Self-Funding with AmeriShare Presented by: American Trust Administrators, Inc.
American Trust Administrators A full service Facility Established in 1972 – over 40 years of experience Specializing in self-funded medical plans for groups with 10 or more employees Pioneered self-funding for small to medium employers Headquarters in Lee’s Summit, MO (suburb of Kansas City)
American Trust Administrators ATA offers cost savings through: National and regional PPOs ATA Rx Pharmacy Benefit Management program ScriptCare HSA-qualified and other high deductible plans Dual & Triple option plans Direct Contracting Reference-based pricing strategies
ATA Products AmeriShare - self-funded medical plan For groups of 10 to 99 (varies by state) underwritten by long form app with some telephone interviews ATA gives the smaller employer an opportunity previously available only to large employers
ATA Products Life, AD&D, & Dependent Life Fully insured, packaged with medical Dental and/or Vision Available as a self-funded benefit with AmeriShare
Self- Funding: What It Isn’t Not for groups with above average claims experience Not a short-term solution to reducing and controlling benefit costs A long-term strategy, not a quick fix Employer’s business should be stable; not likely to reduce the number of employees
Why Do Employers Like It? Benefit directly from favorable claims experience Maximum expenditures for the next 12 months are known up front Keep interest on claims reserves Pay reduced carrier profit & risk charges Pay less state premium taxes Has the potential for improved cash flow
Why Do Employers Like It? Greater control over plan design Design a benefit plan that will attract and retain employees Costly state mandated benefits can be avoided (self- funded plans are governed by ERISA) Receive information for decision making Detailed reports show where benefit dollars are going Enables the development and management of cost- effective benefit plans
Self Funding and the ACA Self Funding… Does not have “Community Rate” Does not have to “Guarantee Issue” coverage Does not have 3:1 rate compression rules Does not have MLR rules Is not subject to some taxes/fees
Benefits Design Flexible benefit options may be tailored to group needs and managed for cost-effectiveness Choice of deductibles, coinsurance amounts, Rx, OV Copays and many other benefits PPO, Indemnity, & HSA/HRA compatible plans available Minimum Essential Benefit plans
Self-Funding: A Basic Definition Employer establishes plan to provide health care benefits to its employees Employer limits exposure by purchasing excess loss coverage Helps employer fund the unpredictable, catastrophic losses & excessive utilization Self-funds predictable claims Allows smaller employers to self-fund successfully For many groups, Self-Funding is a viable alternative to fully insured plans and HMOs
Excess Loss Coverage Protection for the Employer against unexpected or unpredictable claims Two types (typically packaged together): Specific – helps protect the employer from large claims on any one member/family Aggregate – helps protects the employer from heavy claim utilization on the group as a whole Excess loss coverage for AmeriShare is provided by Companion Life Insurance Company Rated A+ (Excellent by A.M. Best)
Specific Excess Loss Helps limit the employer’s exposure on any one individual Reimburses the employer for claims paid in excess of the Specific Deductible that are incurred and paid within the time frames elected when coverage was purchased With ATA, prescription, dental, and vision benefits can be covered in addition to medical Reimbursed immediately as claims are paid
Specific Deductible Options Amount selected by the employer Function of company’s size, risk tolerance, financial resources, plan of benefits and claim history AmeriShare $7,500 to $50,000 (varies by state) May be per person or 2x cap per family
Supplemental Individual Retention Deductibles (SIR) or “Lasers” An SIR is higher specific deductible for an individual with potential large claims (Remember that excess loss coverage is intended to cover unknown or unpredictable losses) An SIR is an underwriting/Risk Management tool used to: Avoid loading excess loss premiums Make self-funding available to more groups if they are willing to assume more risk We will review and consider removing lasers at renewal
Aggregate Excess Loss Helps limit the employer’s exposure for the group’s claims as a whole Reimburses claims paid above the “Aggregate Deductible” that are incurred and paid within the time frames elected when coverage was purchased Aggregate deductible is determined by our underwriting facility Expected claims determined actuarially based on the demographics and history of the group Aggregate coverage can also include Rx, dental, and vision claims.
Monthly Aggregate Accommodation Provides monthly protection against unpredictable claim fluctuation Advances funds to cover heavy claims utilization Paid if accumulated claims exceed “monthly aggregate accommodation point” Must be repaid: When accommodation point again exceeds 1. accumulated claims, or On termination, if accommodation point is less than 2. the aggregate deductible
Specific & Aggregate Contracts Many specific and aggregate options are available based on employer needs Contracts vary by when a claim is incurred and when it must be paid in order to be covered Differs from fully insured plans, which are essentially “Incurred” contracts (a charge for claims incurred but not reported is collected up front as a part of each monthly premium) Specific and aggregate can be sold with different coverage periods
Contract Types – Example #1 12/12: Claims Incurred AND Paid within the plan year 1/1 12/31 Incurred Paid
Contract Types – Example #2 12/15: Claims Incurred within plan year AND Paid within the plan year PLUS three months following – this is called “run - out” coverage 1/1 12/31 3/31 Incurred Dates Paid Dates
Contract Types – Example #3 15/12: Claims Incurred within the plan year Plus the 3 preceding months AND Paid within the plan year – this is called “run - in” coverage 10/1 1/1 12/31 Incurred Dates Paid Dates
Specific & Aggregate Options AmeriShare Specific Aggregate FY RN FY RN 12/15 12/15 12/15 12/15 12/18 12/18 12/18 12/18 12/12 24/12 15/12 24/12 12/12 24/12 w/TLO
Funding Options Minimum – group makes periodic deposits to claims account as needed to fund claims We advise depositing an amount equal to two months’ estimated aggregate deductible to establish reserve and avoid claim delays Maximum – group funds up to the monthly accommodation point amount shown on their bill Funding option can be changed on request
Plan Surplus Excess money in the Claims Fund can be: Rolled over to cover the next year’s claims or used to reduce future Claims Fund contributions Change from maximum funding to minimum funding Used to add benefits to the plan Used to fund run-out liability (discussed later) Used to fund any other employee welfare benefit plan established pursuant to ERISA, such as: Dental, vision, LTC, life, disability income, unemployment plans, vacation plans, pre-paid legal plans Returned to the Plan Trustee at termination
Understanding the Proposal Fixed costs Amount paid each month regardless of claims utilization Includes: Excess loss coverage premiums Agent compensation TPA service fees Other fees: PPO access, preauthorization, utilization management, disease management Maximum Aggregate Deductible Claims fund Includes 5% claims fee for AmeriShare groups and 1% claims fee for ISL groups
Summary Advantages for Your Clients: Benefit from favorable claims experience Maximum claims and insurance expenditures for the next 12 months is known up front Keep interest on claims reserves Pay reduced carrier profit & risk charges Pay less state premium taxes Has the potential for improved cash flow Protection from adverse claims experience
Summary Advantages for Your Clients: Greater control over plan design Custom design a benefit plan that will attract and retain employees Costly state mandated benefits can be avoided Receive information for decision making Detailed reports show where benefit dollars are going Enables the development and management of cost- effective benefit plans
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