A fully self‐funded plan, in which the employer bears full responsibility for payouts, clearly carries a certain amount of risk. However, such plans also have the potential for high rewards – especially as costs continue to rise and insurance options dwindle. For organizations with sufficient assets, this may be an excellent choice; we can help you ask the right questions and analyze pros and cons. The many benefits of self‐funding include:
• Full control over the plan’s design to meet your unique needs and capabilities. You determine all the benefits, exclusions and terms of coverage, and establish a provider network; EBS advises and assists you in the process and then administers your plan.
• Improved cash flow: You hold your own reserves and gain the returns from their investment.
• Administration tailored purely to your requirements … and at lower costs (self‐funding eliminates a carrier’s risk charge and profit margin).
• Avoidance of state mandates on non‐governmental plans and most premium taxes. (The federal Employee Retirement Income Security Act, or ERISA, supersedes state regulations in governing self‐funded plans.)
Also, you should know that EBS has considerable experience and a proven successful track record in two critical areas of great concern to organizations considering self‐funding:
• Provider networks. As you might imagine, negotiating mutually acceptable fees with scores of independent professionals, hospitals and other health‐care firms can be a daunting task. For those considering self‐funding, EBS offers a tremendous advantage: In most geographic regions, we already have the extensive contacts and resources it takes to set up a network of providers who will accept your payments and agree not to balance‐bill either your firm or the employee. Rather quickly, we can line up providers who will discount their fees in exchange for a place on your organization’s preferred list, and then set up provisions for out‐of‐network services and charges.
• Prescriptions. For pharmaceuticals and medically prescribed supplies and equipment, EBS can custom‐design coverage to fit the employer’s limitations and desires. We’ll help you set employee co‐pay levels and establish a formulary (including a multiple‐tier system if desired), and then “do the shopping” for the best discounts, continuing to reduce the costs of your plan.
If self‐funding is your choice, EBS can help you set up a separate account, often a money market account or trust fund, to earn interest for you until claims are actually paid. And to protect you against the rare catastrophic claim, we’ll help you find stoploss insurance, covering costs above specified limits for individuals and your annual corporate aggregate. Thanks to our established relationships with a number of top‐rated stop‐loss insurers, we can obtain for you the best possible stop‐loss premium quotes.
We also partner with a panel of specialists – physicians and nurses who review large claims (cancer, serious disabling accidents, and birth defects are examples) and unusual or non‐traditional requests (as for new devices, new treatments, and newly defined conditions). These specialists advise on the level of care that’s appropriate – hospital, nursing home, home health care, equipment and devices – and help us find providers who will offer you the best value for that care.
Our exceptionally knowledgeable staff will administer the entire package – both routine and large‐case management, claims research, review of individual and aggregate claims history, identification of high‐risk people and high‐cost diagnoses.
As the label implies, this alternative concept for health plan financing blends elements of an insured plan with features of self‐funding – and again, EBS will be happy to help you analyze your unique situation, explore the options and reach a sound decision.
Partial self‐funding actually constitutes a traditional insured plan, with the employer committing to help employees with costs. If this is your choice, we can help you find a plan that is right for you with high deductibles and high out‐ of‐pocket maximums – for example, $1,500 and $4,000. Then you would provide more reasonable limits for your employees, such as $500 and $1,000, and fund the difference yourself.
Under this system, all claims go first to the insurance carrier – but once they determine what covered expenses the plan will pay and remit that amount, they will send an Explanation of Benefits (EOB) to EBS. With that EOB in hand, we would then administer the remaining claim, mailing partial self‐funding checks directly to the care provider or your plan’s participant.
In most instances, the money you’ll save on premiums paid to the primary carrier will more than offset your reimbursement costs and EBS’ administration fees.
Just as EBS prides itself on tailoring benefits packages to suit its individual customers, we know that most employees truly appreciate the ability to select specific benefits to meet their unique situations. You and your employees may know this as a “cafeteria plan,” a “flex plan,” or a “125 plan” for the governing section of federal code; we call it a Flexible Spending Account (FSA), in which employees set aside a certain amount of their pay to cover individually selected and defined benefits.
