Level the Paying Field
Help Groups Understand How They Can Earn A Refund Through Good Claims Experience
One fact of which neither you nor your groups may be aware should have you feverishly exploring level-funded healthcare plans. This is a little difficult to wrap your head around, but nonetheless true.
Your group could have a million-dollar claim — and the employer still receive a refund.
Neither a loophole nor an oversight, this is the nature of stop-loss reinsurance, at least the kind OptiMed reps will steer you toward in the Level-Funded Major Medical plan. Please follow closely.
Reinsurance Dynamic Duo
This plan combines two separate entities of stop-loss reinsurance, basically independent of each other, not stacked atop one another. This can dramatically curtail your group’s liability. This is easier to illustrate than explain.
Let’s assume your group is set up with a $250,000 claim fund with $50K specific deductible. An employee undergoes emergency heart surgery amassing a million-dollar medical claim. The specific deductible amount, $50K, is extracted from the claims fund. The specific insurance carrier pays the remainder. Specific reinsurance, incidentally, covers an unlimited amount once the deductible is met. That’s one of the reasons it’s required — at a choice of deductible levels — on OptiMed Level Funded Major Medical.
Returning to our scenario, that’s $950K expended on your employee, far exceeding the quarter-million-dollar fund.
$1 Million Aggregate
Aggregate reinsurance is purchased at a maximum payout amount, customarily $1 million but can be more. Along with this a “minimum attachment point” is calculated as representative of anticipated claims. This minimum attachment point functions similarly to a deductible (but the amount may increase month-to-month based upon changes in employee population throughout the year). Let’s assume the minimum attachment point is $250K; that’s the employer’s liability amount for the year’s aggregate of medical claims until the point of exhausting the $1 million of aggregate reinsurance.
Keep in mind that:
- Specific reinsurance has a deductible per insured and is unlimited thereafter.
- Aggregate sets a minimum attachment point and thereafter pays up to the policy limit.
But here’s the kicker.
Payments by the spec reinsurance do not count against the claims. In our example, there’s still $200K in the claims fund before the aggregate is applied. So if the other charges were $125K, for example, the employer could still receive a $75K refund at the runout period following year’s end:
$250K claims fund
– $50K deductible on spec
– $125K in aggregate
= $75K refund.
The aggregate reinsurance pays any combination of claims that exceeds $250K, which essentially puts a cap on an employer’s annual medical claims so long as they remain less than the plan maximum.
Here's a sample of what this might look like:
Bottom line: two different types of reinsurance independent of one another: spec and agg.
Another feature of the plan is “monthly accommodation.” This is more likely early in the year, when there are few installments in the claims fund. OptiMed will authorize payment of claims in an amount exceeding what’s yet accumulated into the fund. Think of it as an advance, which will be paid back when the fund has a surplus.
Get A Quote
Go to the broker center to fill out an RFP that requires a group census with date of birth, gender and medial tier for all employees currently enrolled in the group’s major medical program. You’ll be asked for last two year’s renewals with current and renewal rates. For groups of 25 or more there will be a gate-keeper questionnaire, or individual health questionnaires for groups under 25. Groups over 100 will be asked about experience with any shock claims, if relevant.
Brokers can also set a PEPM commission rate in their quote request, and further enhance the program with OptiMed Gap secondary insurance to ease employee out of pocket expenses, and/or an HSA or HRA. At little or no extra charge telephonic doctor visits and a wellness line staffed by nurses are included, along with administration of COBRA, HIPPA, Section 125, an Employee Assistance Program, Patient Advocacy, and the group will receive an actuarial certification compliance letter.