Premium Analysis Presentation


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This presentation will explain the rationale and process that will help you decide which funding method, Fully Insured or Partially Self-Funded, is appropriate for the health insurance in your organization. If it is Partially Self-Funded, the (patent pending) softeare will determine the most effective stop loss limit. Monte Carlo simulation software (patent pending) will also provide you a risk reward analysis. For a presentation with sound, call 888-781-2698.

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Premium Analysis Presentation

  1. 1. Health Insurance Fully Insured or Self Funded Financial Analysis Raymond J. Gianantoni, FLMI
  2. 2. About Premium Analysis, Inc. <ul><li>- Privately owned </li></ul><ul><ul><ul><li>-Independent provider of Risk Analysis tools on a fee-for-service basis for health insurance purchasers </li></ul></ul></ul><ul><li>- How did it come into existence </li></ul><ul><ul><ul><li>-Desire to address the lack of Risk Analysis in assessing health insurance funding options </li></ul></ul></ul><ul><ul><ul><li>-Concern that many employers were making funding decisions without needed input </li></ul></ul></ul><ul><ul><ul><ul><li>Probabilities of outcomes were not being provided </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Scientific basis for decisions were lacking </li></ul></ul></ul></ul>
  3. 3. Health Insurance <ul><li>- Becoming a bigger ticket item </li></ul><ul><ul><ul><li>Seeing $1,400/mo plus for a family </li></ul></ul></ul><ul><ul><ul><li>- Rate increases of 20% plus </li></ul></ul></ul><ul><li>- How do you mitigate the costs </li></ul><ul><ul><ul><li>- Cost sharing (shifting) </li></ul></ul></ul><ul><ul><ul><li>- Benefits changes </li></ul></ul></ul><ul><ul><ul><ul><li>Deductibles </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Co-pays </li></ul></ul></ul></ul>Fact: Benefit changes, unless dramatic, will yield low single digit savings.
  4. 4. Health Insurance <ul><li>- Plan/funding changes </li></ul><ul><ul><ul><li>- Greatest opportunities for savings </li></ul></ul></ul>Fact: For employers with 100-499 employees, only 29.6 % utilize self-funded arrangements (National 2000 statistics)
  5. 5. Self-Funded – Why Low Utilization? <ul><li>- Fully insured </li></ul><ul><ul><ul><li>- Budgetable/Known </li></ul></ul></ul><ul><ul><ul><li>- “Risk free” </li></ul></ul></ul><ul><ul><ul><li>- Easier to understand and administer </li></ul></ul></ul><ul><li>- Self-Funded </li></ul><ul><ul><ul><li>- Unknown probable liabilities </li></ul></ul></ul><ul><ul><ul><li>- Assumption of risk…how much is unknown </li></ul></ul></ul>In essence… fear of the unknown
  6. 6. What should you do? <ul><li>- Know your alternatives </li></ul><ul><ul><ul><li>- If fully insured, get a self-funded quote </li></ul></ul></ul><ul><ul><ul><li>- If self-funded, get a fully insured quote </li></ul></ul></ul><ul><li>- Quantify Risk/Reward </li></ul><ul><ul><ul><li>- Proprietary Software (patent pending) to analyze choice in Stop Loss – can save thousands of dollars on cap coverage </li></ul></ul></ul><ul><ul><ul><li>- Monte Carlo simulation to predict results (patent pending) </li></ul></ul></ul><ul><li>- Compare the different funding alternatives </li></ul>
  7. 7. Example – Using Specific Deductible Software Stop-Loss Quotes Analysis -$190,176 -$88,437 n/a Projected Savings $280,780 $93,593 n/a Additional Claims $90,604 $5,156 n/a Premium Savings $305,099 $390,547 $395,703 Annual Premium $77.01 $98.58 $99.88 Family: 252 $27.11 $34.70 $35.16 Single: 222 Census $ 125,000 $ 100,000 $ 75,000
  8. 8. What Is Monte Carlo Simulation ? <ul><li>Monte Carlo simulation is a statistical analysis method. In any single Monte Carlo simulation, likely values for the various conditions being analyzed are randomly generated; this gives a possible case that the model may encounter in the real world. The software runs many thousands of these possible cases and uses them in combination with each other until a statistically accurate representation of all possible combinations has been created. </li></ul>
  9. 9. Monte Carlo Simulation Probability of Results There is a 84.5% probability that the self-insured plan will breakeven or improve the fully insured cost. Based on census of Single-222 Family-252 Why not have the benefit of technology to help you make sound business Decisions on a large recurring expense? 204,580 3,986,507 4,191,087 80% 0 4,191,087 4,191,087 84.5% -277,371 4,468,459 4,191,087 Worst Case -277,371 4,468,459 4,191,087 90% 581,412 3,609,675 4,191,087 70% Savings Self-Funded Fully-Funded Probability
  10. 10. Compensation <ul><li>Commissions (usual carrier scale) </li></ul><ul><li>Usual fee (see right ) waived </li></ul><ul><li>- A fee equal to .4% (40 Basis Points) of premium equivalency </li></ul><ul><ul><li>Minimum of $2,500 </li></ul></ul><ul><ul><li>50% due at start of work </li></ul></ul><ul><ul><li>Balance within 30 days of completion </li></ul></ul><ul><ul><li>Retain your usual broker </li></ul></ul>We ask that a confidentiality agreement be signed at the start of the engagement. Copies are available for your review. or
  11. 11. For more information contact: Raymond J. Gianantoni, FLMI Premium Analysis, Inc. 20 Maple Street, Suite 3 Springfield, MA 01103 Tel 413-732-2888 [email_address]