Self-insured (SI)

  • In a self-insured plan, the employer assumes financial risk for providing benefits to employees.  
  • Employers pay each  claim claim
    A bill that your health care provider sends to your insurance company after you receive health care services.      (through a bank account), rather than paying monthly  premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     . 
  • Since the employer bears the financial risk, profit and risk fees (about 1-6% of premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     ) are significantly reduced.
  • Unlike FI plans with fixed monthly premiums, the employer's costs go down if claims are lower than expected but increase if claims come in higher than anticipated.
  • Claim Claim
    A bill that your health care provider sends to your insurance company after you receive health care services.     administration and membership  eligibility eligibility
    Whether an individual is covered by a health insurance plan for plan services in a given time period, based on a pre-set list of requirements.      functions are performed by commercial carriers or Third Party Administrators (TPAs). 
  • A SI plan using a TPA often pays a fee to use an already-established network of providers.
  • Employers have the ability to customize plan design.
  • SI plans are not subject to state mandates, premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     tax, or the  ACA insurer tax ACA insurer tax
    A fee imposed on entities engaged in providing health insurance in the United States to help fund the implementation of the Patient Protection and Affordable Care Act (PPACA, or ACA).  The fee is based on each insurer’s share of the taxable health insurance premium base. This tax does not apply to self-insured employers, government entities, some nonprofit organizations, and certain voluntary employee beneficiary associations.     .

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  • Employers often purchase  stop-loss insurance stop-loss insurance
    An insurance product that provides protection against catastrophic losses.  These policies can be purchased by insurance companies or by employers who elect to self-fund their health plan offering.      (aka reinsurance) to protect against catastrophic losses.
  • Individual or specific stop-loss limits the employer's liability for each member to a defined threshold or  deductible deductible
    The amount your health insurance plan requires you to pay for health care services and supplies before they begin to pay. For example, if your deductible is $1,500, you are responsible for paying for all of the services and supplies you receive (except for any covered preventive services) until the amount you paid reaches $1,500. Once the deductible has been reached, your insurance company may pay for all of your health care expenses, or you may have to pay co-insurance, a percentage of the charges. If you have a high deductible health plan, you may be eligible for a Health Savings Account.      such as $100,000.
  • Aggregate stop-loss limits the employer's liability for all members combined, to a defined threshold or attachment point, expressed as a percentage (e.g. 125%) of expected claims.
  • Premiums for stop-loss insurance stop-loss insurance
    An insurance product that provides protection against catastrophic losses.  These policies can be purchased by insurance companies or by employers who elect to self-fund their health plan offering.     offset some of the Self Insured savings.

  • Although self-funding has traditionally been used by large employers, employers with 25-250 employees increasingly use level-funding arrangements to avoid selected regulatory requirements under the ACA as well as to reduce premium taxes and the ACA insurer fee.  
  • Small group self-insured plans use very low stop-loss attachment points to mitigate risk but are still considered self-insured for regulatory and tax purposes.
  • To qualify as self-insured in NH:
    • Individual stop-loss limits can be as low as $20,000.
    • Aggregate stop-loss limits can be as low as 100% of expected claims (120% for <51 members).
  • With this arrangement there is no premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     tax or ACA insurer fee except on the stop-loss premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     .
  • The annual settlement compares the sum of the 12 monthly payments to expected incurred claims plus all fixed costs to determine if there is a surplus.  A portion of any surplus (e.g., 50%) is returned to the employer.
  • Often this surplus can only be used as a future premium premium
    Payment to your insurance company for health and prescription drug coverage. If you receive health insurance through your employer, your premium may be deducted directly from your paycheck. If you have separate health and dental insurance, you would have two premiums. If you don’t pay your premium, your health care coverage will be cancelled.     credit and would be forfeited upon policy lapse. 

  • The NHID does not regulate self-insured plans.  
  • Self-insured plans are regulated under Employee Retirement Income Security Act of 1974 (ERISA).
  • The Employee Benefits Security Administration (EBSA) is responsible for administering and enforcing the fiduciary, reporting and disclosure provisions of Title I of ERISA.
  • To learn more about the EBSA follow the link below to the  U.S. Department of Labor website:

Trends in benefit richness (average  actuarial value actuarial value
The ratio (expressed as a percentage) of the benefits for which a plan will pay after member cost sharing to the total allowed covered benefits.  For example, if a plan has an actuarial value of 70%, on average, members would be responsible for 30% of the costs of all allowed covered benefits. ) for NH self-insured plans.

Trends in Benefits Richness

What level of specific and aggregate stop-loss is purchased in NH?

Self Insurance Stop-loss

 

SI Stop-loss

Source:  NHID Supplemental Data Request; Commercial population including New Hampshire situs membership only.  Excludes FEHBP population.  The total doesn't add to 100% since there are a few members with "other" Attachment Points, such as 1.15 or 2.0.