FAQ's
What are the benefits of Self Insurance?
With what laws must the Self Insured employer comply?
Will other benefits, such as Life Insurance, be affected by Self Insuring the health Plan?
What is Stop Loss coverage?
Will Self-Insuring require a redesign of my existing health Plan?
What should I expect from my TPA?
What are the benefits of Self Insurance?
Employers find self-insurance appealing because they maintain better control over claim administration. Some key advantages include:
- Faster payment of valid claims
- Better evaluation of questionable claims
- Improved employee relations with superior claim service
- Better coordination of benefits
- Reduction, avoidance or elimination of over-reserving for claims
- Cash flow improvement since premium is not paid in advance to an insurance carrier. Investment income which is earned will benefit the health plan rather than the insurance carrier
- An employer doesn't pay for state premium taxes, which represent a percentage of monthly premium
- With the exception of mandates under Federal law and regulations, Plan Design can be tailored to better fit the needs of employees and employers rather than be structured to conform to a myriad of coverages imposed by State laws
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With what laws must the Self Insured employer comply?
State laws cannot impose requirements on self-insured welfare benefit plans that impact on operation and design. The Plan does, however, come under all relevant Federal legislation such as Employee Retirement Income Security Act (ERISA), Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Americans with Disabilities Act (ADA). RMSCO, Inc. can provide review and guidance in this area and in structuring of your Plan Document.
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Will other benefits, such as Life Insurance, be affected by Self Insuring the health Plan?
No. Life Insurance and other benefits will not be affected.
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What is Stop Loss coverage?
Stop Loss coverage is insurance sold to Self-Insured health Plans to protect against financial loss due to unexpected large losses or excessive claim frequency. There are two types of coverage: Specific and Aggregate.
Specific Stop Loss Insurance shields against the threat of “shock loss” by limiting claim liability with respect to any one Plan participant. It provides prompt reimbursement if claims exceed a specified amount per participant, all cause deductible amount in a given policy year.
Aggregate Stop Loss Insurance protects against unusual fluctuations in claim frequency. When the annual claim limit for all participants exceeds a predetermined level., Aggregate Stop Loss Insurance reimburses the Self Insured employer for all claims exceeding that level during the policy year.
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Will Self-Insuring require a redesign of my existing health Plan?
No change will be required. Any health Plan changes, however, will have to be set forth in a Plan Document. RMSCO, Inc. can assist you in making changes that are most appropriate to your goals and employee expectations. It is recommended that no substantial changes occur in the first year of self-insuring.
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What should I expect from my TPA?
The broad range of services offered by a TPA should include Plan Design consulting, aggressive pharmacy arrangements, contracting for Stop Loss coverage, claim administration, the availability of health provider networks, medical management, writing Plan Documents, client reporting and COBRA/HIPAA administration.
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