Our customers are making FSAs an extremely popular EBS option, not only because of our service and custom‐ tailoring, but also for the financial reward: FSA dollars are “pre‐tax” – deducted from earnings to reduce taxable income – and typically provide savings of about 30%. You may want EBS to help you design an FSA plan to help reimburse employees for their costs in such areas as:
• Insurance deductibles, co‐payments and other eligible costs
• Prescription medications
• Dental services, which may include orthodontics, oral surgery and dentures
• Vision care – exams, glasses, contacts and solutions, eye surgery
• Chiropractor services
• Hearing devices
• Daycare for children and dependent adults
Of course, EBS can do as much or as little as you desire in defining and administering FSA benefits, but many organizations like us to “do it all.” First, we go over all the possibilities with you, including analysis of your employment mix and what it takes to be competitive in your industry and community. That will establish the “entrees” you’ll offer in your “cafeteria” (and of course, you can add or change items as circumstances change from year to year). Next, we’ll advise your employees of the plan and its benefits, in group meetings. We’ll explain how the choice and level of each optional benefit is typically affected by individual circumstances – high or low wage scale, single or married, having a spouse covered by another plan, needing day care (with the IRS now allowing up to $5,000 per year for child care, this is an extremely popular benefit for anyone with youngsters at home). Then we’ll administer the program, and have experts available to answer any questions your employees may have.
We also offer participants the convenience of using a FSA Debit Card. This eliminates the need to pay with cash, file a claim and wait for the reimbursement. Each participating employee also has the ability to go online to check their FSA and Child Care balances, get a detailed account history, determine what is covered under their FSA, and find answers to other questions.
With their FSA contributions deducted up front, employees realize not only significant tax savings but also increased spending power … and for every dollar the employee contributes, THEY save about 25% and YOU save about 8% in unemployment and workers’ comp premiums, Medicare and FICA matches.
Offering multiple health plans along with other employee benefits requires a great deal of coordination among various insurance carriers, administrators, and other service providers with regard to employee eligibility, enrollment, billing, and remittance. EBS’ Consolidated Billing Service simplifies this process by handling all the details from eligibility administration to insurance carriers.
• One easy to read monthly invoice
• 24 hour turnaround time on new or existing enrollment changes
• Dedicated team member for your account
• Direct phone line to your expert enroller
• 99.4% accuracy on all data entry
• Enrollment and payment provided to all your employee benefit partners
• EBS maintains multiple direct electronic data feeds
• Interfaces (EDI) with local, regional, and national firms
• EBS provides an additional resource to assist your employees through the enrollment process
The federal statute’s formal name – the Consolidated Omnibus Budget Reconciliation Act of 1985 – does not sound much like an insurance law. Buried within its pages, however, was language that required employers with group health plans to offer departing employees an opportunity to continue their coverage. While it has helped many employees, COBRA’s fine print and red tape continues to confuse and complicate the lives of many human resources officers.
Whether your benefits plan is traditionally funded or financed through the increasingly popular alternative of partial self‐funding, EBS is eager to help. Our services not only support the departing employee, but also (and more importantly), we help our customers comply with the complex federal rules and regulations.
A Health Reimbursement Arrangement, like the FSA, has other popular names – defined contribution plan, personal care account, and health care account. Compared to the FSA, some major HRA differences are these: The HRA is 100% employer‐funded; at the employer’s option, its cash value can carry over from year to year (that is, it is not necessarily a “use‐it‐or‐lose‐it” proposition); and the employer pays into the account gradually, by the month or pay period, making for smoother cash flow.
Within defined limits, an HRA can cover insurance co‐pays and deductibles, and premiums on health‐related policies; plus costs of certain medical, vision, dental, mental health and chiropractic services and prescription drugs. For each coverage period, the employer places a set amount in each employee’s HRA; claims are paid and the account reduced as the employee incurs covered expenses.
The employer also enjoys significant benefits with an HRA. It can become a partially self‐funded system, in which you augment a less costly high‐deductible health insurance plan; it can reduce prescription drug costs; and it offers a means to cap or reduce costs of retiree benefits. Also, administrative fees are tax‐deductible (and may be paid by your organization, your workers, or a combination of employer/employee dollars) – and if your benefits strategy requires, you can design the plan so that any unused employee account balances are forfeited each year.
Finally, you can use an HRA to complement your FSA plan and enhance FSA values. Combined or alone, they’re great benefits … and EBS can help you make sense of all the plan sponsorship regulations and variables, determine what’s best for your specific situation, and administer your plan for maximum value.