For use with North Carolina brokers only. Self-Funded Health Plan Designs and Stop-Loss Insurance for North Carolina Small to Mid-Size Businesses

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1 For use with North Carolina brokers only Self-Funded Health Plan Designs and Stop-Loss Insurance for North Carolina Small to Mid-Size Businesses

2 Why Choose a Starmark Self-Funded Plan Design with Stop-Loss Insurance? Savings Opportunity for future savings should medical costs be lower than funded Protection Aggregate and specific stop-loss protection against large unexpected covered claims from the entire (or whole ) group or just one individual Starmark offers: Convenience Administration and stop-loss insurance are bundled Flexibility Three surplus option choices For use with North Carolina brokers only 2

3 Who are Ideal Clients? Clients interested in an opportunity for future savings should medical claims be lower than funded Clients who want predictable monthly payments Clients who want to offer the same plan for employees in different locations Clients who want transparency on how their claim dollars are spent Clients interested in promoting healthy behaviors to employees For use with North Carolina brokers only 3

4 Why Starmark HealthyEdge SM? Lower costs by paying for actual claims at a discount with network access Opportunity to get money back Flexibility in plan design Knowledge on how claim dollars are spent For use with North Carolina brokers only 4

5 Why Starmark HealthyEdge SM? HealthyEdge gives you, the broker: Something different to present to clients Ability to differentiate yourself from other brokers A door opener to expand client base Adjustable compensation For use with North Carolina brokers only 5

6 Key Advantages of Starmark HealthyEdge SM Stop-loss insurance and self-funded plan designs are bundled less hassles Many specific stop-loss levels from which to choose Aggregate Claim Liability Summary Report is mailed to the group monthly Claim utilization reports provide transparency on how healthcare dollars are used No lasers (carve out specific risks in stop-loss contract) For use with North Carolina brokers only 6

7 Specific and Aggregate Stop-Loss Specific stop-loss will pay covered claims over a certain amount for a specific person. $25,000 $30,000 $50,000 Specific stop-loss levels $35,000 $45,000 $40,000 Aggregate stop-loss will pay covered claims over a certain amount for the entire group. Aggregate stop-loss attachment point: Groups with <5 eligible employees: 325% of expected claims Groups with 5-9 eligible employees: 165% of expected claims Groups with 10+ eligible employees: 125% of expected claims North Carolina is a community-rated state; therefore, the stop-loss insurance is not underwritten. For use with North Carolina brokers only 7

8 Starmark Self-Funded Plan Designs 3 Key Components to the Monthly Payment Claim pre-fund The claim pre-fund (or aggregate claim liability) account is used to pay covered claims. Stop-loss premium Stop-loss insurance pays if covered claims are more than the group is required to fund. Administrative expenses For use with North Carolina brokers only 8 Total Monthly Payment

9 Surplus Covered claims are paid out of the claim pre-fund account. If claim activity is favorable, the group may have a surplus in the claim pre-fund account. The group may choose to receive the surplus either as an administrative fee credit or cash 1. 1 Not all surplus options have a cash option. For use with North Carolina brokers only 9

10 Four Surplus Options 2/3 Administrative Fee Credit Surplus 2/3 Administrative Fee Credit, 2/3 Cash Surplus Cash Surplus Traditional Cash Surplus The price differential between the most and least expensive surplus option ranges between 2 to 4.75% of the total cost*. *Subject to change. For use with North Carolina brokers only 10

11 2/3 Administrative Fee Credit Surplus Description Group receives 2/3 as an administrative fee credit at new plan year. If the administrative fee credit is greater than the yearly administrative fee, the difference will be refunded as cash at the end of the second plan year. Starmark receives 1/3 as a delayed administrative fee. Any surplus is forfeited if the agreement is terminated on or off anniversary. This surplus option is subject to a terminal liability reserve adjustment, which is the amount set aside to pay claims during the runout period. Runout Period 15 months Surplus Determination 16 th month (the 4 th month after the start of the new plan year) For use with North Carolina brokers only 11

12 2/3 Administrative Fee Credit, 2/3 Cash Surplus Description Group receives 2/3 as an administrative fee credit at new plan year. If the administrative fee credit is greater than the yearly administrative fee, the difference will be refunded as cash at the end of the second plan year. Starmark receives 1/3 as a delayed administrative fee. Cash refund provided for on-anniversary termination. No credit or refund for off-anniversary termination. This surplus option is subject to a terminal liability reserve adjustment, which is the amount set aside to pay claims during the runout period. Runout Period 15 months Surplus Determination 16 th month (the 4 th month after the start of the new plan year) For use with North Carolina brokers only 12

13 Financial Example 2/3 Administrative Fee Credit Surplus and 2/3 Administrative Fee Credit, 2/3 Cash Surplus $60,000 ($35,000) ($4,000) $21,000 ($7,000) $14,000 Annual claims pre-funding Paid covered claims Terminal liability reserve* Difference 1/3 delayed administrative fee Administrative fee credited to group (or cash), depending on the surplus option selected *The terminal liability reserve is the amount that Starmark estimates based on the group s experience and sets aside to pay claims during the 15-month runout period. Surplus accounting is performed in the 16 th month after the effective date of the agreement. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 13

