Self-Insured Health Plan

Self-Insured employers pay for only the healthcare claims their members consume, a low stop-loss insurance premium for catastrophic claim coverage, and an administrative fee to a third party administrator who will administer their program. For comparison purposes, fully insured employers pay insurance premiums that are primarily based on the underlying claims experience of a much larger pool of employers that are also insured by the same health insurance provider. Healthy companies within these pools are likely paying far more than they ought to be paying since they are not rewarded for their favorable claims experience. If they were Self-Insured, they would pay for only the healthcare their members consume, a small stop-loss insurance premium, and an administrative fee to their Third Party Administrator.

Employers have the flexibility to design the plan exactly the way they want it, limited only by ERISA requirements. This flexibility applies to both medical and prescription coverage.

Transparency into claims data enables employers to have full access to their detailed utilization and claims information; allowing them to make effective decisions in real time to increase plan efficiency and lower claims. This gives them the ability to see what conditions or utilization patterns are driving the costs; and implement specific strategies to target those cost drivers reducing the employers claim exposure and overall improving the bottom line.

Example:

MRI utilization at hospital-based facilities is too high, so the Self-Insured employer provides incentives (possibly lower copay or deductible,) to employees if they obtain MRI’s at a local, independently owned facility, which significantly lowers the cost of the MRI.

Since employers pay for only the healthcare their members consume, population health management programs with high levels of member engagement can have a real, meaningful impact on claim costs since healthier people consume less healthcare.

Transparent data allows for micromanagement of that data including the following possible cost-containment strategies:

• Claim audits: It has been proven that most hospital bills contain errors. Hospital charges typically represent the majority of incurred claims and since most hospital bills contain errors or duplicate charges, auditing those bills before paying them is a great way for employers to save money
• Steering members to high quality/low cost providers: Similar to manufacturing, facilities that perform the most of a particular procedure tend to do it better and cheaper than facilities that don’t perform as many procedures. Members should be utilizing these higher quality/ lower cost providers as they will reduce claim dollars and improve outcomes.

Elimination of a large portion of the state charged Premium Tax. Fully insured plans pay a premium tax on 100% of their healthcare costs since all of the costs are in the form of insurance premiums. Self-Insured employers only pay a small percentage of their total costs in the form of Stop-Loss insurance premiums, which is charged a premium tax, but this represents far less in premium tax than a comparable fully insured program.