Self-Funding Medical Plans

Advantages of Self-Funding What Are the Advantages of Self- Funding? –Utilizing self-funding, employers frequently find they are able to exercise better control over the cost and design of their employee benefit programs.

Advantages Advantages can be achieved in the following areas: –Improved Claims Control – ability to subrogate claims –Reduced Cost – pay for claim administration and network access fees (if applicable) versus full premiums –Greater Flexibility – design plans that meet the employer and employees needs –Improved Cash Flow – employer now holds their own claims reserves versus paying the carrier full premium for claims that may never occur. –Freedom From State Regulation - self-insured employers are mostly exempt from costly state mandated benefits.

How to Protect the Self-Funded Plan How Companies Can be Protected From Unforeseen Catastrophic Claims? –Aggregate Stop Loss policy will reimburse the employer for paid claims in excess of the Aggregate Attachment Point at the close of the Plan Year, subject to the terms of each policy. –Specific Stop Loss Insurance protects the Self- Funded Plan from large individual medical claims. Only the amount of a claim up to the specific deductible is accredited to the Aggregate Liability, so that one large claim cannot destroy the integrity of the Plan.

Do You Need Stop Loss ? At some point you may want to consider the breakeven point for you plan where the cost of the cost insurance outweighs the benefit. Black & Decker did not carry any Stop Loss coverage, aggregate or specific.

Why Did Black & Decker Self-Insure Our Plans? Cost Savings/ Flexibility We self-insured our plans, so that we can look at the drivers of our costs. Once we know this information we can tweak our plans to change elements that will save the most money the quickest or improve the health status of the greatest number of people. Self-insuring gives employers access to data that fully-insuring does not.

Self Insured Plans and The Future As employer start to move toward wellness and value based benefit designed programs, self insured plans will allow them the flexibility to create the plan designs that make sense to their employees.