The Affordable Care Act does not allow for any rate consideration for the overall health condition on fully insured small group health plans for a Practice. Fully insured small group health plans are written and renewed with rates that are the same whether a group is very healthy or very sick. In essence healthy fully insured Practices must subsidize the cost for sicker ones.
Self Insured Fully Funded (SIFF) small group health plans are allowed to underwrite and set rates for each Practice based on the health of that group. By going through this process a Practice can see the fair price based on the health of their Staff. The bottom line is healthier groups WILL save money. How does it work? Below are 6 advantages.
1. Underwriting Based on Age, Sex, Health and Lifestyle: With a fully insured plan, the healthier and younger groups must subsidize the cost for older and less healthy groups. The underwriting process used for self insured but fully funded plans allows you to be charged the correct amount for your Practice, rather than being included in a community rated traditional plan.
2. Tax Savings: Practices with SIFF (ERISA) plans save on state insurance taxes. The ACA “HIT” does not apply to SIFF plans. This is a large cost to insurers of fully insured health plans.
3. Not subject to State Mandates: Carriers selling fully insured plans must spend large amounts of resources to comply with the hundreds of different State mandates. With SIFF plans, a Practice selects the benefits that work best for them.
4. MUCH more latitude in plan designs: All ACA plans fall into four categories: Platinum, Gold, Silver or Bronze. Benefits have to match up to one of those categories. With SIFF plans there are a large number of deductibles, co-insurance, co pays, prescription benefits and other options that allow a Practice to customize a plan that works best for them; i.e. a Practice is not limited to the “one size fits all” metal plans designs.
5. “Money Back” from Claims fund: In years that claims are less than funded for the money left over in the claims fund belongs to the Practice.
6. Monthly Claims Reports: The Practice receives monthly claims reports showing where healthcare dollars are being used.
In summary, savings for a healthier Practice result from underwriting, fewer mandates, more latitude in plan designs, tax savings and a refund of claims funds. In many cases these savings are significant. And for Practices that go through underwriting and find out they are not as healthy as they thought, they simply stay in the community rated fully insured pool until their overall health improves.
More good news: With over 50 years of combined experience, The Principals of The Medical Practice Resource Group can help. We combine a high-tech and high-touch approach to offer you the best plans, latest technology, and personalized service for any size Practice. The MPRG is an independent agency so we bring you the best insurance company for your needs. We offer health, life, dental, vision, disability, long-term care, critical illness, accident, identity theft, legal plans, and pet insurance.
And we’ll give you – as in FREE – all the tools to manage your Practice – like our customizable HR software that includes HRIS, on boarding, benefits, payroll, COBRA, ACA compliance, and an app.