Self-funding is often referred to as self-insurance, can have many advantages for both private sector and public employers, including more input in health plan design and better control over rising costs. Because of these advantages, the majority of US group health plans are self-funded. If you are not familiar with the self-funding model and would like to learn more, click here for information on how self-funding works, and real-life employer success stories.

What is self-funding?

A self-funded health plan is sponsored and designed by the employer. The employer does not purchase traditional “insurance”, but pays for actual claims through a reserve fund established specifically for this purpose. Stop loss insurance is purchased to protect the company against high dollar claims. It allows a plan to set in advance the maximum loss levels it is willing to sustain on any specific situation or on the aggregate of claims on the whole group. A Third-Party Administrator (TPA) is usually hired to administer the plan. Administering the plan includes to adjudicate and pay the claims, provide COBRA/ HIPAA administration, ensure compliance with the current federal regulatory requirements, research and select stop loss insurance, prepare the Summary Plan Description, and to generate detailed monthly reports so the employer can see each and every health plan expenditure.

Why Use Tucker Administrators for a self-funded plan?

• We have experience-we have been in business since 1976
• We have the expertise needed for appropriate stop loss placement
• We have access to several Pharmacy Benefit Managers for drug cost containment
• We have access to top quality stop loss carriers with A- or better financial rating
• We have the technology for claims detail and other reporting tools
• We offer other cost containment tools such as population/disease management services, wellness plans and on-site clinics
• We offer compliance assistance, including the Affordable Care Act (ACA)
• And most of all, we offer superior service

Is self-funding risky for small employers?

Many people think self-funding is appropriate only for the larger employer with over 100 employees. However, since health plan expenses now ranks as the largest employee expense, smaller employers are now seeking self-funded health plans as a way to reduce costs.

Stop loss insurance is purchased to protect the company against high dollar claims. It allows a plan to set in advance the maximum loss levels it is willing to sustain on any specific situation or on the aggregate of claims on the whole group.

What types of benefits are self-funded?

Usually the group health plan is the focus of a self-funded program. Other health benefits are often included, such as dental, vision, prescription drugs, and short-term disability. Certain high loss, low frequency coverages, such as life insurance, accidental death and dismemberment, and long-term disability are generally not suitable for self-funding.

What Are the Advantages To Self-Funding a Health Plan?

Employer Investment:
Employers invest millions of dollars each year in insured employee benefit plans. As the cost of providing medical insurance increases, employers are looking at funding alternatives for their health and welfare plans. Many employers are disappointed with their fully-insured plans because:

• • • They are limited to off-the-shelf plans.
    • Effective cost containment programs are not always available.
    • Fully insured plans tend to consume employee compensation dollars that can be better spent to curb employee turnover and to attract new, qualified employees.
    • Self-funded plans are regulated under ERISA, that preempts individual state mandates for health insurance and allows an employer to offer a standardized health plan across state jurisdictions.

More Financial Control:
Under a self-funded plan, it is usually possible for an employer to reduce operating costs significantly and maintain control of reserves usually held by insurance companies. The reserves should be held in a trust, producing tax-exempt interest and thereby reducing the cost of providing employee benefits. Reserves can also be held in an interest-bearing bank trust account.

Financial Protection: In order to provide an extra measure of financial protection against catastrophic claims, most employers purchase Stop Loss insurance coverage. This protects the plan from large individual claims and from an excessive amount of total claims.

Elimination of most premium tax:
In most states, there is no premium tax for self-funded claim funds. This produces an immediate savings equal to the amount of the premium tax, approximately 2% to 3% of the fully-insured premium.

Lower cost of operation:
Employers frequently find that administrative costs for a self-funded program through Tucker Administrators are lower than those charged by their previous insurance carrier.

Carrier profit margin and risk charge eliminated:
The profit margin and risk charges of an insurance carrier are eliminated for the bulk of the plan. This translates into direct savings for the client.

The Problem

• Fully-insured plans with low deductibles are unaffordable
• Health Savings Accounts (HSAs) are not a good fit for my company
• A Health Reimbursement Arrangement (HRA) can be cost-saving components of a Long-Term Financial Solution, but:
  • Partnerships, shareholders of S-Corp owning more than 2% of outstanding shares, LLP, LLC owners are considered self-employed and are unable to participate in HRAs. Many businesses fall into these categories, such as physician practices, law firms, engineering firms, and other professional practices.

The Tucker Limited Self-Funded Plan Is The Answer

Tucker Administrators offers a unique, proprietary plan that blends traditional insurance and a self-funding component together. It provides more control over plan design and cost structure. The results are:

• Health plan costs are typically lower than traditional plans, without sacrificing benefits
• Premiums can be structured to eliminate any risk to employer
• 100% of covered charges after deductible
• Employer chooses funding level

Have us provide a no-obligation assessment of your needs, and show you how to switch from a purchased off-the-shelf insurance to a customized limited self-funded plan.

