February of 2018 Edition
Another busy 1/1 season comes to a close. This one seemed to run longer than in years past. Many more employers decided there has to be a better way to fund their employees’ medical benefits. Maybe a bit late, but at least all of these employers looked to improve their current predicament.
As binding documents and plan details are administered, a good New Year’s resolution would be to remain committed to the ideas that attracted the employer to self-funding in a captive. Ideas like transparency of claim information. Full disclosure sounded good as compared to not receiving any claim information when also being presented with a double-digit price increase, but will the information be reviewed and acted upon? Claim data is now available, but there must be a commitment by all parties to make use of the available data on a regular basis.
The attraction of control is easy to understand. Who doesn’t want control, but control can become a burden if an action plan is not developed. When funding health benefits with a captive, we all should identify a feature of control delivered by self-funding. For example, review and understand how the company’s pharmacy claims are impacting the benefit spends’ overall cost. What percentage are they of the overall health care expense, what prescriptions make up the costs and how do the prices received compare to what the market offers. It’s a start down the path of control that will return immediate value.
What about the idea of cost savings? What value is found in analysis of cost savings when an employer has been conditioned to only look at its health care insurance once a year? How is the stop loss captive funding strategy different? A resolution to quarterly or even monthly review and compare the company’s health insurance costs to prior periods will place the self-funding endeavor into proper perspective. These costs must be looked at with an analysis of both per employee and total business expenses. The medical captive is a long-term funding strategy whose costs are best tracked more than once a year and not only for a 12-month period. If costs are consistently reviewed and compared to prior experience, the stop loss captive’s difference and value is self-evident.
Action on the above resolutions during the coming year will make next year’s 1/1 season all the more productive and efficient. Let’s commit to do so.
– Mike Schroeder