$200$400$600$800
$1,000
100,000 50,000 25,000 10,000
Cost per EE V Stop Loss Limit
Cost per EE V Stop Loss Limit
Self_Funded Prevalence
▰ By group size
▰ Opportunity in Small to Mid Size Groups!
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Types of Self Funding
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Traditional (ASO)▰ Most risk falls on employer
▰ High Levels of Stop Loss
▰ Outsource TPA, PBM, etc
Minimum/Expected Employer Can choose to fund less, and true up IF needed
Level/ Maximum
Fund “worse case”
Which Way?
Small Group Self Funded Funding Options
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Minimum
• GREAT Rates!• What if..• Usually never
just the minimum, and when it’s bad, its really bad.
Expected
• Attractive Rates
• What If..• Usually Safe
but..
Maximum
• Competitive• Refund
Potential!• No “What If”• “LEVEL
FUNDED”
Plan ComponentsOF LEVEL FUNDED PLANS
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Stop Loss
Admin
Claims Funding ?
Self Funded= Transparent VS. Fully Insured= One Pot of Money
Plan ComponentsOF LEVEL FUNDED PLANS
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Stop Loss
Admin
Claims Funding
Multiple Players Different Arrangements
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TPA
Outsources Stop Loss
Group Claims Fund
Stop Loss Carrier
Outsources TPA
Group Claims Fund
BUCAH
Everything In House
Group Claims Fund
Polling Question :
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The Need for Level Funded
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How the ACA created a much bigger need and broader market for Level Funded health plans
Level Funding
ACA Rate Impact
Transparency
Plan Choice
Cost Containment
The ACA vs. ERISA
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ACA Metallic Plans and Self Funded Plans are similar, the vast majority of the time. However, there are some key differences and nuances to look out for and be aware of.
Similarities Differences
PCORI EHB
ACA VS ERISA
▰ If it is considered a compliant Major Medical Plan everything put in place in 2010 is included in these plans, including.▰ 100% Preventative▰ Unlimited Lifetime Max▰ Women’s Contraception▰ Deductible and OOP Max Limits
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Similarities
ACA VS ERISA
▰ Again, assuming it is considered a compliant major medical plan -▰ Limits or exclusions on certain benefits (mental
health, infertility, drug formulary)▰ State Mandates may not be included▰ Not GI▰ Not Community Rated▰ Metallic Levels/Minimum Actuarial Value▰ 20% MLR small group, 15% in large group
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Differences
ACA VS ERISA
▰ The Patient -Centered Outcomes Research Institute is a United States -based non -profit institute created through the 2010 Patient Protection and Affordable Care Act .
▰ $2.54 Per Covered Life Per Year▰ Not Included in Self Funded Premiums
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PCORI
ACA VS ERISAEssential Health Benefits
▰ The ACA requires insured health plans in the individual and small group markets to contain an "essential health benefits package .”
▰ Self Ins ur ed pla ns a r e not r equ ir ed to include them, though ma ny do.▰ If they do include them, they ca nnot pu t a n a nnua l ma x on the ir
benefit.
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1. Ambulatory patient services,2. Emergency services,3. Hospitalization,4. Maternity and newborn care,5. Mental health and substance use disorder services (including behavioral health treatment),6. Prescription drugs,7. Rehabilitative and habilitative services and devices,8. Laboratory services,9. Preventive and wellness services and chronic disease management, and10. Pediatric services (including oral and vision care).
EHB
Pros of Level Funding
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• Rates
• Underwriting
• Customization
• Transparency
• Refund
• COMP
CustomizationAbundant Options
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Basic
Available in most platforms*
Plan Design
Certain Benefits
Intermediate
Stop Loss
Refund Split
Network
Advanced
PBM
Run Out
Carve Outs
(Potential) Cons of Level Funding
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• Not for All Groups• Contract Holes• Run Out/TLO• State Mandates• Underwriting• Renewals• Minimum Attachment
Polling Question :
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How Do I Position?
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• Never a waste of time
• Be a better CONSULTANT, not a “spreadsheeter”
• More Work= More $$$
• More Work= More Savings
• ACA GI IS YOUR FALLBACK
Sell Concept FirstShop Base Rates, AlwaysKnow Your Contract
Focus on “Spread”Field Underwrite if possible*
UnderwritePrepare for WorstHope for BestLand somewhere in between= SAVINGS
Self Funding: YOUR WINNING STRATEGY FOR ALL GROUP SIZES
o Lead with Self Fundingo Extra Effort Will PAY Offo Small Groups Need “Love” Tooo Know Your Contractso ADVISE
Pro Tip- Online Applications Make Things Easier!
QUESTIONS?
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