Self-Funded Health Plan Designs and Stop-Loss Insurance. Specifically for Businesses With Ten or More Employees

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1 Self-Funded Health Plan Designs and Stop-Loss Insurance Specifically for Businesses With Ten or More Employees

2 Agenda Why Starmark HealthyEdge SM? What is Starmark HealthyEdge SM How to Get Started 2

3 Why Starmark HealthyEdge SM Benefit costs for self-funded employers rose 26% over past 5 years compared to 35% for those that buy health insurance % of employers with employees selfinsure; 13% of employers with <100 employees selffund. 2 50% of primary decision makers said they will move to self-funded insurance to control costs Kaiser Foundation, 7/ Department of Health & Human Services Report, 3/ Employer Survey on U.S. Health Reform, McKinsey & Co., 2011

4 Why Starmark HealthyEdge SM Gives you... Lower costs Opportunity to get money back Flexibility in plan design without watering down benefits Knowledge on how claim dollars are spent... an alternative to status quo! 4

5 What is Starmark HealthyEdge SM? Self-funded health plan designs offer Opportunity for future savings through refund Stop-loss protection Predictable monthly payments 3 surplus option choices - surplus can be returned as administration fee credit or cash Aggregate and stop-loss protection against large unexpected claims from the group or just one individual 5

6 What Businesses are Well Suited for Starmark HealthyEdge SM? Businesses interested in an opportunity for future savings should medical claims be lower than funded Businesses that want predictable monthly payments Businesses that want to offer the same plan for employees in different locations Businesses that want transparency on how their claim dollars are spent 6

7 Key Advantages of Starmark HealthyEdge SM Groups can have as few as 10 enrolled employees Many specific stop-loss levels from which to choose Stop-loss insurance and self-funded plan designs are bundled less hassles Aggregate Claim Liability Summary Report Mailed to the group monthly Claim utilization reports Provide transparency of how healthcare dollars are used No lasers (carve out specific risks in stop-loss contract) 7

8 Starmark HealthyEdge SM Stop-Loss Specific stop-loss levels $6,500, $10,000, $15,000, $20,000, $25,000, $30,000, $35,000, $40,000, $45,000 and $50,000 State-mandated minimum levels apply Aggregate stop-loss attachment point Will vary from 120% to 125% of expected claims State-mandated minimum levels apply 8

9 The Total Cost of HealthyEdge 3 Key Components Three parts make up the total cost of HealthyEdge Self-funded claims Aggregate claim liability ( claim prefund ) Administration expense Stop-loss premium Specific and aggregate stop-loss 9

10 3 Surplus Options 1. Excess surplus* is credited to the group as an administration fee credit 2. Excess surplus* is credited to the group as an administration fee credit or cash % of excess surplus* is refunded as cash *All surplus options are subject to a terminal liability reserve adjustment. 10

11 Surplus Option 1 Excess surplus is credited to the group as an administration fee credit Group receives 2/3 of surplus as an administration fee credit at renewal to be applied toward the administration fee in the new plan year Starmark receives 1/3 of surplus as a delayed administration fee No credit at termination 11

12 Surplus Option 2 Excess surplus is credited to the group as an administration fee credit or cash Group receives 2/3 of surplus as an administration fee credit at renewal to be applied toward the administration fee in the new plan year Starmark receives 1/3 of surplus as a delayed administration fee Cash refund provided only for on-anniversary termination No credit or refund for off-anniversary termination 12

13 Surplus Option 3 100% of excess surplus is refunded as cash Cash refund provided in the form of a check This is the only surplus option available in KY, NM, NV, UT and WV. 13

14 Claim Runout Handling Standard runout period 15-month runout (12/27) ensures practically all claims are paid during the runout period Terminal liability reserve fund The amount that is set aside to pay claims during the 15-month runout period. 14

15 Timing of Surplus Determination Surplus determination refers to when the surplus accounting is performed. Surplus determination options: Groups with enrolled employees Performed in 4 th month after renewal (16 th month) Groups with 25+ enrolled employees Choice of determination performed in either the 1 st or 4 th month after renewal (13 th or 16 th month) Option is selected at time of quote Note: In KS, surplus is determined in the 16th month regardless of group size. 15

16 Financial Example #1 $200,000 ($160,000) $40,000 ($4,000) $36,000 ($12,000) $24,000 Annual aggregate claim liability Less actual aggregate claims Aggregate claim liability surplus Less terminal liability reserve adjustment Net aggregate claim liability surplus Delayed administration fee payable to Starmark Administration fee credited to group (or cash), depending on the surplus option selected Dollar figures are used for illustration purposes only. 16

17 Financial Example #2 $200,000 ($235,000) ($35,000) ($5,000) ($40,000) Annual aggregate claim liability Less actual aggregate claims Aggregate claim liability Less terminal liability reserve adjustment Total aggregate claim liability Dollar figures are used for illustration purposes only. In this example, the $35,000 aggregate claim liability is covered through aggregate stop-loss coverage. Trustmark also funds the $5,000 terminal liability reserve adjustment. 17

18 Application of Administration Fee Credit The administration fee credit is applied to the administration fee on the bill several times during the next plan year. If the administration fee credit is greater than the yearly administration fee, the difference will be refunded as cash at the end of the second plan year. 18

19 State-Mandated Benefits State insurance mandated benefits are not covered Many mandated benefits are covered, just not at levels required state-by-state Self-funded plans governed by ERISA don t require it Non-ERISA governed plans require state-mandated benefits to be covered; therefore, Starmark HealthyEdge SM is not available for non-erisa groups. Churches, municipalities, and charter and public schools 19

20 Other Important Benefits with Starmark Express Connect paperless employee enrollment Nationwide network access True personal service, including a welcome call for each new group Optional plan benefits YourCare health and wellness outreach program CareChampion 24/7 health advocacy service Inpatient Admission and Outpatient Surgery Access Fee Maternity Supplemental Accident 20

21 Trustmark and Starmark Trustmark, an employee benefits company for nearly 100 years, is dedicated to providing financial security, improving health and well-being, and helping people navigate the healthcare system. Serving more than 2 million covered lives or plan participants, Trustmark is rated A- (Excellent) by A.M. Best. Starmark is a distinguished leader in group healthcare benefits offering self-funded and fully insured plan designs. With paperless employee enrollment, health and wellness programs, nationwide network access and seamless HRA administration, Starmark is the choice in employer healthcare benefits. 21

22 Starmark HealthyEdge SM Give your group the Edge get started today! For costs and further details, including exclusions and limitations, contact your Starmark representative. Plan design availability and/or stop-loss coverage may vary by state. Self-funded plans are administered by Starmark, and stop-loss insurance is provided by Trustmark Life Insurance Company, Lake Forest, Illinois. 22 S ER (5-12)