Self-funding your major medical plan can provide additional financial benefits over a fully-insured arrangement including better cash flow, greater flexibility in plan design to reduce cost, elimination of any state mandated benefits or premium taxes, and reduced risk and administrative charges. However, along with these advantages comes the risk of paying for unanticipated claim fluctuations and the need to manage your own health care plan expenditures. AFAS can provide the consulting support needed to understand your risks associated with self-funding.
- Assess your risk profile for high cost claimants using your actual historical claims experience (if available) and normative data aligned with your organization’s unique risk characteristics including size, industry, and employee demographic profile (age, gender, etc.).
- Provide recommendations on the appropriate level of stop loss coverage (individual and/or aggregate) given the risk profile.
- Assess your organization’s tolerance for risk acceptance and cost fluctuations.
- Create budget projections under self-funding and a comparison to current and projected costs under a fully-insured environment.
- Develop the annual reserve requirements (IBNR).
- Develop employee contribution rate based on the desired cost-sharing structure between employer and employees.
- Develop required COBRA rate.
- Provide an administrative and compliance checklist, including new requirements under the ACA.
- High cost claimant information.
- Stop loss recommendations.
- Plan design considerations.
- Budget projections.
- IBNR analysis.
- COBRA and employee contribution rate development.
- Considerations for current and future benefit strategy.