2016 Presentation to the Benefits Committee of the TSA Texas Sign Association on the concept of self-insured group medical stop loss captive for employee health insurance.
5. Options for Paying for Health Plans
Fully insured plan
Self-funded plan
Group medical benefits captive
6. Fully Insured
Significant rate increases with little or no data
Are you subsidizing the insurance company’s other policy holders?
Buying decisions not linked to your company’s costs
Conrol costs
Change carriers
Change benefits offered
Change contributions
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/
14C_Employee_Benefit_Group_Captives.pdf
7.
8. Lou Polur’s 2016 Family Health Care
Experience
2016 Premiums $15,000
2016 Family Deductible $12,000
2016 Family Medical Out of Pocket $4,500
“Profit to Carrier” from Polur family: $15,000
9. ACA: Regulation on Insurance and
Health Care Industry
Cadillac plan taxes
Medical devices
Prescription drugs
Coverage mandates
10. Would you like to take control back from
Big Insurance Companies and ACA?
11. Employers can self fund their health plans
The employer can customize the plan to meet the specific health care needs
of its workforce, as opposed to purchasing a 'one-size-fits-all' insurance policy.
The employer maintains control over the health plan reserves, enabling
maximization of interest income - income that would be otherwise generated
by an insurance carrier through the investment of premium dollars.
The employer does not have to pre-pay for coverage, thereby providing for
improved cash flow.
http://www.siia.org/i4a/pages/Index.cfm?pageID=4546 Self
Insurance Institute of America website
12. Employers can self fund their health plans
The employer is not subject to conflicting state health insurance
regulations/benefit mandates, as self-insured health plans are regulated
under federal law (ERISA).
The employer is not subject to state health insurance premium taxes, which
are generally 2-3 percent of the premium's dollar value.
The employer is free to contract with the providers or provider network best
suited to meet the health care needs of its employees.
http://www.siia.org/i4a/pages/Index.cfm?pageID=4546 Self Insurance
Institute of America website
14. Who Are Good Candidates?
Eligible companies with 25-750 eligible employees
Forward thinking management teams and owners
Good communication with employees on health care costs
Willingness to implement robust health and wellness programs
Financially stable and willing to take on some portion of the health plan risk
15. Self-funded Plans’ Advantages
Traditional
Cash flow advantages
Data transparency
Plan design flexibility
Ease of administration
Lower fixed costs
Exemption from premium taxes
Retain the carrier’s profit
Under ACA
Not required to provided coverage
with minimum essential benefits
Not required to participate in a
risk-adjustment system
Not subject to insurance company
provisions such as medical loss
ratio requirements
Premiums driven by plan
experience
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_
Employee_Benefit_Group_Captives.pdf
16. Considerations to Self-funding
Long-term focus
Retaining risk
Data overload
Volatility and lasering
Resources to manage
health care risk programs
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_E
mployee_Benefit_Group_Captives.pdf
17.
18. Self-funded: Medical Stop Loss Insurance
to Control Risk
Covers catastrophic or unpredictable losses
Protects the self-funding employer’s assets
Individual/Specific stop loss
Protects against high claims from any one individual
Protects against the severity of a single catastrophic claim
Aggregate stop loss
Provides a ceiling for overall claims liability
Protects against higher-than-expected usage or frequency of claims from the entire
group
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_E
mployee_Benefit_Group_Captives.pdf
19. How does an Association help members
control medical insurance costs?
20. Group Medical Stop-loss Captive
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_E
mployee_Benefit_Group_Captives.pdf
21. Group medical stop-loss essentials
Each employer that participates maintains its own self-funded health benefits
plan separate from that of the other member employers.
The employer can dictate its own plan rules, including levels of coverage such
as copays and deductibles, provided they comply with federal laws governing
self-funded employee benefit plans.
https://www.businessinsurance.com/article/20130310/NEWS05/303109989
22. Stop loss policy structure
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/
14C_Employee_Benefit_Group_Captives.pdf
23. Group medical stop-loss essentials
The stop-loss insurance program is purchased from a medical excess insurer
that issues a separate policy to each captive member.
The stop-loss policy has a specific deductible, which applies to each plan
participant; and an aggregate attachment point, which applies when the total
amount of a single employer's health benefit plan's claims reaches a certain
level, 125% of expected claims, for example.
https://www.businessinsurance.com/article/20130310/NEWS05/303109989
24. Captives offer
Predictability and Probability
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_E
mployee_Benefit_Group_Captives.pdf
25. Captive for the Self-funded Group
Medical Benefits
The captive enters into a reinsurance agreement with the medical stop-loss
insurer The reinsurance agreement also limits the total amount of claims the
captive is responsible for paying.
To fund this layer of risk, the stop-loss insurance carrier pays a portion of the
stop-loss premium collected by each captive member to the captive. Under
this arrangement, the captive is only acting as a reinsurer.
The stop-loss insurer is said to be “fronting” the captive, issuing policies in its
name.
https://www.businessinsurance.com/article/20130310/NEWS05/303109989
26. Risk Layers in Captive
https://www.iscebs.org/Symposium/Documents/2016Sessions/Wednesday/14C_E
mployee_Benefit_Group_Captives.pdf
27. Keys to Success
Critical mass- 1000+ covered employees over first twelve months
Clear understanding of role and benefit of a captive
Wellness and disease management programs
Commitment from a cohesive group
Internal advocates and champions
Involvement beyond HR
Excellent internal communication
Alignment of interests among participating companies
Transparency
Adequate and well structured excess/aggregate protection in stop loss
contract
SRS presentation on medical stop loss group captive
28. Case study example
Formed in 2012
Fronted A+ carrier for the medical stop loss coverage
2016 Membership includes eleven groups, covering over 6,000 lives from size
104 employees to over 550 employees
Annual trend increase in medical costs has been less than 4.5%
Program has produced profits each year; $2 million in cumulative captive
dividends have been distributed to participants since 2012
SRS presentation on medical stop loss group captive
29. Employer groups are invited
Captive membership is by invitation
Employer groups are each medically underwritten
Joining the captive is a transparent and group decision
30.
31. Questions?
How to move forward?
1,000, 1,200, 1,500 employees
20, 25, 30 or more companies
3 to 5 year commitment to participate
Editor's Notes
http://www.siia.org/i4a/pages/Index.cfm?pageID=4546 Self Insurance Institute of America website
http://www.siia.org/i4a/pages/Index.cfm?pageID=4546 Self Insurance Institute of America website