Employee Benefits have become the second largest expense for employers, and various financing vehicles are available to manage those expenses.

Healthcare financing – and the level of risk retained by the client is the most critical element of purchasing employee benefits. In addition to selecting the right carrier and benefits, a very important consideration for employers is how to finance, manage, and control healthcare costs. Depending on the number of members covered in your group, employers can elect various methods to finance their healthcare spend.

Fully-Insured

The most common, traditional method of healthcare financing provides guaranteed rates and budget certainty.  Carriers guarantee coverage and premiums – typically for a full year, regardless of the claims expense incurred by employees.  Since they are taking on all the risk, carriers protect themselves by adding profit margins into the rates to ensure they stay solvent. In addition, fully insured rates add additional costs in the form of premium taxes. 

The rates quoted are a function of the employer’s previous claims experience and demographics.  LBA’s vast experience in underwriting and rate development help in negotiating the best rates benefits and premiums available.

Self-Funded

A Self-funded plan may be a viable option when you are seeking an alternative to traditional healthcare plans to decrease spending without losing employee coverage.  A self-funded health plan – also known as a self-insured plan – is typically utilized by employers with a large number of employees.

Typically, the more employees you cover, the more predictable the risk, and employers may use self-funding to reduce costs by avoiding carrier margins and profits, as well as premium taxes.  While self-funding for large employers usually is less expensive than fully-insured rates, there is no guarantee, and employers risk spending more than they have budgeted for healthcare.  To help mitigate some of these risks, employers purchase Stop Loss coverage to provide protection against unexpected costs.  (Use a link on “Stop Loss” to take user to Stop Loss page.)

The bottom line: A self-funded employee healthcare plan means lower and more reasonable  employer costs on average.   However, keep in mind that a self-funded plan is risky. The number of claims per month can only be estimated and, some months, can cost a company far more than average or expected.

Each employer’s situation and risk level is unique, and LBA leverages its Underwriting and Actuarial expertise to evaluate the best funding solution for every employer.

Partially-Funded

Some employer take a hybrid approach to funding their healthcare costs.  There are different ways to undertake a “partially-funded” program.
A partially funded employee health insurance plan offers many of the same benefits as its parent insurance, and employers can take multiple approaches to partial funding.

• HRA’s, or Health Reimbursement Accounts are an employer-funded medical reimbursement plan with a tax advantage. Employers purchase a basic health plan with high deductibles and/or copays, and then use the HRA to “wrap-around” or provide supplemental coverage not available in the basic plan.  The advantage is lower health care premiums, and the employer only funds the HRA (with pre-tax dollars) when actual claims that aren’t covered by the basic plan are incurred. 

• HSA’s or Health Savings Accounts are similar to HRAs, but have several important distinctions:
• the HSA can be funded by either the employer or the employees.
• The monies in the HSA belong to the employee, not the employer, and stay with the employee if they end employment
• The basic underlying plan accompanying HSA programs are required to meet certain federal guidelines, with the employee responsible for a minimum out of pocket expense before the basic plan coverage kicks in.  The HSA dollars may then be used to pay for all  or a portion of the employee’s up-front expenses.

 

• “Contingent Funding” is a unique type of funding arrangement, where the underlying benefits are identical to the parent coverage.  The employer pays a fixed rate for the entire year, and at the conclusion of the year, a claims reconciliation compares actual claims expenses incurred by the employer over the full year to the estimated claims used to develop the premiums at the beginning of the year.  If actual claims are favorable to the estimate, the employer is entitled to a refund, but if actual claims are higher than the estimate, the employer is responsible for paying a portion of the claims overage back to the carrier.

Whether your company operates on a self-funded, partially funded, or fully insured medical plan,  health care costs are increasing across the board and with many new Government changes ahead, companies will be forced to consider reducing benefits, shifting more costs to employees or dropping coverage entirely. LBA helps you maintain the quality of benefit packages your employees expect, at rates you can afford.

LBA creates an information-rich but easy-to-understand environment of options that serves your operational needs as well as the healthcare needs of your employees.

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Employers providing health insurance for their employees through a self-insured plan often subscribe to Stop Loss policies in order to protect themselves against catastrophic claims. The premium is calculated on a per employee, per month basis, and the rate is based on the number of participants, claims and diagnosis information.

LBA’s Underwriting & Actuarial experience enables us to cull through your historical claims expense and utilize mathematical models to analyze and project your high claims risk and exposure. Our ability to discern risks allows us to provide clients with the optional Stop Loss attachment points, and to and negotiate exceptional coverage and rates on your behalf.  LBA is Rhode Island’s premier Stop Loss brokerage firm.

