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  • When the Affordable Care Act passed in late 2010, one of the major tenets of the plan was the creation of healthcare exchanges in every state. These exchanges would be state-run with federal seed money used to create them. People who didn’t have coverage or had unaffordable coverage through their employers would be able to buy subsidized plans at a comparatively low cost.

    The exchanges began with the implementation of the ACA in 2014. Of the 50 states, 23 of them were run by the federal government. In late 2015, it was reported that 12 of the 23 federally-run state exchanges were shutting down due to unsustainable losses. In some areas, things have gotten worse.

    Image of healthcare exchanges. Learn about self-insured health care plans.

    Withdrawal from the Healthcare Exchanges

    Over the last couple of years, some insurance companies have begun announcing their intent to withdraw from the healthcare exchanges. In some counties, they were the last insurance company standing. According to a recent Washington Post article, dozens of counties across the country could be without any insurance companies in the exchanges. 

    According to that same article, “that leaves 35 thousand marketplace enrollees living in a county with no affordable way to purchase insurance (As it stands, people who receive subsidies can only use them to purchase coverage in the marketplace.), and 2.4 million would be left with just one insurer’s plan to choose from. That’s out of 12.2 million enrollees total.”

    What to Do Without the Healthcare Exchanges

    If you’re an employer who counted on those exchanges for your employees to get coverage, what are you to do? If you’d like to take care of your employees and offer them coverage, you can begin shopping for a group plan, but you’ve probably heard about the extremely high costs of even the most basic coverage. You can wait for Congress to step in, but partisanship appears to be at an all-time high and the prospects of a quick resolution seem remote.

    Another option is to look at self-insuring your healthcare through a level-funded plan, like the kind offered by GMS. To find out if this is something that could work for an organization of your size contact us today to talk to one of our healthcare experts about a self-insured health plan.

  • When it comes to finding the right health plan for your business, the key is to find an option that makes sense for your business. One route that a business can go is to invest in TPA services for a self-funded health plan, which offers several benefits that can help owners save money and mitigate their risk with proper planning and support. Self-funded insurance also allows businesses to avoid some of the increased regulations on healthcare, which is a big reason why more small and midsize employers are choosing to self-insure, according to the Society for Human Resource Management.

    With all that in mind, self-funding sounds like an intriguing option, right? However, there are a pair of misconceptions about self-funding that either dwell in the past or are not that relevant to business owners. Here are two reasons why owners avoid self-funding, and how a TPA can dispel those arguments.

    Image of a business owner considering self-funded health insurance through TPA services.

    Myth No. 1: Self-Funding Will Sink Small Businesses

    Some business owners remember stories about a company sinking because they went self-funded. What essentially would happen is that a business with self-funded insurance would run into a large number of costly claims after one or several employees got really sick. Because they were self-funded, the business would theoretically be stuck paying all of those claims without any help from a provider, which would force them to shut down since they wouldn’t have the cash flow to actually run their business and pay their other bills.

    While businesses back in the ‘70s and ‘80s did run into this problem, times have changed. Businesses can now invest in something called stop-loss insurance to manage their risk and set a maximum liability number for their yearly claims. 

    Stop-loss insurance allows a business to mitigate its liability so that it can self-fund its insurance without having to fear a year with an unexpected number of claims. Let’s just say that your business is given a $10,000 monthly maximum through stop-loss insurance. At the end of the year, that’s $120,000 max. If your business exceeds $120,000 in claims in a year, you’re reimbursed the overage by the reinsurer.

    This policy also works in your favor if you have fewer claims than expected. If you don’t reach your maximum claims liability number, you simply get to keep the difference, or you can take advantage of a “premium holiday.” This allows you to use the refund to pay for one or several insurance premiums in advance. Since the refund could affect your tax filings, this option can help you avoid having to do a tax adjustment on your healthcare fees since we’ll just deduct your refund from the premiums for the following year.

    Myth No. 2: Self-Funding Makes Owners Deal with Several Moving Parts

    As we’ve mentioned before about self-funding, “normal businesses with fewer than 5,000 employees won’t have the infrastructure to comply with all the regulations and make it financially feasible.” Managing a self-funded plan can mean carefully overseeing several important moving parts. This means that you’re going to need some help because self-funding can be a lot of work for whomever oversees their HR.

