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Alaska Government Financial Officers Association
Presented by: Jeff RanfVP USI
Health Insurance Solution Using
Captive Risk Pool Presented by: Jeff RanfVP USI
Today’s Discussion
© 2015 USI Insurance Services. All rights reserved. 1
Why don’t more mid-sized public entity employers self-fund?
What is self-funding your benefit plan?
What is a medical insurance captive arrangement?
How can a captive work for Alaska public entities?
Could a group of employers develop their own captive?
Why would you want to do this?
© 2013 USI Insurance Services. All rights reserved. 4
Why DON’T More Mid-Sized Employers Self-Fund?
The cost of healthcare is scary, don’t want the risk
Volatility – Employer costs can vary significantly due to large claims or an aggregation of smaller claims. Or………..
…fearful of the maximum cost.
Fully insured plans are Turnkey.
Off the shelf.
No decisions need to be made.
© 2013 USI Insurance Services. All rights reserved. 8
What is self-funding?
It’s deciding to take control of your benefit program
It’s designing your own plan around your objectives, not the insurance carrier
It’s taking predictable funding risks
It’s avoiding some of the ACA requirements
It’s seeing where all your money is going including claims
© 2013 USI Insurance Services. All rights reserved. 8
What is self-funding?
Employing an experienced claims payer or third party administrator
Purchasing individual / aggregate stop-loss protection
Developing own plan design:
Deductible, coinsurance, co-pays, Rx
Dental, Vision, Travel, etc.
Deciding how YOU want your benefit to look
© 2013 USI Insurance Services. All rights reserved. 9
A Medical Captive Risk Program
Traditional self-funded programs pooling multiple employers’ the stop-loss premium
Sharing risk and rewards with like minded employers
Purchasing health insurance like Fortune 500 employers
© 2013 USI Insurance Services. All rights reserved. 9
A Captive Arrangement
How does it work?
Control---Plan Design, Wellness, Disease
Mgmt.
+ Transparency---Claims & Financial
Data
= Cost Stabilization
© 2013 USI Insurance Services. All rights reserved. 10
How can a Captive work for Public entities?
Employers band together forming their own pool. NOT A MEWA
Utilize regional & national networks
Each group retains own plan designs
Establishing their own stop-loss levels
Pool shares in underwriting profits on a pro-rata basis
© 2013 USI Insurance Services. All rights reserved.
WHY?
To smooth out the renewal volatility
To have more control of your costs
Because cities and boroughs are seeking a better solution
© 2013 USI Insurance Services. All rights reserved. #
How to plans differ?
Fully Insured Plans
100% Fixed Costs
All Services / Options controlled by the carrier
NO Employer Control
Carrier retains all the profits
© 2013 USI Insurance Services. All rights reserved. #
How to plans differ?
Self-funded Plans
40% Fixed Costs
Employer keeps unspent claims
Employer assumes most of the risk …and realizes control and transparency
Employer assumes their own claim volatility
Avoidance of ACA requirements
© 2013 USI Insurance Services. All rights reserved.
How to plans differ?
Captive
15% Fixed Costs
Employers assumes some risk, shares some risk and shifts catastrophic risk
Transparency: employer control
Employer retains up to 80% of the claim spend
Avoidance of ACA requirements
© 2013 USI Insurance Services. All rights reserved.
Other than the sharing underwriting profits…
Solving the volatility issue…
Pooling with other employers….
It looks and feels like your own plan.
The Look and Feel
© 2013 USI Insurance Services. All rights reserved.
NOW WHAT?
Usual submission of Info (census, plan design, rates, claims)
Third Party Administrator (TPA)
Benefit Plan Design & Retentions
Stop-loss Levels
Thank youPresented by: Jeff RanfVP USI