Pictured Above (Left to Right): Dan Soucier,
Chief Financial Officer; Charlie Soleau,
Executive Vice President & Brooks
Everyone at DGB hopes you are enjoying your summer and will take advantage of the nice weather, get your bodies moving, enjoy the outdoors and your friends and family.
Considering the whirlwind of change that has taken all aspects of health care on a wild ride, we felt that the calmer (hopefully) days of summer would be a good time to reflect back on all the positive and beneficial reasons to self-insure your health and welfare plans. In times of great change, reacquainting ourselves with the basics can have a settling effect
With that in mind, Section 1254 of the Patient Protection and Affordable Care Act (PPACA) required the Department of Health and Human Services (HHS) and the Department of Labor (DOL) to provide an objective report to Congress that compares fully-funded insurance to self funding. This report came up with 7 key advantages for self-funded plans (We have been telling you this for years, but now it is coming from an official government study!):
1) Control over the design of the benefits program, including exemption from state mandated benefit requirements
2) Lower administrative service costs than would be charged by a commercial carrier
3) Easier access to data, improving the employer's ability to evaluate health benefit costs and implement cost containment measures
4) Improved cash flow generated by keeping funds in-house until needed for payment of claims
5) Avoidance of state insurance premium taxes that can range from 1% to 2.5% of premium paid
6) Ease of altering the group's contract with a Third Party Administrator (TPA) or stop loss insurer without affecting their employees' choice of providers
7) ERISA based equity through standardization of plans across states (avoiding potential state by state insurance law differences in mandated benefits) and efficiency through economies of scale that come with offering a single set of plans to all employees regardless of location
We know PPACA did not make anything easier for anyone but based on findings in this PPACA compelled study, we believe self-funding will continue to grow in the United States. We have seen evidence of this trend at DGB over the last 15 months. It is estimated that 75% to 80% of employee benefit health plans are using self funding as a way to control costs. PPACA (Health Reform) was aimed at insurance companies for what the government deemed as having excessive profits and a lack of transparency. Self-funded plans are comparatively unscathed by Health Reform and can thus continue to offer employers and plans the cost effective much-desired flexibility of plan design.
As you can see, you and your company are enjoying the many benefits that a self-funded plan affords you. While you are enjoying some down time this summer, you can be assured that, as your Third Party Administrator, we will continue to stay on the cutting edge to provide you with new ideas, products and services that assist in controlling healthcare costs.
We thank you for your business. Please read on and enjoy many of the other sections of the Group Scoop and let us know if you need additional insight on any items in this edition of the Group Scoop.