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Solana Insurance Services, Inc.
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Self-Insurance/Partial Self-Insurance
 
Solana Insurance Services
 
This is what we know as of 2-18-13
 
Self Funding---Do you want to pay for a whole loaf of bread when you may only eat half of it?
 
How do you value Company Healthcare?     A % of compensation  or  a % of profitability ?
           
You can plan on 2 classes of employees:
            Class 1—Full time employees 30+ hrs per week
            Class 2—Part time employees 29 hrs max per week
 
 Employer’s Mandate will require coverage at the required “Minimum Essential Value” (MEV)  for all full time employees.   In addition, the “Mandate” requires the Single / Employee Only Contribution to NO MORE than 9.5% of W2 wages.   This means most employers will have to move toward basic 100% for Single employee contributions.
 
For those Employers that wish to not play, that employer would have to move employees  to 29 hours or below to evade the “Mandate”.  That practice brings another set of issues on staffing and the use of the employers Worker’s Compensation policy “by employees” as their health care plan.
 
PENALTIES:    Minimum Essential Value and Minimum Value Contributions (MEV or MVC) – if the employer fails in executing  these Mandates,  the employer will be fined for all Full Time Employees. This could be $2,000 per employee. There will be Calculators available by HHS and/or  Solana, with its strategic partners, in the coming months to calculate the pain/tax for Employers thinking of not Playing. Invariably the Employer losses greatly in the penalty phase. Penalties are not tax deductible!
 
Medical Loss Ratio ( MLR) – In a fully Insured environment employers are pooled within the PPACA world and therefore the Risk of Pool is everyone’s in that Pool – Under this provision, Loss Ratios are regulated and the Employer may not be able to participate in their own “good claim” years.
As it is, One for All and All for One Pool.
 
Modified Community Rating – This is a component of how to Pool and calculate MLR. It prohibits insurers from varying rates based on health status or claims history. It also prohibits insurance rate variations based on demographic characteristics such as age and gender, whereas adjusted or modified community rating (self insured programs) allows insurance rate variations based on demographic characteristics such as age and gender and many other components.
 
 
This results in a 3 to 1 ratio for the maximum difference in premium for oldest to youngest age category. Currently the ratio is about 7 to 1. Accordingly anticipate premiums increasing for younger employees up to 47%, estimated, and falling for older employees about 13% due to these MCR requirements. This explains why the max deductible will be $2,000.
 
Reinsurance Carriers are not bound by Loss Ratios, Modified Community Rating, or unhealthy employee populations.
 
Employers will be able to offer plan designs to their employees that will have better protection and better value than the new traditional marketplace mandated plans.
 
Employer Contributions can now be associated with the employee and their dependents that DO NOT maintain or participate in a Company Wellness program.  If you or your family do not participate the contribution and plan design could suffer.
 
The bottom line by self insuring:
The overall cost of healthcare can be managed closer because the employer has more control with plan designs that are not forced by the mandate and the real fact that 50% to 70% of employees do not use their health plans or use it very little!
 
Hubie Laugharn
 
 
PS
 Have you done a “calculator assessment “yet? This will tell you if it is more cost effective to pay the penalty or buy insurance for your employees. 
 
 

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