Why consider a Superior Self-Funded Solution through PAI?
Many groups choose to self-fund their health benefit plans because it gives them greater flexibility in the design of the plan compared to fully-insured packaged products. But there are other advantages as well. Your agent or broker can help determine what is right for your group.
Good claims experience, profits go to you.
Self-funded benefits can put you in control over managing the cash flow and cost of your health care benefits program. In fact, when changing from a traditional insurance plan to a self-funded system, the normal claims lag generally frees a significant amount of cash. With a good claims experience, monies that would be spent on premiums can be retained as your profit. With a 501(C)(9) trust fund, you also earn tax-free interest income on any unclaimed reserves. All contributions to your fund are tax deductible and you'll save on premium taxes too.
Continuity and Freedom
Stop loss insurance is typically part of a self-funded solution to help companies manage their claims exposure. With PAI, you can keep your plan design from year to year, even if you choose to change your stop loss carrier. PAI will shop stop loss carriers when your plan is up for renewal each year. This will ensure you the most competitive rates on the market so your employees enjoy a stable benefit, while you have the freedom to change carriers as you see fit.
Stop Loss FAQ
What is advance funding?
Some carriers will offer groups advance funding when a participant who has already exceeded the specific stop loss deductible has additional claims. PAI can seek advance funding from the carrier, which would mean the provider's payment would be held until the carrier responds with either a denial or the funds to cover the check.
- The specific stop loss deductible must be fully satisfied.
- The amount of the check must equal or exceed $5,000.
- The check must be issued no later than 30 days before the end of the contract period.
If the advance funding request is denied by the carrier, then the check must be funded by the group immediately. Not all carriers offer advance funding so please discuss with your marketing representative if appropriate.
What is aggregate coverage?
The aggregate attachment point is the predetermined amount of claim dollars a company will be responsible for paying prior to the stop loss carrier reimbursing any payouts. This figure is based on the group's actual paid claims trend, usually set at 25% above your actual expected claims expense. Aggregate coverage can be monthly; but, in most contracts, it is written as annual coverage.
Does a group have to have aggregate coverage?
No. A group doesn't have to have aggregate coverage but would then be accepting additional risk.
What is the difference between the contractual attachment point and the calculated attachment point?
The contractual attachment point is the aggregate minimum set when the stop loss contract is signed. It is determined by the carrier based on the projected funding factors (Single/Family) multiplied by the actual Single/Family enrollment as of the effective date.
The calculated attachment point is run on a month-to-month basis (based on census data) and at year-end is compared to the contractual attachment point. If the calculated attachment point exceeds the contractual attachment point at the end of the coverage period, the calculated attachment point then becomes the attachment point for the group to exceed in order to receive reimbursements under the aggregate coverage.
How does aggregate coverage differ from specific coverage?
Aggregate coverage is different than specific coverage in a number of ways. Aggregate coverage relates to the total claims for the entire plan. Specific coverage relates to claims of an individual subscriber. Advance funding does not apply for aggregate coverage. For aggregate coverage, the carrier usually reserves the right to conduct an on-site audit prior to any funds being reimbursed (depending on the amount of the requested reimbursement).
What may not be covered by aggregate coverage?
There may be claims that are excluded from an aggregate filing for various reasons, including these most common reasons:
- certain types of claims were excluded from aggregate coverage in the initial contract;
- claims were paid from a previous contract year; and
- reimbursements received under specific coverage are excluded from aggregate coverage.
What are monthly or rolling aggregates?
If this option was elected at the time of the sale/renewal, PAI compares applicable claims against the monthly attachment point to see if there is a monthly reimbursement due. This helps groups with their cash flow. At year-end, if the total allowed aggregate reimbursement is less than the money received throughout the year, a group may need to reimburse the stop loss carrier.