Self-Funding and CIGNA Select Solutions. Brian Helmly Rogers Benefit Group

Transcription

1 Self-Funding and CIGNA Select Solutions Brian Helmly Rogers Benefit Group 1

2 Innovative funding options CIGNA offers more funding options for smaller companies than any other national health company. A fully insured option Two self-funding options 2

3 CIGNA Offers More Funding Options than Any Other Carrier RISK : REWARD Fully Insured Level Funding Graded Funding Fixed Monthly Cost Participating Contract All dedicated to cost control 3

4 Fully Insured Risk Pooling Fully Insured funding averages the risk across the pool. On average, selffunded employers run under expected four-out-of-five years, but experience volatility year over year and must be prepared for the bad year.* High Claims Expected Claims $ Low Claims *Source: The Kaiser Family Foundation Employer Health Benefits Survey,

5 Fully Insured Funding Functions as full insurance protection Employer pays a fixed monthly premium Insurance plan assumes full claim liability Predictable expenses Premiums do not fluctuate based on actual claims incurred by plan members Rates are set prospectively and are guaranteed for Benefits aligned by state State required benefits are included automatically Also referred to as pooled or guaranteed cost the plan year No additional costs at termination 5

6 CIGNA Fully Insured Product Overview 51 (or more) ELIGIBLE and Minimum of 50% PARTICIPATION 6

7 Simplicity and predictability Innovative funding options A fully insured option Fully insured funding is ideal for companies looking for the financial protection that comes from knowing their annual health care expenses. With a fully insured option, companies: Can easily budget with a single, set premium amount due each month. Get full protection for covered claims, regardless of how high claims go during the year. Enjoy features that are straightforward and easy to understand. Gain financial advantages in claims risk by being combined with a large group of smaller employer clients. 7

8 Self-Funding Functions as a selfadministered plan Employer pays an administrator to provide benefits Often paired with Stop-Loss insurance to limit the total liability (especially for smaller employers) Pay for what your plan uses Employer liable for paying claims incurred by their plan s members Low claims: > lower payments; High claims: > higher payments Employer holds reserves (versus fully insured carrier holding reserves) Benefits uniform among all states Flexibility to design a customized benefit plan not subject to state mandated benefits Designed with the help of an administrator and broker based on employer s/ employee s needs Also referred to as ASO (Administrative Services Only) For this presentation, all references to self-funding assume a paired arrangement with Stop-Loss insurance 8

9 Why Consider Self-Funding? Your client wants to benefit financially from good claims experience Your client needs greater control and flexibility over their plan design (No canned plans) Your client needs one consistent plan design across multiple states You and your client want better reporting & transparency of their healthcare costs (Puts you in better position to negotiate renewal to help clients) Your client wants to participate in the health and wellness of their members Your client wants lower Premium Taxes 9

10 What about self-funding can scare small employers? Fluctuations in monthly payments Unknown Terminal Liability due if they terminate the plan Large claims and/or unfavorable claims experience Delays in stop loss reimbursements Hidden fees or pass through costs that make budgeting difficult Stop Loss covered charges not matching plan covered charges Complex contract provisions - Minimum Attachment - Deficit Carryover Provision - Lasers at renewal 10

11 CIGNA Level Funding Product 25 (or more) ENROLLED 11

12 Level Funding: Protection Geared to Smaller Employers CIGNA Stop Loss Provisions Low Individual stoploss levels with Immediate Reimbursement Low attachment levels with Monthly Accommodation 15 months of Runout protection (12/27 spec & agg) Level Funding Contract Provisions No lasers No deficit carry forward No terminal liability No minimum attachment Includes 12/27 spec & agg Confidential unpublished property of CIGNA. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel CIGNA 12

13 How does Level Funding Work? Client pays pre set level payments (max costs) each month of policy year, based on actual enrollment each month Client and broker can view monthly claims reporting and assess expected surplus throughout the year In month 15, a reconciliation is done to assess Claim Funding Surplus, less the Terminal Fund 1 set aside (to cover runout claims; no additional fees due) In month 16, the client benefits from an administrative fee credit for their portion* of the Claims Funding Surplus $35,000 $30,000 Terminal Fund = 50% Mo. 11 Claim Funding + 75% Mo. 12 Claim Funding Total Costs $25,000 $20,000 $15,000 $10,000 $5,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 15 month runout 1 Held by CIGNA on behalf of the group Monthly claims funding (MCF) Administrative and insurance costs (A&I) *Surplus Share arrangements vary and may be impacted by state regulations. Includes 2/3 option, ½ option, and 100% option. 13

14 Who Are the Ideal Candidates? Level Funding The losers under Obama Care (Young, healthy, favorable industry) Wants to benefit from good claims experience Needs greater control and flexibility Needs consistent plan across multiple markets Wants better reporting & transparency Wants to participate in the health and wellness of their members Wants lower Premium Taxes Is accustomed to fully insured Needs predictable payments Needs low pooling level 1 What employers want from health insurers in 2010: Better information, more value, Pricewaterhouse Coopers Health Research Institute, January

