Module 5 Funding Of Health And Welfare Flashcards
What are the three types of funding methods for health and welfare insurance plans?
Self-insured
Fully insured
Partially insured 
In regard to insured health and welfare plans, what does the term fully pooled mean?
Premium rates are based on the Claims experience of the pool or community
When funding health and welfare plans with an insurer, what are key advantages?
What is the one downside?
Limited administration on the employer -managing enrollments and changes)
Easier to budget because the only charge is the premium invoice
Claims risk gains 100% with the insurer
Downside: The employer does not have much flexibility in the plan
What are the elements of an insured premium structure?
Margin (potential profit)
Expenses (Taxes, fees, administrative charges, carrier, profit, commissions)
Expected claim charges (Included in expenses above)
What type of employers typically decide to be self insured
Larger employers go with self insured option because they can mitigate the financial risk better than smaller employers
What type of employers typically decide to be self insured
Larger employers go with self insured option because they can mitigate the financial risk better than smaller employers
How are claims paid on a self insured plan?
The organization pays Claims and administration fees directly out of the general assets
What are advantages of a self funded plan?
Lower cost
More control over plans
Protection under ERISA employee, retirement, income, security act
What are important factors and deciding whether to self fund insurance plans
Risk tolerance
Degree of predictability of cost required
Availability of cash reserves
Time and skills to administer
What are key characteristics of self insured plans?
Lower cost
Favorable experience
Lower administration
Cash flow management opportunities
Avoid state, mandated benefits
No state premium tax
Flexibility and plan design
Fully insured plans have pooling charges, how do self funded plans protect against high cost claims?
Stop Loss protects employer from large individual claims and excessive total claims
What type of employer would use a partially self funded medical plan?
Smaller employer, who doesn’t have the financial ability to go fully self insured
Define aggregate stoploss
Liability for plan sponsorship is Capt at some percentage of expected total claims
Example 125%
Define specific stoploss
Liability for plan sponsor is capped at specific amount
What are the essential functional areas for self-insured plans?
Enrollment (ensure employees independence are properly identified)
Claim processing
Communication
Utilization review
Case management
Lost control and prevention (employee one this programs employee assistance programs)
Plan design and redesign
Legal services
Claims review process
Cobra administration, and processing
Regarding risk management and benefits programs, a program with the right price and low risk to the employer and employee is ideal
What are the goals of an employee benefit program?
Meet the reward strategy of the business
Meet legal obligations
Meet contractual obligations
When managing risk associated with benefits programs, what are the three main areas to focus on?
The process of analyzing procedures and practices that are in place
Identifying risk factors
Implementing procedures to address those risks
What are some common risks that accompany and organizations benefits plan?
Financial risk
Accounting risk
Compliance risk
Governance risk
Operational risk
Employment brand, and talent risk
What are three methods of handling risk?
Avoidance
Cost sharing expenses
Contractual transfer