Types of Stop Loss

“Specific” (or “individual”) stop-loss deductible protects the employer from any single individual’s claims exceeding a pre-determined threshold ($200,000, for example).  Insurers will reimburse the insured (the employer, not the participant) for the remainder of the claim to be paid over that deductible amount.

“Aggregate” stop-loss applies to all paid claims combined for the employer. For all claims at or below their specific stop-loss level, if the sum of these are more than the aggregate stop loss level, then the insurer will reimburse the insured (employer) for the difference.

Other, new forms of Stop Loss coverage are now hitting the market, that provide coverage you expect at significantly lower premiums.

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In the last fifteen years, there has been a dramatic shift in employer-sponsored health care.  Increased options and cost savings for employers have led the shift away from traditional indemnity plans and towards new consumer-driven HMO, PPO, and POS alternatives.

TRADITIONAL INDEMNITY COVERAGE

Traditional Indemnity health insurance allows individuals to visit any doctor or hospital they want and receive coverage for any treatment covered under the policy. Plan members can go to any specialist without a referral, and the insurance company has no say as to whether or not the visit is necessary.

The reason they are so rare these days is cost. Because there are few oversight or cost-saving measures, premiums for traditional insurance tend to be much higher than for other kinds of plans, which raises costs for both employers and employees.

HMO

Health maintenance organizations (HMOs) were the first alternatives to traditional insurance. When they first became prevalent during the 1990s, they were the least expense of all plans. By creating a network of doctors and hospitals and implementing cost-saving measures, HMOs can control costs better than other plans.

However, HMOs are also the least flexible type of health care plan: they require members to choose a primary care physician who performs basic health checkups and may be required to approve visits to other physicians (the PCP is referred to as a “gatekeeper”). These plans also generally only cover the expense of member visits to doctors and hospitals that are part of the network. Visits to nonparticipating doctors must be paid directly by the employee.

This gatekeeper system represents both the best and the worst of HMOs. While this structure helps minimize costs for employers, it can be unpopular with some insured’s that currently use doctors outside the HMO network, since they must switch physicians to receive coverage. Also, for those that want more control over their medical care can find it annoying to jump through the gatekeeper hoop to see specialists.

PPO

Preferred provider organizations (PPOs), are now the most popular choice for individual health care. A PPO is a collection of physicians and hospitals that agree to provide health care at a reduced cost to PPO members. With this setup, they can limit health care costs without the restrictions of an HMO.

Most PPOs have two different levels of coverage depending on which providers you use. For visits to doctors and hospitals that are affiliated with the PPO, patients pay a copay, or deductible and little or no co-insurance. Visits to doctors and hospitals outside the network are not as fully covered, requiring higher co-payments from the patient.

This structure is designed to encourage PPO members to use specific doctors and hospitals that have been designated by the organization as preferred providers. These doctors and hospitals agree to provide health care to PPO members at lower rates, which allows the PPO to reduce overall health care costs.

POS

POS plans are very similar to PPOs.  Enrollees in a POS plan are required to choose a primary care physician from within the health care network, and this PCP becomes their "point of service". Members are not required however, to get approval from the PCP to seek other services….but treatment outside the network, while allowed, requires a higher co-payment from the enrollee. For medical visits within the health care network, paperwork is usually completed for the patient. If the patient chooses to go outside the network, it is the patient's responsibility to fill out forms, send bills in for payment, and keep an accurate account of health care receipt.

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Medical and prescription drug coverage are the core of member benefits, and selecting the right carrier, benefits, and provider networks for these benefits is essential.  Employer costs now exceed $15,000 per employee annually for comprehensive coverage.  LBA’s experience in value based plan designs, and wrap around coverages like Health Reimbursement Accounts and Health Savings Accounts help employers control costs while still providing excellent benefits to its employees.

Within each type of Medical Plan – HMO, PPO, and POS – it’s never been more important to create optimal, value-based benefit plans.  Our data analytics provides a sophisticated approach to benefit design, allowing us to tailor plans to the specific needs of different clients.  

LBA principals’ knowledge of healthcare financing – the risk assessment process and rating formula calculations used by carriers provide clients with a negotiating edge that delivers the best benefit package for your healthcare dollars.  LBA reviews provider networks, claims discounts, and all benefit components – copays, deductibles, co-insurance, and drug coverage – and lays out your options in an easy to follow outline.

Pharmacy Costs on the Rise!

