Balanced Funding Quick Guide

Transcription

1 One Mission: You Balanced Funding Quick Guide Form No (03-17)

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3 BLUE CROSS OF IDAHO INSURANCE PLANS / BALANCED FUNDING QUICK GUIDE A Quick Guide to Understanding Your Blue Cross of Idaho Balanced Funding Self-funded Health Plan This guide was created to give employers a quick overview of the new Blue Cross of Idaho Balanced Funding Self-funded Health Plans. These self-funded group plans are designed specifically for employers with 51 to 250 employees who want an alternative to conventional self-funding arrangements. Comprised of maximum claims funding, administrative services and stop-loss insurance, the Blue Cross of Idaho Balanced Funding program combines the predictability of a stable monthly payment and protection against losses and ease of administration. With Blue Cross of Idaho s Balanced Funding program, if your claims are lower than expected, you may receive a surplus credit back after fixed costs are paid. If claims run higher than anticipated, the stop-loss insurance has got you covered. Also called excess-loss insurance, it includes both specific stop-loss to protect against a high claim on any single individual and aggregate stop-loss to provide a ceiling on the collective amount of claims expenses in a contract year. BUDGETED MAXIMUM LIABILITY Claims FAVORABLE CLAIMS YEAR Claims Fixed Costs Surplus Credit Settlement (Calculated 3 Mo./Paid 5 mo. post plan year) 20% Retained by Blue Cross of Idaho (Deferred admin) 80% Retained by Employer Fixed Costs Note: Fixed Costs include administration fees and stop-loss insurance premiums. UNFAVORABLE CLAIMS YEAR Claims Overrun Claims Fixed Costs Stop-Loss Insurance $25,000 Specific 12 Months Run-out Protection 110% Aggregate 3 Months Run-out Protection As a self-funded health plan, additional actions and responsibilities will apply. Please work with your legal counsel to ensure compliance with ERISA, HIPAA and any other applicable federal or state requirements. bcidaho.com 1

4 Self-funded Health Plans As an employer, when you self-fund your health plan, you take on financial responsibility for your employees medical benefits. Your company assumes risk for the payment of claims filed with your health plan. The Blue Cross of Idaho Balanced Funding program has been designed with bundled stop-loss insurance to help protect you against risk. PLAN BENEFITS AND OPTIONS We offer several options for Balanced Funding plan designs, including PPO, POS, CCO and HSA plans. Once plans are selected by the employer, and employees make their selections from these options, Blue Cross of Idaho will provide group members with an Enrollment Certificate packet explaining the benefits, exclusions and limitations. ADMINISTRATIVE SERVICES AGREEMENT Blue Cross of Idaho will manage all claims administration for your self-funded health plan. You will sign an Administrative Services Agreement as the contract to authorize Blue Cross to process claims, billing, reporting, enrollment and membership changes. We will also provide customer services and fulfill materials requests, as well as allow access to our member portal and online wellness services. STOP-LOSS INSURANCE POLICY The stop-loss insurance policy, also known as the Blue Cross of Idaho Excess Loss Insurance Policy, protects your self-funded health plan from: Specific stop-loss catastrophic claims incurred by a single member. Coverage is for a 12-month contract period, plus an additional 12-month run-out period. Aggregate stop-loss coverage in the event that all claims exceed the dollar amount budgeted. Coverage is for a 12-month contract period, plus additional 3-month run-out period. 2 Blue Cross of Idaho Balanced Funding self-funded health plans include specific stop-loss starting at $25,000 and aggregate stop-loss starting at 110 percent. The Blue Cross of Idaho Excess Loss Insurance Policy outlines the coverage that is bundled with your Balanced Funding self-funded health plan. CLAIMS FUNDING Your Balanced Funding self-funded health plan has been specifically designed to determine your budgeted maximum claims liability (maximum claims liability includes both claims and fixed costs, such as administrative fees and stop-loss insurance fees). You will remit a monthly payment based on enrollment to Blue Cross each month on the 27th day. Money not paid out in claims in a given month will roll over. If your claims exceed the specific or aggregate stop-loss thresholds, your excess loss policy covers the additional eligible claims. YEAR-END SETTLEMENT In the event your self-funded health plan does not incur the budgeted maximum claims liability, Blue Cross will share the benefits of a positive claims experience. Eighty percent of the unused claims funds will be returned to your group health plan and 20 percent will be retained by Blue Cross to help offset administrative costs, called a deferred administration fee. Settlement reconciliation will occur three months after the contract period (plan year).

