Self Insurance

Rockie

We are looking at all insurance possibilities for the year 2005. One is self insurance. Have any of you had success stories of how you went from fully insured to self insured, especially in the area of saving money.

Have any of you had nightmare experiences and wish you'd never heard of self insurance?

Feedback would be appreciated.

Lola815

We are fully insured with our health but we are partially self insured with our dental. Meaning we pay Blue Cross a small fee per employee for Blue Cross to take care of all the paper work and we just pay the bill in full. Does that make sense? We have been doing this for the past three years and we have saved money. For us it is has been good.

Rockie

Thanks for replying. Is there any reason you haven't gone this route with your health insurance?

Lola815

Yes. The biggest our company has ever been is 120 employees and in the past few years we were down to 60 employees. Our insurance broker recommended that self funding dental is a lot less riskier than self funding health when you have that few employees. He recommended to us that if we were a company of 200+ it would be something we would want to consider. He also said you should look at how many singles, two-parties, and families, you have. If your two-party and families outweight your singles, then you could end up paying a lot more when self funded because in general singles don't use health insurance as much as families. It has been awhile since we talked about it, so I'm sure there was other things but I can't remember everything. I like how we have the partialy self funded dental because I don't have to worry about a lot of the HIPPA regs that if we were fully self funded I would have to deal with.

For us to keep insurance costs down we have had to make changs to our plan and increase employee contributions.

Rockie

This is basically what we have been doing, but we are going to try to look at other options without having to raise premiums to employees yet again. A small increase is expected, but 30% is entirely too much for families to absorb (since salary increases don't keep pace).

Thanks for the info.

E Wart

We are self funded and have been for a long long time. If you send me your email, I can email you a summary of our benefits and I will be glad to share our TPA that I am very happy with.
[email]ewarthen@newcombspring.com[/email]
E Wart
PS I was with an insurance company for 19 years and worked for another company where we were fully funded. So, I know that side too. So far I find that we are more in the drivers seat as far and designing our benefits and costs through self funding.

SMace

We are self-insured. The TPA is a very important part of the component, if not the most important. You need a good TPA. I can refer one from Charlotte that I have worked very closely with if you want me to. They can build networks and do a good job with claims. It takes a lot of work when dealing with claims and reviewing plan documents, but for our company it is worth it. I like the control. We have reinsurance for specific claims over $100,000. We dropped the aggregate coverage because it was so high, there was no chance we would hit it. So why pay for the insurance? We have roughly 900 ee's and our budgeted costs are about $5 mil. Depending on your size I would almost guarantee you will save money the first year.

AJ SPHR

I worked for a large manufacturing company and we had 2 large medical plans that were self-funded for many years (a Traditional Indemnity plan and comp major med). When I was a benefits Analyst, one of my projects was to analyze and compare cost data for 3 of our largest HMO plans to see if converting to self-funding was appropriate. I collected data from the vendors that showed the total for insured premiums we paid, as compared to the actual claims costs and an estimated admin fee we would have paid had we been self-funded.

My analysis showed that we would have saved money if we were self funded for 2 of the three plans. In other words, the claims costs plus an estimated admin fee would have been significantly less than the premiums we paid had we been self-insured for 2 of the plans. The third plan came in pretty comparable, in that the insured premiums were reasonably close to the claims cost + admin fee.

As a result, we converted the 2 plans to a self-funded status but left the third plan as an insured plan.

But remember, there are other issues when you have a self-funded plan:
1. HIPAA would require a medical privacy officer and much more stringent requirements imposed on the employer when you have a self-funded plan and have access to actual individual claims data. These responsibilities and requirements could be pretty significant depending on the size of your group.
2. You need an internal appeals process and appeals "officer". When you self fund a plan, you as the employer have the ultimate decision when a member appeals a claim denial. It will usually go through one round of appeals review at the TPA but then moves to the employer. For a large employer, this was a significant piece of work and we had one person dedicated (in addition to some other benefits work) to this job.
3. As other posters have identified, look at your stop-loss coverage and whether amounts need to be adjusted since you will now be assuming more of the risk.

Good luck!

System

Our company went self-insured for prescriptions only. Then, for unrelated reasons, our Rx usage shot through the roof, so we're taking a big hit.

James Sokolowski
HRhero.com

HRJENN

Where I am, I am the benefits Administrator for the company, and we have a fully insured plan for medical and dental then we have a seperate division that we have a self-funded plan for. I fell that the self-funded plan is great as long as you have it set up right. On our self funded plan, we used to have a really bad TPA but now we have found a great one that manages the claims very well. I think it is much cheaper as long as the TPA is doing there job. The only thing is you could have one employee or their dependent with a serious health condition and that can run your funding real high. My suggestion is to have your experience ran from prior years and analyze them, given the results of the claims, then evaluate if it would be in your best interest.

HRJENN

Don D

Rockie: Is this really something that you, as HR Manager, have to decide upon? Surely your CFO and your office benefits management staff are supposed to be sifting through this while you administer the Human Resources Function. If you are the large medical office you've told us you are, this decision should be analyzed way, way down the hall from your office, thankfully. x:-)

Balloonman

Rockie,
Sorry I missed this when originally posted. We have a partially self funded plan, we pay the $15,000 per employee in claims on medical. Has saved us significant $$$$$$ over traditional plan. Risk vs Reward. Been doing it for 4-5 years, savings are enought that we could get killed and still be ahead in the long run.
My $0.02 worth!
DJ The Balloonman

Rockie

>Rockie: Is this really something that you, as HR
>Manager, have to decide upon? Surely your CFO
>and your office benefits management staff are
>supposed to be sifting through this while you
>administer the Human Resources Function. If you
>are the large medical office you've told us you
>are, this decision should be analyzed way, way
>down the hall from your office, thankfully. x:-)

Don: You can tell how often I visit this site (Whew!). Anyway...the CFO generally does the analyzing...but our Benefits Specialist is basically a paper pusher and is clueless about benefit design, etc. Since I know enough to be dangerous, some of this kinda fell into my lap. Not my forte to be sure!

Rockie

Patty Mac

We have been self-insured on medical for several years and just went self-insured on dental in January of this year. It is working fine. We have saved money, but you have to be sure to inform employees of the new process and get them to be cost contientious - letting them know that their frugality will pay off in future premiums!
Educate, Educate, Educate.