Self-Funding with AmeriShare Presented by: American Trust - PowerPoint PPT Presentation

Self-Funding with AmeriShare Presented by: American Trust Administrators, Inc.

American Trust Administrators  A full service Facility  Established in 1972 – over 40 years of experience  Specializing in self-funded medical plans for groups with 10 or more employees  Pioneered self-funding for small to medium employers  Headquarters in Lee’s Summit, MO (suburb of Kansas City)

American Trust Administrators  ATA offers cost savings through:  National and regional PPOs  ATA Rx Pharmacy Benefit Management program  ScriptCare  HSA-qualified and other high deductible plans  Dual & Triple option plans  Direct Contracting  Reference-based pricing strategies

ATA Products  AmeriShare - self-funded medical plan  For groups of 10 to 99 (varies by state)  underwritten by long form app with some telephone interviews ATA gives the smaller employer an opportunity previously available only to large employers

ATA Products  Life, AD&D, & Dependent Life  Fully insured, packaged with medical  Dental and/or Vision  Available as a self-funded benefit with AmeriShare

Self- Funding: What It Isn’t  Not for groups with above average claims experience  Not a short-term solution to reducing and controlling benefit costs  A long-term strategy, not a quick fix  Employer’s business should be stable; not likely to reduce the number of employees

Why Do Employers Like It?  Benefit directly from favorable claims experience  Maximum expenditures for the next 12 months are known up front  Keep interest on claims reserves  Pay reduced carrier profit & risk charges  Pay less state premium taxes  Has the potential for improved cash flow

Why Do Employers Like It?  Greater control over plan design  Design a benefit plan that will attract and retain employees  Costly state mandated benefits can be avoided (self- funded plans are governed by ERISA)  Receive information for decision making  Detailed reports show where benefit dollars are going  Enables the development and management of cost- effective benefit plans

Self Funding and the ACA Self Funding…  Does not have “Community Rate”  Does not have to “Guarantee Issue” coverage  Does not have 3:1 rate compression rules  Does not have MLR rules  Is not subject to some taxes/fees

Benefits Design  Flexible benefit options may be tailored to group needs and managed for cost-effectiveness  Choice of deductibles, coinsurance amounts, Rx, OV Copays and many other benefits  PPO, Indemnity, & HSA/HRA compatible plans available  Minimum Essential Benefit plans

Self-Funding: A Basic Definition  Employer establishes plan to provide health care benefits to its employees  Employer limits exposure by purchasing excess loss coverage  Helps employer fund the unpredictable, catastrophic losses & excessive utilization  Self-funds predictable claims  Allows smaller employers to self-fund successfully For many groups, Self-Funding is a viable alternative to fully insured plans and HMOs

Excess Loss Coverage  Protection for the Employer against unexpected or unpredictable claims  Two types (typically packaged together):  Specific – helps protect the employer from large claims on any one member/family  Aggregate – helps protects the employer from heavy claim utilization on the group as a whole  Excess loss coverage for AmeriShare is provided by Companion Life Insurance Company  Rated A+ (Excellent by A.M. Best)

Specific Excess Loss  Helps limit the employer’s exposure on any one individual  Reimburses the employer for claims paid in excess of the Specific Deductible that are incurred and paid within the time frames elected when coverage was purchased  With ATA, prescription, dental, and vision benefits can be covered in addition to medical  Reimbursed immediately as claims are paid

Specific Deductible Options  Amount selected by the employer  Function of company’s size, risk tolerance, financial resources, plan of benefits and claim history  AmeriShare $7,500 to $50,000 (varies by state)  May be per person or 2x cap per family

Supplemental Individual Retention Deductibles (SIR) or “Lasers”  An SIR is higher specific deductible for an individual with potential large claims (Remember that excess loss coverage is intended to cover unknown or unpredictable losses)  An SIR is an underwriting/Risk Management tool used to:  Avoid loading excess loss premiums  Make self-funding available to more groups if they are willing to assume more risk  We will review and consider removing lasers at renewal

Aggregate Excess Loss  Helps limit the employer’s exposure for the group’s claims as a whole  Reimburses claims paid above the “Aggregate Deductible” that are incurred and paid within the time frames elected when coverage was purchased  Aggregate deductible is determined by our underwriting facility  Expected claims determined actuarially based on the demographics and history of the group  Aggregate coverage can also include Rx, dental, and vision claims.

Monthly Aggregate Accommodation Provides monthly protection against  unpredictable claim fluctuation Advances funds to cover heavy claims utilization  Paid if accumulated claims exceed “monthly  aggregate accommodation point” Must be repaid:  When accommodation point again exceeds 1. accumulated claims, or On termination, if accommodation point is less than 2. the aggregate deductible

Specific & Aggregate Contracts  Many specific and aggregate options are available based on employer needs  Contracts vary by when a claim is incurred and when it must be paid in order to be covered  Differs from fully insured plans, which are essentially “Incurred” contracts (a charge for claims incurred but not reported is collected up front as a part of each monthly premium)  Specific and aggregate can be sold with different coverage periods

Contract Types – Example #1  12/12: Claims Incurred AND Paid within the plan year 1/1 12/31 Incurred Paid

Contract Types – Example #2  12/15: Claims Incurred within plan year AND Paid within the plan year PLUS three months following – this is called “run - out” coverage 1/1 12/31 3/31 Incurred Dates Paid Dates

Contract Types – Example #3  15/12: Claims Incurred within the plan year Plus the 3 preceding months AND Paid within the plan year – this is called “run - in” coverage 10/1 1/1 12/31 Incurred Dates Paid Dates

Specific & Aggregate Options AmeriShare Specific Aggregate FY RN FY RN 12/15 12/15 12/15 12/15 12/18 12/18 12/18 12/18 12/12 24/12 15/12 24/12 12/12 24/12 w/TLO

Funding Options  Minimum – group makes periodic deposits to claims account as needed to fund claims  We advise depositing an amount equal to two months’ estimated aggregate deductible to establish reserve and avoid claim delays  Maximum – group funds up to the monthly accommodation point amount shown on their bill  Funding option can be changed on request

Plan Surplus  Excess money in the Claims Fund can be:  Rolled over to cover the next year’s claims or used to reduce future Claims Fund contributions  Change from maximum funding to minimum funding  Used to add benefits to the plan  Used to fund run-out liability (discussed later)  Used to fund any other employee welfare benefit plan established pursuant to ERISA, such as:  Dental, vision, LTC, life, disability income, unemployment plans, vacation plans, pre-paid legal plans  Returned to the Plan Trustee at termination

Understanding the Proposal  Fixed costs  Amount paid each month regardless of claims utilization  Includes:  Excess loss coverage premiums  Agent compensation  TPA service fees  Other fees: PPO access, preauthorization, utilization management, disease management  Maximum Aggregate Deductible  Claims fund  Includes 5% claims fee for AmeriShare groups and 1% claims fee for ISL groups

Summary Advantages for Your Clients:  Benefit from favorable claims experience  Maximum claims and insurance expenditures for the next 12 months is known up front  Keep interest on claims reserves  Pay reduced carrier profit & risk charges  Pay less state premium taxes  Has the potential for improved cash flow  Protection from adverse claims experience

Summary Advantages for Your Clients:  Greater control over plan design  Custom design a benefit plan that will attract and retain employees  Costly state mandated benefits can be avoided  Receive information for decision making  Detailed reports show where benefit dollars are going  Enables the development and management of cost- effective benefit plans