5 BLUE CROSS OF IDAHO INSURANCE PLANS / BALANCED FUNDING QUICK GUIDE CONTRACTUAL AGREEMENTS As an employer, you are directly responsible for your Balanced Funding self-funded health plan. Any services provided by Blue Cross of Idaho to help administer your plan must be supported by contracts. The following legal documents must be agreed to and signed by both parties: Business Associate Agreement Administrative Services Agreement Excess Loss Insurance Agreement FINANCIAL RESPONSIBILITY Claims liability for a self-funded health plan belongs to the employer, and not Blue Cross of Idaho. BILLING AND PAYMENT Blue Cross of Idaho Balanced Funding self-funded health plans will require electronic funds transfer (EFT) of all plan funds (monthly maximum claims liability, administrative fees and stop-loss insurance fees) by the 28th day of the prior month. If funds not received by the first day of the month they are due, all claims payments will be put on hold until funds are received. Invoices are to be paid as billed, with any adjustments made in the next month s billing. If remittance is not received by the end of the month, your plan will be terminated (including stop-loss insurance and administrative services) and additional admin fees will apply. These fees also apply if you drop your plan mid-year or choose not to renew. This may decrease your potential surplus credit. SAMPLE MONTHLY BILLING CYCLE FOR MAY EFFECTIVE DATE April 20 May bill is generated April 27 May 10 May 10 May 31 May remittance drafted via EFT Blue Cross confirms May payment has posted If payment has not posted, all claims payments are immediately pended If May payment still not posted, plan will be terminated effective May 1 and May claims will be denied. NOTE: Employers electing a Blue Cross of Idaho Balanced Funding self-funded health plan will be required to provide Blue Cross with a check equal to the first month remittance by the 5th of the previous month. This must be received prior to any plan setup occurring in Blue Cross systems. Important: Self-funded Health Plan Group Responsibilities Offering a self-funded health plan has many unique benefits, but there are also additional actions and responsibilities for the group. Blue Cross of Idaho recommends that employers work with legal counsel to ensure they are able to fulfill the obligations of the Balanced Funding Self-Funded Health Plan. Understanding Your Fiduciary Responsibilities Under a Group Plan: ghpfiduciaryresponsibilites.html The Center for Consumer Information & Insurance Oversight: bcidaho.com 3

6 Glossary of Terms Fully insured health plan a plan for which the plan sponsor/employer purchases health insurance coverage from an insurer that takes on the financial risk of paying claims for covered benefits. Health insurance tax (HIT) fees charged to insurance companies to help pay for the Affordable Care Act. These administrative costs are passed on to fully insured health plans, but do not apply to self-funded health plans. Self-funded health plan (also called self-insured) a plan in which the plan sponsor/employer takes on the financial risk of paying claims for covered benefits. Third party administrator (TPA) an insurance company or employee benefits company that provides administrative services, such as enrollment and billing, customer service and claims processing. Stop-loss insurance (also called excess loss) an insurance policy that operates like reinsurance to reimburse sponsors of self-funded plans for claims above a specified level. Specific stop-loss plan sponsor is protected against a high, catastrophic claim on any one individual for illness or injury. Monthly premium what an employer would pay an insurance company to administer benefits to employees and pay claims in a fully insured health plan. Aggregate stop-loss provides a ceiling on the dollar amount of eligible expenses that a plan sponsor would pay in total during a contract year. Monthly contribution what an employer would pay a third party administrator to cover the cost of estimated claims, administrative fees and stop-loss insurance. Premium taxes fully insured health plans pay a state health insurance premium tax on employer insurance premiums. Self-funded plans are not subject to state insurance regulations. Balanced funding the cost savings from a favorable claims year, combined with the limited liability of an unfavorable claims year and convenient level pay contributions, make this self-funded health plan an attractive alternative to conventional self-funding. 4

7 BLUE CROSS OF IDAHO INSURANCE PLANS / BALANCED FUNDING QUICK GUIDE Run-out period the period of time immediately following the end of the self-funded plan year. During this time, all claims incurred prior to the plan renewal or termination date are paid. Most contracts provide three months of runout protection. Maximum claims funding Claims funding is the estimated amount an employer will be paying for claims in a plan year. At year-end, this amount is compared against total paid claims for the year to determine if a surplus is available. Surplus credit in a favorable claims year, an employer in the Balanced Funding Program may receive a settlement after claims and fixed costs are paid. In an unfavorable claims year, stop-loss insurance will cover the claims overrun amount. Incurred but not reported (IBNR) claims Claims that are in the lag period that occurs between the date a claim is incurred and when it is paid. This helps the TPA estimate run-out and terminal liability. Employee Retirement Income Security Act (ERISA) is a federal law that provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. Health Insurance Portability and Accountability Act (HIPAA) is a federal law that restricts access to individuals private medical information. Fixed costs Consists of administration fees and stop-loss insurance premiums. Combined with estimated claims funding, the budgeted maximum liability is paid monthly based on enrollment for employers in Balanced Funding. bcidaho.com 5

8 One Mission: You Sales Customer Service Claims Inquiries or Blue Cross of Idaho complies with applicable Federal civil rights laws and does not discriminate on the basis of race, color, national origin, age, disability or sex. ATTENTION: If you speak Arabic, Chinese, French, German, Korean, Japanese, Persian (Farsi), Romanian, Russian, Serbo-Croatian, Spanish, Sudanic Fulfulde, Tagalog, Ukrainian, or Vietnamese, language assistance services, free of charge, are available to you. Call (TTY: ). Chinese 注意 : 如果您使用繁體中文, 您可以免費獲得語言援助服務 請致電 (TTY: ) Spanish ATENCIÓN: si habla español, tiene a su disposición servicios gratuitos de asistencia lingüística. Llame al (TTY: ). bcidaho.com 2017 by Blue Cross of Idaho, an independent licensee of the Blue Cross and Blue Shield Association