Self-Insured Health Plans: Group Coverage - Save more money over traditional health care programs

Self-insured health plans are now becoming popular amongst large companies, allowing them to create customized health care benefits packages and save more money over traditional health care programs obtained through standard providers. For companies with over 100 employees, their premium is based on their own loss history. When calculating future premium, underwriters will typically add 40% over an employer’s previous incurred loss to ensure that the amount is adequate to cover future risk and maintain an adequate profit margin.

With self-insured plans, a company will assume the financial risk of covering its employees based on the medical plans they offer. In essence, the employer is paying all of the health care costs in addition to administration costs. The policy will be managed by a TPA (Third-Party Administrator) and if no or little claims are paid out, the client will stand to benefit by profiting from the difference of what they would have paid in premiums and the actual payout disbursed. The employer can choose to limit their risk up to - or a little bit over - the amount they would have paid in premium under a fully insured program by purchasing stop loss coverage at any point.

A hired TPA handles claims, payments and the day-to-day administrative tasks of the self-insured benefits packages. The TPA will use the same coverage model followed by traditional insurance carriers to uphold structure of this healthcare network and contain cost. This will include:

  • PPO (Preferred Provider Organization) - A nationwide network of affiliated physicians who participate in this healthcare network providing quality care and significant savings
  • PBM (Pharmacy Benefits Manager) - A nationwide network of participating pharmacies providing extensive savings on prescription costs
  • Hospital & Lab Network - A network of participating Hospitals & Laboratories providing additional savings on those costs.

Through the combination of these 3 distinct elements, as well as other cost containment measures, the TPA will be in the position to administer healthcare plans just as equivalent to the level of a standard fully insured insurance plan and ensure that the cost of claims is kept to an absolute minimum. Most importantly, the PTA is in a position to do a better job over traditional carriers because they can customize plans and pay more attention to the individualized claims and administration process.

In some cases, the client will pay monthly "premium payments" directly into a fund managed by the TPA that is used to cover employee health expenses claimed. During periods when claim amounts are lower than expense paid out, the remaining funds left are returned to the client. During periods when claims are greater than expected, the Stop-Loss policy obtained by Broad Coverage Service when requested will cover any such payments.

Broad Coverage Service specializes in analyzing the challenges of each company and determining whether the application of a self-insured health plan is prudent - and will work with clients to choose the appropriate TPA, PPO, PBM and Hospital & Lab Network in an effort to maximize savings and minimize losses.