14 Financial Example 2/3 Administrative Fee Credit Surplus and 2/3 Administrative Fee Credit, 2/3 Cash Surplus $60,000 ($95,000) ($4,000) ($39,000) Annual claims pre-funding Paid covered claims Terminal liability reserve* Difference (paid by stop-loss insurance) In this example, the $39,000 aggregate claim liability is covered through aggregate stop-loss coverage. Trustmark also funds the $4,000 terminal liability reserve adjustment. *The terminal liability reserve is the amount that Starmark estimates based on the group s experience and sets aside to pay claims during the 15-month runout period. Surplus accounting is performed in the 16 th month after the effective date of the agreement. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 14

15 Cash Surplus Description Group receives a cash refund provided in the form of a check. This surplus option is subject to a terminal liability reserve adjustment, which is the amount set aside to pay claims during the runout period. Runout Period 15 months Surplus Determination 16 th month (the 4 th month after the start of the new plan year) For use with North Carolina brokers only 15

16 Financial Example Cash Surplus $60,000 ($35,000) ($4,000) $21,000 Annual claims pre-funding Paid covered claims Terminal liability reserve* Surplus remaining in the account as a cash refund. *The terminal liability reserve is the amount that Starmark estimates based on the group s experience and sets aside to pay claims during the 15-month runout period. Surplus accounting is performed in the 16 th month after the effective date of the agreement. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 16

17 Financial Example Cash Surplus $60,000 ($95,000) ($4,000) ($39,000) Annual claims pre-funding Paid covered claims Terminal liability reserve* Difference (paid by stop-loss insurance) In this example, the $39,000 aggregate claim liability is covered through aggregate stop-loss coverage. Trustmark also funds the $4,000 terminal liability reserve adjustment. *The terminal liability reserve is the amount that Starmark estimates based on the group s experience and sets aside to pay claims during the 15-month runout period. Surplus accounting is performed in the 16 th month after the effective date of the agreement. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 17

18 Traditional Cash Surplus Description Group receives a cash refund provided in the form of a check. This surplus option is not subject to a terminal liability reserve adjustment. Runout Period Choice of 9 or 12 months Surplus Determination None For use with North Carolina brokers only 18

19 Financial Example Traditional Cash Surplus $60,000 ($35,000) $25,000 Annual claims pre-funding Paid covered claims Difference (cash refund) Starmark self-funded plan designs with the Traditional Cash Surplus option offer a choice of a 9- or 12-month runout period. Groups receive a cash refund of money remaining in the claim pre-fund account at the end of the runout period. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 19

20 Financial Example Traditional Cash Surplus $60,000 ($95,000) ($35,000) Annual claims pre-funding Paid covered claims Difference (paid by stop-loss insurance) Starmark self-funded plan designs with the Traditional Cash Surplus option offer a choice of a 9- or 12-month runout period. Dollar figures are used for illustrative purposes only. Group experience will vary. For use with North Carolina brokers only 20

21 State-Mandated Benefits Self-funded plans are not required to cover state insurance mandated benefits. The plan designs include many mandated benefits, just not at levels required state-by-state in a fully insured plan. North Carolina requires non-erisa governed plans (churches, municipalities, charter and public schools, and public libraries) to cover some state-mandated benefits. For use with North Carolina brokers only 21

22 Terminating a Plan Off-Anniversary If the stop-loss insurance contract terminates before the end of the contract period: There is no aggregate stop-loss insurance available for the months the contract was in force. The employer is responsible for reimbursing Trustmark Life Insurance Company and/or Starmark for any advances, including all aggregate advances. The employer is also responsible for paying all covered claims, below the specific deductible, that were incurred and not paid while the plan was in force. If the 2/3 Administrative Fee Credit Surplus or the 2/3 Administrative Fee Credit, 2/3 Cash Surplus option was selected, the employer forfeits the surplus. For use with North Carolina brokers only 22

23 Additional Starmark Highlights Nationwide network access through Aetna Signature Administrators (ASA) PPO Network, Cigna PPO Network and other networks Teladoc phone/video doctor consults Grand Rounds medical second opinions True personal service, including a welcome call for each new group Optional plan benefits YourCare health and wellness program CareChampion 24/7 health advocacy service Maternity Supplemental Accident Easy employee enrollment online or by telephone with Express Connect Employers can add Starmark HealthyDental SM to complement their self-funded health plan and encourage good dental health. Fully insured Dental, Guaranteed Issue Life/AD&D, and Short-Term Disability Plans are also available. Employers can provide employees choice and a low-cost alternative to major medical coverage with Starmark Preventive Plus SM. For use with North Carolina brokers only 23

24 Starmark HealthyEdge SM Compensation Two Options Percent of Paid Stop-Loss Premium Per Employee Per Month (PEPM) Broker compensation is adjustable. For details, refer to the Starmark Compensation Schedules available by logging in at > Compensation > Compensation Schedules and Bonus Program, or ask your Starmark distribution partner. For use with North Carolina brokers only 24

25 Getting Started: Sales Toolkit Available by logging on to > Marketing Materials > Toolkit Library PPO Advantage and CDHP Advantage plan design brochures Self-funded concept brochure along with 4 surplus option inserts State mandate comparisons A reference document highlighting state variations for specific and aggregate stop-loss coverage requirements Flyers Enrollment information And more! For use with North Carolina brokers only 25

26 Starmark : Personal. Flexible. Trusted. Experience Starmark s unparalleled personal service. Employers can choose from flexible self-funded health plan designs to create a plan to meet their needs and budget. Employers have trusted Starmark to serve the healthcare benefit needs of their employees since For costs and further details, including exclusions and limitations, contact your Starmark representative. Plan design availability and/or stop-loss insurance 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. For use with North Carolina brokers only 26 S br-NC (7-1-16)