    While some owners may be scared off by self-funding, there’s a simple solution to these moving parts: a TPA. What we can do as a PEO with TPA services is manage everything in house so that you can benefit from self-funding without having to deal with all the regulations and administration needs, which can include: 

    • Electronically sending out a file on health plan eligibility every day
    • Having an in-house programmer who can receive necessary data files
    • Access to a pharmacy benefits manager, who works with pharmacies on plan eligibility and drug costs

    Those are just a few of 30 moving pieces that are necessary for self-funding. When you work with a TPA, we can be as transparent about this process as you’d like so that you can see how everything works, or you can let us take care of the work while you focus on other important matters. Regardless of how much or how little you want to know about the process, a TPA enables you to take the HR work out of your hands. This way they can sign up for self-funding, pay their premiums, and know that the work is being done for them.

    Using TPA Services to Self-Fund Your Business

    The key to a good self-funded plan is a TPA that can take care of all the moving parts for your business. As a Professional Employer Organization that offers TPA services, Group Management Services can allow you to enjoy the benefits of self-funding while managing your plan. Contact GMS today to talk one of our experts to learn more about self-funding and to get a quote for your business.

  • Escalating costs of healthcare and benefits have led business owners across the country to seek out a solution that makes the most sense for their company. Of the many options out there, self-funded health insurance has become a realistic opportunity for many small businesses thanks to third-party administrators.

    These organizations, also known as TPAs, allow business owners to take advantage of self-funding, which can provide a “greater level of flexibility that comes with being able to tailor the plan to their needs,” according to the Society for Human Resource Management. The self-funding process can be complicated, but a good TPA can simplify the process so that employers can reap the benefits of self-funded insurance without having to deal with the risks of managing it themselves.

    Image of a third-party administrator for a small business.

    How Does the TPA Process Work?

    While some people refer to TPAs as “claims payers,” the role a TPA plays is much more intricate than that. Let’s start by imagining that your business is going from a fully-insured carrier to become self-funded. In this instance, the business owner is  now the plan fiduciary, which just means that they are financially responsible for the plan.

    Since you’re now self-funded, there’s no insurance company anymore, and you rent what is called a PPO network. For example, GMS primarily works with Cigna. These networks have a long list of providers and hospitals in their network and negotiate discounts with each of these groups. You then pay your network a set cost per employee, per month so that they have access to these discounts.

    This is where the “claims payer” name comes into play. When members of your plan go out and generate insurance claims, those claims go directly to your TPA. The TPA then administers these claims to tell providers who’s eligible on the plan, processes them, and bills the client for monthly fees and the amount of money that needs to be paid to these providers.

    Do I Need a TPA if I want Self-Funded Insurance?

    Absolutely. While a Google-sized company can afford to have an in-house TPA, normal businesses with fewer than 5,000 employees won’t have the infrastructure to comply with all the regulations and make it financially feasible. A TPA gives you access to a team of people who can handle the day-in, day-out needs of self-funding, which can range from daily electronic filings of plan eligibility to a pharmacy benefits manager who deals with every prescription one of your members has filled.

    There are also the potential financial ramifications of managing self-funded insurance in-house. The right TPA can offer you stop loss insurance to mitigate your liability. As GMS’ Costas Reamensnyder points out, a self-funded health insurance plan allows you to “pay only for actual claims; not the total expected claim level from a fully insured carrier.” This means your plan can save a substantial amount of money each year. . A TPA can help you set a cap for maximum liability, which means that you can properly budget for your plan and cover yourself from unforeseeable circumstances.  This maximum liability is provided by adding a stop loss insurance policy. It essentially mitigates your financial liability by limiting the plan’s maximum exposure.

    The PEO TPA Connection

    If interested in self-funding your health insurance, GMS can help. As a Professional Employer Organization, we can help business owners in a variety of ways, including our TPA services. Contact GMS today to talk to one of our experts about self-funded health insurance for your business.