“They used to be self-funded, but had far too many cash-flow headaches – plus trying to get reinsured every year…”
“One of our larger groups saved $400,000 their first year, but to be honest (after a series of tough years), we helped them switch because they were facing issues with reinsurance and huge loses due to claims. They were looking at 48% increases with fully-insured health plans. We didn’t know what else to do because everything seemed pretty bleak due to some unfortunate circumstances and their people not understanding how their behavior (coming back to the USA for everything) was affecting the viability of their organization’s plan. Without the solution we offered them, they would have paid $2.4 million out of our their reserves instead of $1.6 million – if they had stayed with our self-funded plan. And with 3X claims to premium, they didn’t have the cash flow to handle those kinds of medical expenses.
While they didn’t install the plan design that we recommended, they did listen and switch to a partially self-funded /self-insured plan. We are so glad they did!
This group of 400+ now has between $150k-175k in the bank even with a really rough number of years and that claims history.
In the first year they saved over $400,000. We cannot tell you how big this is for them after the battering they took. We’re happy to say that for the last four years they haven’t had to raise the rates that families overseas pay and actually lowered costs 3% while retaining the same good coverage that was a top priority to the organization. You have to protect people. They are trusting you. Even with those bad claims, their people now enjoy better overseas protection and zero deductibles.
With a trend of 12-14%, that will swallow any 25% set aside in two years if you have no plan design. It’s not just getting into the right plan but setting it up right that profits groups long-term. Almost any option will help a group for two or three years.
Neither self-funded nor fully-insured options really worked for this organization–Maybe it would have been different if they hadn’t had that series of bad years. The only thing we wish was done differently is installing the plan design element earlier, since they might have $2.5 million in the bank now (about a year’s annual premium). They are doing it now, but we wish it would have happened sooner.”