ACA Fee Moratorium and Self-Funding

acaWhen Congress delayed the Cadillac Tax until 2020, the same law placed a one-year moratorium on the annual fee the ACA imposes on health insurance carriers. While the fee does not have a direct impact on TPAs or self-funded plans, it does sometimes impact stop loss premiums.

Since this fee applied to insurance carriers and not the majority of self-funded plan costs claims, some small group plans that moved to level funding may experience a slight cost increase in 2017. When the tax returns in 2018, the revenue targets are expected to increase. If the tax increases from its previous levels of 3% to 4%, the potential savings available to self-funded and level-funded plans will increase as well.

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Level Funding Lets Your Plan Retain The Savings

levelfundingAfter integrating a new health plan strategy and reducing overall claim costs, you discover that the company managing your health plan has kept half of your savings!

While it’s always encouraging to achieve a savings, especially when it’s so difficult to trim health care costs to any significant extent, it’s pretty disappointing to see half of the windfall disappear.

EBSO offers a Level Funded alternative that truly gives qualifying employer groups the best of all worlds. Monthly costs are established in advance, much like a premium for a fully insured plan. In contrast to a fully insured plan, however, your plan retains up to 100% of the savings when claims are lower than anticipated levels. Best of all, ongoing claims data is provided to keep you aware of how your healthcare dollars are being spent.

Avoid Surprises

Employers love the Level Funding approach because overall plan costs are predictable. Monthly costs are established in advance and consist of two parts; one part including fixed costs such as stop loss insurance premiums and administrative fees – the other part including an estimate of claims expenses. If claim costs are greater than anticipated during any one month, stop loss insurance covers the excess expense, limiting risk and capping the employer’s overall financial exposure.

Other benefits of Level Funding include plan design flexibility, access to claims data and ACA compliance. Since a Level Funded plan is a hybrid plan, your organization will not be subject to the Health Insurance Tax (HIT), associated with the Affordable Care Act (ACA).

Enjoy Greater Flexibility

Because a Level Funded plan is a partially self-funded plan, you gain the flexibility needed to tailor plan designs that meet your organization’s benefit objectives and the needs of your employees. As monthly reports identify factors impacting claim costs, plan designs can be modified and strategies such as employee education, wellness and preventive care can be implemented.

Look Before You Leap

While Level Funding is certainly an option to consider, all Third Party Administrators and all administrative agreements are not alike. The administrative services agreement should identify not only the services to be provided but also how any savings that may result from lower claim costs will be allocated. EBSO has built a long-standing reputation for cost transparency among clients and brokers.

Whether you choose EBSO for Level Funding or another self-funded option, you’ll work with an experienced partner known throughout the industry for helping employer groups manage the risks and future costs of employee health care.