More Employers Expected to Use Self-Insured Plans
Health insurance executives expect more U.S. employers to self-fund their group health insurance plans as a result of the Affordable Care Act, according to a survey by Munich Health North America. Eighty-two percent of executives say that employers are showing growing interest in self-funding. Thirty-two percent say that employer interest has increased significantly.
Richard Phillips, president of Munich Health North America’s Reinsurance Division said, “The trend towards self-funding stems from employers’ desire to maintain…flexibility and control in the design and financing of their employees’ health benefits. A properly designed self-funded health plan can allow a company to directly reap the benefits of their cost containment and wellness activities as opposed to having to pay a monthly premium based on an arbitrary set of rating restrictions. As companies struggle with the growing cost of providing quality benefits, we expect self-funding to continue to grow in popularity.”
Health insurance organizations expect to see growth in their self-funded or administrative services only (ASO) portfolios as a result of this trend. Sixty-nine percent of those surveyed plan on growing their self-funding or ASO portfolios over the next year.
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Employer Migration to Self-Insured Health Plans Bodes Well for Stop-Loss Market
Interest in the stop-loss market will to continue to grow as along with the popularity of self insured health plans, according to an A.M. Best special report. Since stop-loss plans are not subject to the health insurance industry fee component of the Affordable Care Act (ACA) or its minimum loss ratio requirements, they are gaining renewed interest from carriers and employers.
The pricing environment remains competitive with many carriers vying for business from employers and third-party administrators. Given these new dynamics, A.M. Best expects a continued migration from fully insured plans to self-funded ones with a stop-loss component.
Although premiums and earnings have varied, the performance of the top stop-loss providers has remained relatively consistent. However, companies with their own administrative platform have gained traction due to a lower expense structure. While it is unlikely that the top stop-loss providers will lose their market leading positions anytime soon, there will continue to be movement among small and medium employer group providers. For more information, visit http://www3.ambest.com/bestweek.
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Courts Rule in Favor of Self Funded Plan
A federal appeals court recently upheld a district court’s ruling in favor of a self-insured ERISA plan. Blue Cross and Blue Shield of Michigan (BCBSM) was ordered to refund $6.1 million in self-insured plan assets. The Hi-Lex corporation originally filed suit in 2011 alleging that BCBSM breached its fiduciary duty by inflating hospital claims with hidden surcharges. “These new federal court decisions are extremely important for all self-insured health plans, because almost every TPA for self-insured plans have engaged in the successful overpayment recoupment and offsetting from healthcare providers in today’s multibillion-dollar overpayment market. This is the first timely appellate court decision to protect self-insured health plans and millions of hard-working American workers and their families,” says Dr. Jin Zhou, president of ERISAclaim.com, a national expert in ERISA compliance and overpayment recoupment plan assets recovery.
The court found that Hi-Lex was misled into believing that the disclosed administrative fees and charges were the only form of compensation that BCBSM retained for itself. The court ruled that BCBSM also concealed evidence of its alleged wrong-doing. According to BCBSM’s own survey 83% of its self-insured customers did not know that the disputed fees were being charged.
“For self-insured health plans, the number one health plan hidden costs involve overpayment recoupment and plan assets embezzlement,” says Dr. Zhou. For more information, visit ERISAclaim.com.