Alternative Financing Solutions

A fully-insured health plan can work. However, most financial executives know it’s not without pain. You’re always paying for last year’s claims with current premiums, you get no actionable data, plan design flexibility is limited and changing carriers to save money causes disruption.

We help you evaluate, design and implement alternative financing solutions that won’t sacrifice employee care, morale, out-of-pocket spending or your bottom line.

An HRA enables an employer to purchase a High Deductible Health Plan and reimburse expenses below the purchased plan’s deductible. This keeps premium costs low, while offering a high level of benefits.

A Level Funding arrangement enables employers to benefit from the regular and predictable cost of a fully insured plan and benefit from some of the flexibility of a self-funded plan without the uncertainty of fluctuating claims costs that comes with self-funding. If claims are less than the amount deposited to the claim-fund, the employer gets a refund of claim-fund surplus. If claims are more than expected, the employer is not asked to provide additional funds for the bad claim year. Employers get more claims utilization data and because these are ERISA plans, they don’t need to comply with certain state and ACA benefit mandates.

In comparison to a fully-insured health plan, where for a fixed monthly premium all or most of the risk is with the carrier, in a self-funded plan, the risk is on the employer or plan sponsor (although most of the risk is transferred to the stop-loss policy). A third-party administrator (TPA) provides administrative services, and a stop-loss policy is purchased to reduce employer claims liability.

The employer pays administrative fees, stop-loss insurance premiums and actual claims up to a pre-determined threshold. Specific stop-loss coverage is purchased to limit the plan’s financial exposure on any one individual; Aggregate stop-loss coverage is purchased to protect against a higher than average frequency of claims for all eligible plan members combined within the group.

Self-funding is not right for every company. There are advantages and disadvantages. However, the arrangement does allow employers to gain control, have access to data, and deploy cost-containment strategies that improve employee care and actually bend the cost curve.

A group benefit captive allows employers to jointly form and manage their own insurance “entity;” as a result, they can reduce costs and increase control over their employee benefit programs using a self-funded finance model.  The captive provides an additional layer of protection for the employer and acts as a shock absorber.

Employers in a captive gain significant market leverage by sharing a stop-loss policy with other members of the captive, reducing the volatility that might be experienced by a traditional self-funded arrangement.

Group benefit captives give small to midsize employers a way to move to self-funding by reducing volatility, increasing buying power and typically offering lower individual stop-loss deductibles at more favorable pricing. The employer retains control to select the optimal TPA, Network, Plan Design, and cost-containment initiatives.

Self-funding with a benefit consortium provides an employer the purchasing power that comes from being rated with other companies under the same stop-loss carrier. Under this type of arrangement, employers keep the advantages of being self-insured, but gain the collective purchasing power of a much larger group.

Learn why a Benefit Captive
makes sense.