Recent trends in prescription drugs have been a major driver in the rise of medical coverage over the past several years.  The introduction of specialty drugs has dramatically impacted the costs of prescription drug benefits which have grown from about 15% of a employer’s total healthcare costs to over 25% over the past decade.  The cost of prescription drug coverage now average nearly $4,000 per employee annually.

A successfully managed pharmacy benefit can provide the best return on investment in your healthcare plan—if it’s designed and managed effectively. It has been LBA’s experience with optimizing pharmacy spend that enables your plan to obtain the “best-in-class” pharmacy benefit without compromising medical outcomes.   LBA carefully evaluates your drug coverage, and provides solutions that save employers between 10% to 20% on their drug spend – or about 5% to their bottom-line.  

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Group dental insurance is a nice addition to your company’s group health insurance plan. With so many options out there for dental coverage, LBA can act as your trusted advisor as to which group dental plan is right for your unique situation. We understand your need for affordable, but comprehensive insurance for your employees and negotiate the lowest rates in the market.

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Telemedicine is a true “win-win” benefit for employers and employees.  Telemedicine provides your employees with 24/7/365 telephonic access to board-certified, licensed physicians who can prescribe medications as necessary.  This provides members with easy and convenient access to physicians without the need to take time out of work, and benefits employers by reducing unnecessary claims expenses associated with Primary Care, Urgent Center, and Emergency Room visits.  Effective, highly utilized telemedicine programs can reduce employer costs by $400 to $600 per employee annually – or 2.5 to 4% bottom-line.

Telemedicine is not intended for address every medical situation.  Rather, it provides a convenient and inexpensive alternative to non-emergent Emergency Room visits, non-critical care clinics, or when you don't have access to your primary care provider.

It is particularly suitable for diagnosis and treatment for common ailments, such as:

• Allergies
• Bronchitis
• Cold/Flu symptoms
• Cough
• Ear Infections
• Headaches/Migraine
• Insect Bites
• Minor Burns
• Nasal Congestion
• Pink Eye
• Respiratory Infections
• Sinus Infections
• Sore Throat
• Stomach Ache/Diarrhea
• Upper Respiratory Infections
• Urinary Tract Infections

LBA shops these services with best in class, national telemedicine carriers. Contact us today for pricing on your employee group.

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With group life insurance, you can offer employees peace of mind at extremely affordable rates. LBA makes providing the life insurance benefits an easy experience. We offer various types of group life insurance, including:

• Basic Life Insurance
• Life with Long Term Care Rider
• Voluntary Life Insurance

Most life insurance policies are purchased with the help of an employer. Offering this tax-deductible benefit to your employees can be more affordable in comparison to shopping for individual life insurance plans and a nice complement to group health insurance benefits. Anybody who has loved ones who rely on them for financial support, be it their spouse, their children, or other family members, should have some level of life insurance. In the event that the employee's life should be cut short, the resulting financial hardship can be catastrophic to those left behind. Unresolved debts, monthly mortgage commitments, hospital costs and funeral expenses can prove to be financially insurmountable.

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Completing your employee benefits package with supplemental insurance options such as group accident insurance, critical illness plans, medical gap insurance and cancer insurance is an easy way to attract and retain talented employees in your industry. LBA will assist you in identifying which plans are affordable and appropriate for your group.

• Group Accident Insurance

Accidental injuries can lead to some unexpected out of pocket costs and medical expenses. Accident insurance can cover such costs as hospital stays, medical exams, transportation costs and much more. LBA can help guide you in finding the right policy for you and your employees.

• Critical Illness Plans

Critical illness plans can provide lump-sum, tax-free payments when a policyholder suffers from a specific, pre-identified critical illness. Access to group insurance plans such as these is usually offered through an employer. Not all illnesses are covered and some restrictions apply; let LBA help you identify the best critical illness plans for your specific employee group.

• Medical Gap Insurance

Most group health insurance plans will only cover a portion of overall medical expenses. Supplementing your benefits plan with medical gap insurance can help your employees pay high deductibles. This type of insurance is usually paired with group health insurance and can act a complimentary insurance to the benefits already being offered. LBA can help you evaluate if medical gap insurance is needed by your group.

• Cancer Insurance

Millions of people are diagnosed with cancer each year. In fact, one out of two men and one out of three women will be affected by cancer before they retire. Not only can the disease itself hurt, the medical costs of treatment can be astronomical. You can help your employees protect themselves from these costs by offering access to group cancer insurance.



Supplemental cancer insurance can help you manage the costs of treatment, preserve your savings and let you concentrate on getting better, not paying medical bills. Many cancer insurance companies offer this coverage and LBA can help you analyze which company and plan are appropriate for your group.

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