General questions:

1.  Can someone describe the difference between an ASO & TPA?

2.  In your opinion, is 100 too small for this?  My research indicates otherwise - curious if someone has experience.

3.  Can someone put Aggregate Benefit into lamen terms? 

4.  Has anyone done this?  Open to suggestions re staff communication, how to determine which coverages are essential to meet staff requirements, etc.

 

Sorry...I'm sure I'll have many more questions as I continue my reading!  Thank you.

 

I've experienced both good years and bad years under the plan, and I am very happy staying with the plan.  We utilize a reinsurance carrier to cover claims over x amount.  

 

I agree with timk that it can be very good for controlling your renewal costs.  We compared our plan this past year with a fully-insured plan.  The fully insured plan would have been slightly lower than the fully-burdened plan (i.e. we maxed out the claims), but it would have been at only 80% of our current coverage.  This is a nationally known chain and they will not offer us our current coverage.

 

However, for smaller groups, self-funding with a stop-loss of, say, $40,000 can prevent you from going bankrupt if you have a major claim, can work.

 

That is exactly what our plan is comprised of.

 

We are basically self funding the plan but the company is covered by stop loss on specific and aggregate levels. It is not fully self-funded but instead comprised of claims funding and stop loss premiums. To the employee is a seemless basic deductible plan. By doing this we can set a maximum risk exposure for the plan.

 

In our case, the maximum exposure was about equal to our previous fully funded premiums. In a bad year, we would spend an amount equal to our old fully funded plan.

 

One reason it works in a bad year it is not as tough on the carrier. First, the carrier's loss to premiums ratio is much lower because majority of claims come from funding.  They also have much lower risk since most claims are not going to fall into the stop loss. Thus, with a tough year last year (where we actually fell into stop loss) our increase was 5%.

 

Another reason it works is in a good year, anything we don't spend on funding claims is cash reserves for the next year. You cannot take that money out because it is a trust. Still it  means we can either lower costs, increase your stop loss limits, or lower funding the following year. All of those result in savings.

 

In fully funded insurance if you don't use it you don't get any premiums back AND you probably still get some type of increase.

 

I know that I've talked about it in the past and since we are so small, it is not feasible for us.  But if I had 100+ employees to cover, I would seriously consider trying to do what others have posted that they have accomplished.

 

rr