Predictable costs should be funded and paid by the employer. Purchasing insurance to cover predictable claims is not cost effective due to loads for overhead, taxes, profit, sales commission, reserves, etc., in addition to the full amount of the predictable claims. Self-funding these predictable claims, results in a direct saving of medical insurance premium loads.

Unpredictable costs, such as shock claims or catastrophic losses, are justifiably insured through an excess-loss contract with an insurance carrier. Premiums are much lower for this type of coverage, so the insurance company loads are correspondingly lower.

Why Self-Fund?

Increase Cash Flows
• A self-funded plan does not require per-funding of future claims, or reserves for “incurred but not paid” claims. This allows the employer full usage of working capital and interest earnings on any monies in the insurance fund.
• Fixed costs of a self-funded plan are normally less than those of a conventional fully insured plan. Savings results from lower claims administrative costs, premium taxes, commissions, overhead, etc.

Employer Control
• The employer can develop a plan of benefits tailored to employees’ needs.
• The employer has complete control and knowledge of where and how contributions are distributed.

Share In Risk
• Excess-loss insurance protects the employer in a “bad” claims year. In a “good” claims year, the savings in paid claims are available immediately since the funds remains in the employer’s control.

Is Self-Funding for Your Company?
• If you have 50 or more employees covered for health benefits,
• If you are looking for a way to contain your health care costs,
• If you want timely information and reports about your plan,

How Does Self-Funding Work?
• An employer who decides to implement self-funding first retains a third party administrator (TPA). Together they decide upon a plan of benefits, usually similar to the fully-insured group plan being replaced. Often the TPA will suggest various cost containment measures that may be utilized in the plan. The TPA provides the plan document, distributes certificates to the employees, pays eligible claims and maintains all records for the employer. The TPA also helps determine the amount of employer funds that must be contributed to the plan. To offset unpredictable costs, the TPA will generally advise that the plan purchase an excess-loss insurance contract.

• Excess-loss contracts are available through BENEFIT PLAN ADMINISTRATORS, Inc. in two forms: aggregate excess-loss and individual excess-loss. These two types of coverage protect the employer’s self-funded medical plan from unpredictable losses should there be a year in which either unanticipated or catastrophic claims occur.

• Aggregate excess-loss insurance limits the overall annual claims exposure of the employer’s self -funded plan. The employer is expected to fund the predictable claims cost. Predictable (expected) paid claims make up the employer’s annual aggregate deductible. If eligible claims paid by the TPA during the contract period exceed the annual aggregate deductible, the aggregate excess-loss insurance reimburses the employer at the end of the contract period for the excess amount.

• Individual excess-loss insurance protects the employer’s self-funded plan from losses due to catastrophic claims attributed to any on individual. A per-person deductible is established based on the size of the group and the amount of risk the employer wants to assume. If eligible medical claims paid for any individual exceed this deductible, the payments made in excess of the deductible are reimbursed to the employer under the individual excess-loss insurance contract. Individual and aggregate excess-loss coverage can be purchased in the following forms:

- For claims incurred and paid in the 12-month contract period. (12/12)

- For claims incurred in the 12 month contract period and paid in that contract period plus 3 month thereafter. (2/15)

- For claims incurred in the 12 month contract period plus 3 months prior to that period and paid in the 12 month contract period. (15/12)

Responsible Plan Management
As medical costs continue to escalate, claims administration and data management become more critical, since claims represent up to 95% of overall self-funded plan costs.

Responsible Plan Management Prompt, Accurate Claim Settlement with QicClaim
Our claims analysts are experienced and they understand your plan. With one easy data entry, our QicClaims Health Claims Management System can verify employee eligibility, compare current charges to prior history, track provider payments and calculate the benefit payment allowed. Claim checks and a corresponding explanation of benefits are produced automatically.

Quality Assurance
Our claims analysts use the QicClaim system to monitor employee and dependent eligibility. Name changes, per-existing conditions or extension of benefits are updated instantly. In Addition, our people coordinate benefits with other plans or plan limitations and where additional data is required, we follow up immediately.

Financial Control
For self-funded employers, we use our system to manage the loss fund and checking account established for claims. Check register and payment summaries are maintained and billing can be directed to any plant or office location. We provide further assistance in completing necessary federal disclosure forms and provider 1099s.

State Of The Art Data Analysis
As a fully automated Third Party Administration firm, we provide self-funded employers with timely, understandable reports on claims experience, provider practices and funding status. A few of our standard management reports are:

• Monthly check register - monthly paid claims register - benefit analysis report - coverage analysis report - lag study/cash analysis - eligibility listings - 1099s and W-2s - provider payment analysis

With our report generator and cost containment-reporting module, we have the ability to produce several utilization and provider reports. Some of the reports requested most often by our clients are:

• Hospital utilization statistics - diagnosis reporting - provider comparison analysis - loss ratio reports - average length of stay (by diagnosis and hospital) - weekend admission reporting (by diagnosis and hospital) - co-payment analysis - attending physician review - length of stay by cause.

In addition, custom reports may be designed to help employers compare health care providers or analyze plan utilization in further detail.

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