15 CIGNA Graded Funding Product 25 (or more) ENROLLED 15

16 Graded Funding: Protection Geared to Smaller Employers, with Added Flexibility CIGNA Stop Loss Provisions Graded Funding Contract Provisions Low Individual stoploss levels with Immediate Reimbursement Flexible Aggregate Attachment Points No lasers Optional deficit carry forward Pre-established terminal liability Low attachment levels with Monthly Accommodation 15 months of Runout protection (12/27 spec & agg) Optional minimum attachment 12/27 spec & agg Confidential unpublished property of CIGNA. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel CIGNA 16

17 How does Graded Funding Work? Traditional self-funded product, but designed for the smaller employer Client pays fixed costs each month plus claims, up to a pre-defined maximum Financial design of the product follows claim patterns: Month 1 (25%) & Month 2 (50%); Months 3-12 are at 100%. Allows for cash flow savings to employer. Client and broker can view monthly claims reporting and assess savings throughout the year The employer retains all unspent claim dollars under pre-set liability maxes Reserve liability is pre-determined, and held by the client until termination 125% liability not collected in Month 1 & 2 = terminal liability funding 17

18 Who Are the Ideal Candidates? Graded Funding The losers under Obama Care (healthy, young, favorable industry) Wants to benefit from good claims experience Needs greater control and flexibility Clients seeking cash flow advantage Needs consistent plan across multiple markets Wants better reporting & transparency Wants to participate in the health and wellness of their members Wants lower Premium Taxes Wants to retain ALL unspent claim dollars Is comfortable with variations in monthly cost, and like the benefit of cash flow 18

19 Self-Funded CIGNA vs TPA 19

20 NETWORK SELF-FUNDED CIGNA VS TPA CIGNA OWNED & CONTROLLED BY CIGNA TPA RENT-A-NETWORK (PATIENT MAY BE BALANCED BILLED) NETWORK DISCOUNTS TIER 1 TIER 3 CONTRACT TYPES FIXED FEE FOR SERVICE FOR SPECIFIED TIME PERIOD PERCENT DISCOUNT OFF CURRENT RETAIL SERVICES ALL PROVIDED BY CIGNA OUTSOURCED TO MULTIPLE VENDORS ADMINISTRATION FEE FEE IS ALL-INCLUSIVE FEE MAY NOT BE ALL-INCLUSIVE CIGNA TPA RUN-OFF LIABILITY DETERMINED AT TIME OF SALE MAY BE UNKNOWN AT TIME OF SALE RUN-OFF ADMINISTRATION FEES DETERMINED AT TIME OF SALE MAY BE UNKNOWN AT TIME OF SALE

21 SELF-FUNDED CIGNA VS TPA CIGNA TPA SET UP FEES? PLAN DOCUMENT PREP? CLAIMS ADJUDICATION? Items to Consider: THIRD PARTY SUBROGATION LITIGATION RX SERVICE FEES? PRINTING? NETWORK ACCESS FEES?? WELLNESS PROGRAMS? MEDICAL MANAGEMENT? AGENT COMMISSIONS? DISCOUNT PROGRAMS (VISION; HEALTH CLUB)? EAP/HOTLINE/24 HOUR LINE? ACTURIAL VALUE? EXTENSIVE CLAIM REPORTS? CONSULTING SERVICES?

22 Requirements for Quoting 22

23 CIGNA Quoting Information Unlike other carriers case characteristics make a huge difference in rating discounts given for favorable characteristics, Individual Medical Underwriting is not weighted as heavily as other carriers 25 enrolled employees to 99 enrolled employees - Current Census (including COBRA) - Current Rates - Current Benefits - Renewal Rates (once available) - Contribution Strategy - 5 Year Carrier History - Group Questionnaire (For estimated rate) - For firm/final rates we need individual health statements 100 enrolled employees to 250 eligible employees - Current Census (including COBRA) - Current Rates - Current Benefits - Renewal Rates (once available) - Contribution Strategy - 5 Year Carrier History - Group Questionnaire - Month-by-Month Claims Experience - Large Claims Report 23

24 Case Characteristics Example Employee Participation 95% (+6 points) Employer Contribution for employees 95% (+3 points) Employer Contribution for dependents 50% (0 points) Carrier History 1 carriers in 5 years (+4 points) Large Claims No Large Claims (+8 points) Available Info Current and Renewal Rates Both (+3 points) Mandatory Online Health Risk Assessment Yes (+2 points) Number of COBRA Participants None (0 points) 26 Total Points = 10% discount Confidential unpublished property of CIGNA. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel CIGNA 24