A Solution for Small Employers--Level Funding

Tucker Administrators has a solution for the small employer that brings:

• financial predictability,
• population-specific claims detail to identify the type and cost of claims
• plan design flexibility to manage those costs

The Tucker Administrators Level Funding Plan and is available to groups between 10 - 200 lives. It offers:

• Competitive rates
• 12/21 contract basis
• Internal pooling point maximizes potential for employer refund
• All industries eligible except law firms and MEWAs
• Group size: 10-200 lives
  • Claims data is preferred for groups over 100 lives
  • 25 lives minimum in North Carolina
  • 10 lives minimum in South Carolina
• Unused claim fund is refunded to the employer at the end of the plan year
• Stop Loss insurance offers full protection from larger claims. Employer will never have to pay more than the maximum monthly cost
• The predictability of a level, monthly cost-there are no extra charges if there are high claims
• ERISA plan that is exempt from some of the new federal Affordable Care Act regulations

How is This Plan Different from a Fully-Insured Plan?

Under a fully insured plan, the monthly premium costs are locked in. Even if a group is healthy and have no claims, the savings are kept by the insurance company. With Tucker Administrators Level Funding, and the smart use of Stop Loss Insurance, the employer pays a monthly cost that is the maximum cost. No matter how much claims are in a month, the employer will never pay more than this monthly cost. After all claims are paid for the year, the unused money in the claim fund is returned to the employer.

Key Highlights

Defined and Contained Risk
The employer's maximum exposure and annual costs are determined up front through the purchase of Stop Loss insurance. Standard provisions include coverage for claims paid after the end of the plan year (no terminal liability exposure).

Stabilized Cash Flow
Maximum annual claim liability is equally spread over 12 months. If the employer's claim fund does not contain sufficient money to cover claims, the Stop Loss insurance coverage will advance the necessary funds (also referred to as "Accommodation”). No requests for additional money from the employer are made.

Claim Fund
After the claim run-out period remaining funds are released or rolled over to the next year as credit. This is the essence of alternative funding—money not spent on benefits remains with the employer’s benefit plan, not the insurance company.

What are the Advantages of the Funding Advantage Plan?

Plan Design Flexibility
Freedom to keep the current plan of benefits and implement cost-saving features of the employer's choice.

Claim Fund
Maximum annual claims costs are predetermined and the employer pays 1/12 of this cost each month for the 12 months of the plan year. After this amount, there are no other charges for the claim fund. Once all claims have been paid for the plan year, the unused dollars in the claim fund are returned to the employer.

Monthly Accommodation
If at any time the money necessary to pay smaller claims is not in the claim fund (this is common during the early months of a plan year), the insurer will advance this money to the claim fund to pay these claims. Subsequent monthly payments into the claim fund will be used to repay this advance.

Reporting
Each month, the employer will receive an accounting report on all claims paid during the month and the plan year-to-date. Each quarter, they will receive a detailed report about claims paid (subject to federal and state privacy regulations). This reporting provides the information necessary to fully track the claim fund and to understand where the claim fund dollars are spent (such as the doctor’s office visits, prescription drugs, outpatient services and hospitalizations). With this information, the plan can be designed to contain costs and target problem areas.

Plan Year & Terminal Liability
The plan year runs for 12 months from the effective date. Claims incurred during the plan year will be paid though a 9-month run-out period and any balance in the claims fund is refunded to the employer. Terminal Liability coverage is built into the plan by providing the 9-month run-out period.

RFP Submission Requirements

• Group name, industry and location
• Census
• Current rates
• Renewal rates
• Current plan of benefits
• Claims data, if available. If no claims data is available, we will provide a preliminary proposal that will require individual apps to bind coverage. Rates may be adjusted after underwriting of individual applications

Click Here for Level Funding Brochure

Click Here for Level Funding Enrollment Form

A Component of Tucker Administrators’ Employee Benefit Risk Management Program

Many of the most costly and deadly illnesses known today are either preventable through education and life-style change, or curable with early detection.

Tucker Administrators' program is designed to provide pertinent and reliable information to improve one’s overall health status. Claims data is used to identify individuals who may need additional information or advice on maintaining their optimal health and wellness.

