Larger employers generally have two distinct financing methods for their group health insurance. First, they may select a “fully insured” funding approach where the insurance carrier provides a guaranteed premium for the twelve (12) month plan year. In this case, the carrier takes all of the financial risk and provides comprehensive administration for all facets of the program.
An alternative way for funding an employer-sponsored medical coverage program is a self-funded financing method. With the self-funded method, the employer generally assumes more risk but has the potential for saving a significant amount of money. In addition to the increased risk exposure, the employer is also more engaged with managing other aspects of the plan, including but not limited to reinsurance selection and oversight, comprehensive administration of the program, and managed care decisions. The viability of using one funding method versus the other is a function of overall employer risk management strategies, the competitiveness of the reinsurance market, and the relative competitiveness of fully insured carrier premiums in the market. Employers frequently transfer from one method to the other as market conditions change.
Medcom Benefit Solutions provides employers with a professional evaluation of all financing options so that they may select the best option for their firm. Our analysis also provides employers who self-fund with an actuarially sound projection of future costs, a review of stop-loss levels, and an unbiased comparison to carrier stop-loss pricing. We start with a historical analysis of the company’s medical claims trends using actuarial principles and regression analysis. Next, we project an actuarial cost estimate of self-funding the medical coverage program using appropriate specific and aggregate stop-loss levels. Lastly, we provide information from our statistical models regarding expected cost, variability, confidence intervals, and probability of reaching the maximum liability under the different stop loss levels examined so that the employer can make an appropriate choice.
Medcom Benefit Solutions is strategically positioned to assist employers in selecting the most appropriate financing option for their group medical coverage program.