Self-Funding with AmeriShare Presented by: American Trust - - PowerPoint PPT Presentation

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)

• 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

American Trust Administrators

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

• 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

Why Do Employers Like It?

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

Self Funding and the ACA

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
• r 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.

• 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:

1.

When accommodation point again exceeds accumulated claims, or

2.

On termination, if accommodation point is less than the aggregate deductible

Monthly Aggregate Accommodation

• 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

Specific & Aggregate Contracts

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 w/TLO 24/12

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

• 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

Plan Surplus

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

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

Summary