Employer Services

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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.