“In the self-funded world,” you can pick your partners,” McCurry says. “We get to pick first in class management and utilization review companies. We can choose our own prescription benefit manager. We can pick our own stop loss carriers. We can pick our own administrators. So you can go out and build your team that’s going to successfully and soundly operate your plan.” Furthermore, in a self-insured plan, the employer gets the data—and according to McCurry, data is power. “You can analyze what’s going on inside your own plan, and you can dissect that from any given direction and say what is working, what’s not working. Unless you have a couple hundred employees, on most fully insured plans you will never get that kind of data. They just will not disclose it,” McCurry says. For example, “We can tell at a glance that only 2 percent of our population is using preventive care,” McCurry says. “So now we know that we have to go out with some educational pieces to say ‘look, we’re paying these claims at 100 percent. Why aren’t you using this? Why are we not detecting problems early and fi xing them before they get to be a great big claim?’ And data would support that you would see that. From an operating point of view, having that data is critical: Now we can make decisions about our benefits plan that make sense.” Last but not least, there is the advantage of not having to comply with state insurance policy mandates, which may be of particular interest to companies that operate in various states. “Fully insured plans have to operate predominantly under state jurisdiction so they have to comply with state mandates which can add costs: They have state filings, lots of government regulation they have to operate with.” Self-funded plans, however, need only comply with minimum standards for retirement, health and other benefit welfare plans as mandated by Employee Retirement Income Security Act of 1974 (ERISA) and the encroaching Obamacare. Thus, self-funded plans can “reduce cost by an average 2 percent premium tax that does not apply to selffunded plans,” McCurry says. “We can drop off most all state mandates across the country.”
“In a self-funded plan, you’re going to get data sent to you on a weekly basis that says how much your claims were that week, and you’re only going to send that much to the insurance carrier, which in this case would be a third party administrator. But that’s the only amount you’re sending. Then once a month you will get a bill from the TPA and for the administration and stop loss premiums. That’s it!” —Ron McCurry Founder Alaska Employee Benefit Specialists
What’s in it for Them?
As expected, savings for the employer equates for savings to the employee. McCurry finds that employees who have a sense of control over how much they can save on their insurance premiums will use that to their advantage and that of their employers, and will often work as a team to keep costs down. Wellness, prevention, fitness programs, smoking cessation, chiropractic care, nutrition classes, weight loss programs and other incentives can all be written into a company’s self-insured plan. “Fully-insured plans are not in the habit of doing weight loss programs, for example,” McCurry says, including gastric bypass and lap band procedures. “But we see self-funded plans where we are building those in because we understand the long-term cost of not doing something with weight control. It’s going to lead to diabetes . It’s going to lead to heart problems. And so forward thinking employers have the ability to say ‘we will pay for these procedures.’”
bigger insurance component than the larger employers—but they still get to take advantage of claims that were never incurred, and that money stays in the bank as opposed to going to the insurance company.” “In a self-funded plan, you’re going to get data sent to you on a weekly basis that says how much your claims were that week, and you’re only going to send that much to the insurance carrier, which in this case would be a third party administrator. But that’s the only amount you’re sending. Then once a month you will get a bill from the TPA and for the administration and stop loss premiums. That’s it!” Another consideration: According to McCurry, data shows that blue collar workers generate fewer claims than white collar workers. Although not certain as to why, he admits that it may be due to physical activity level or less of an ability to leave work to go to a doctor, which may ultimately help companies who employ either type of worker develop a plan that benefits both employee and employer. MCurry also admits that there is risk: “We’re not going to be able to stop the million dollar preemie baby, or prevent the heart attack in many cases. But with the stop-loss insurance component, we can mitigate and address that risk for each company.” McCurry believes that this is the “Golden Era” of self-insured benefit plans. His industry is seeing a shift towards self-insured plans because of flexibility and cost-effectiveness, and is confident this trend will continue to extend down to smaller companies. “Odds are, year after year you will run lower costs if you’re self-funded than if you’re fully insured,” McCurry says. “My question to a client is, why isn’t this your benefit plan and not the insurance company’s plan?” R
Is a Self-Insured Plan Right for You?
According to McCurry, although the rule of thumb in the brokerage world says you can’t self-insure for less than 100 employees, he is writing plans down to 30 employees, with great success. “It’s just a matter of finding stop-loss carriers that will write that deductible down to a smaller amount, so it’s got a
www.akbizmag.com • Alaska Business Monthly • February 2013
Mari Gallion is Associate Editor at Alaska Business Monthly.
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