Fully Insured – ACA compliant community rated policies. You pay a premium and the carrier assumes all the risk.
Level Funded – Form of Self Funding where the premium is set for the year and the employer pays a fixed cost each month. At the end of the year, a surplus could be returned to the employer. Please click on the link to watch a short video on Level Funding.
Reference Based Pricing – (RBP) Reference based Pricing is a cost containment strategy set up by an employer. RBP works by setting spending limits on certain medical procedures or services—meaning you would only be covered up to the established limit for these services and would have to pay the cost difference out of pocket. However, limits are only set on “shoppable” services. These are services where you can take time to make a decision based on price and quality, like for prescriptions, lab tests or joint replacements. In all of these examples, there are lower-cost options that are typically the same quality as the more expensive alternatives.
Self Funded– A self-funded group health plan is one in which the employer eliminates obligations to a health plan provider by assuming the financial risk for providing health care benefits directly to its employees. While experienced, successful business managers are experts at mitigating risks, many will gladly take on risk exposure if the probability is good for a high payout.
There are numerous well-documented advantages to self-funding for employers that manage risk well; including:
Reduced insurance overhead costs. Carriers assess a risk charge for insured policies (approximately 2 percent annually), but self-insurance removes this charge.
Reduced state premium taxes. Self-insured programs, unlike insured policies, are not subject to state premium taxes. The premium tax savings is about 2 to 3 percent of the premium dollar value.
Avoidance of state-mandated benefits. Self-insured plans are exempt from state insurance laws, subject only to Employment Retirement Income Security Act (ERISA) compliance.
Choosing benefits services à la carte
Flexibility in plan designs, administration and offered services
Customizable stop-loss insurance to reduce the risk associated with high claims
Improved cash flow. Self-insured employers do not have to pre-pay for coverage, and claims are paid as they become due.
Additional cash flow if reserves are held in an interest-bearing account.
Health Reimbursement Arrangements (HRA) – This is not a health plan but more an administrative function of a administrator. This is coupled with a High Deductible Health plan where the administrator can cover a all or a portion of the deductible for the employee. The account is owned by the employer and unused funds are returned to the employer. This offers employers are great amount of flexibility as you can do a lot of creative strategies with this approach.
Health Savings Accounts (HS A ) – For an H S A plan to be implemented, it needs to be coupled with a qualified health plan. The plan needs to meet certain standards in order to be qualified. The H S A is owned by the employee of the employer. The concept of an H S A plan is one part qualified Health Plan and one part Financial account that is tax free. Please click on the link for a brief video on What is an H S A?