Here are a list of services available to the employer to manage this risk component:

Primary Prevention

• Performs an analysis of medical claims and provides members with customized recommendations for certain wellness screening tests
• Provides wellness guidelines for all employees and their dependents, customized for age and gender and include a recommended schedule of preventive visits, blood tests (e.g. cholesterol level) and immunizations.
• Provides age and gender specific guidelines for the prevention and early detection of the most common cancers including breast, colon, prostate and lung cancer. Important screening tests may be recommended in accordance with guidelines developed by the American Cancer Society and other experts.
• Employer may elect an on site Health Risk Assessment event, with biometric screening and a blood panel

Disease Management Program

In addition to Primary Prevention, members with certain specific diseases or risk factors identified for intervention and management. These include:

• Diabetes
• Asthma
• Coronary Artery Disease
• Hypertension
• High Cholesterol

These high-risk members enter the Disease Management Program for individualized disease monitoring and nurse coaching. In addition to the analysis, members with one or more listed illnesses can be identified via the Workplace Medical Risk Questionnaire for new employees and dependents.

Members receive information and guidance in several ways:

• Members will be contacted by phone, letter or e-mail by the RN Health Consultant and offered customized education and counseling.
• Disease-specific education will be provided through a combination of printed materials and web access.
• A comprehensive listing of relevant resources, including websites for additional education and self-help activities, will be provided.
• The RN Health Consultant will schedule periodic follow-up calls to selected employees and dependents.

Reports

• Tucker Administrators and the employer groups are provided periodic reports that indicate the activity of their employees
• The reports demonstrate the number of clinical interventions by the RN Health Consultant, as well as specific disease prevalence within their employee population.
• The reports will detail each group’s collective adherence to key recommended tests in the Wellness Guidelines.
• This data may suggest additional group and/or disease specific interventions that may be indicated.

Health Risk Assessments (HRAs) are used to identify risk within an employee population and then target those individuals with intervention programs that will stabilize and improve their risk factors. An example would be detecting high blood pressure, and then having the employee participate in a program specifically designed to reach a normal blood pressure reading. High blood pressure has a direct correlation to heart attacks and strokes. Ultimately, the goal is to reduce the possibility of a catastrophic claim, and improve the member's well-being. It has been shown that HRAs have a positive return on investment.

Here is a list of tests that are included in an HRA:

• Comprehensive Metabolic Panel (CMP)
• Liver Function Panel
• Nutritional Panel
• Cholesterol (Lipid Panel)
• Behavioral Factors

Wouldn’t you rather focus on your business than handle COBRA and HIPAA administration yourself?

Compliance to COBRA and HIPAA requires an investment of time, knowledge of COBRA and HIPAA law and administrative expertise. Making even a simple mistake of sending a COBRA or HIPAA letter with incorrect language, or at the wrong time to a beneficiary or eligible individual can easily cost an employer hefty fines. Tucker Administrators is current on all COBRA and HIPAA law, and our administrative resources will keep you in compliance.

Why Tucker Administrators for COBRA and HIPAA Administration?

• Budget and control administrative costs.
• Minimize the risk of penalties and fines for non-compliance.
• Utilize your labor force more efficiently.
• Save time, money and headaches by eliminating COBRA aggravation

Tucker Administrators provides administrative services for Flexible Spending Accounts, (FSAs) that allow employees pay for unreimbursed medical expenses and work-related dependent care on a pre-tax basis.

Generally, these eligible expenses include hospital, surgical and other unreimbursed medical expenses incurred for care of the employee, his or her spouse and dependent(s). For example, a flexible compensation plan might be used to reimburse expenses applied to a deductible and co-insurance amounts. Expenses for annual physicals and preventive care, as well as dental, vision, and hearing. Work-related dependent care expenses are also eligible.

Through an employee-funded flexible compensation plan, both the employer and employee stand to receive substantial payroll tax relief. Employer tax savings can offset a plan’s modest administrative costs, and these plans can serve as strong recruiting and retention tools for the most talented employees.

Here's how it works:

It still remains one of the most innovative ideas in employee benefits today.

Pre-Paid Benefits (Debit) Card

We have found that employers and employees alike are more likely to participate in an FSA if the plan administration is easy to understand and streamlined. A component of that is providing a pre-paid (debit) card for reimbursement of participant expenses. The card eliminates the need for employees to pay cash for eligible services and wait for reimbursement for most purchases. However, IRS regulations require that FSA participants save all receipts for verification of compliance.

Tucker Administrators also provides a customized website for FSA so:

• Employee may view plan document, examine participant account balance information, claims status including pending and payment information through their secure login and password
• Employer may verify participation and eligibility, enrollment, individual deductions, individual participant account balance information, claims status including pending and payment information, and run Excel-compatible reports.

• Tucker's billing administration technology enables our clients to combine multiple carrier billings into one statement.
• One bill can make it easier for the client to analyze employee benefit expenditures
• The client remits one check to Tucker Administrators. The Tucker consolidated bill gives you a detailed cost report for each account.
• We have clients that state combining multiple carrier billings into one statement reduces their benefits administration costs by 30%. That means the employees can concentrate on more productive activities for the company