Feels All Savers Plan brings needed competition, choice
Feels All Savers Plan brings needed competition, choice
Self-funded health insurance plans are becoming increasingly popular with small businesses in New Jersey.
The control over costs, options for plan design and savings potential all make self-funded plans more appealing for employers looking for alternatives amid ever-increasing health care costs.
Especially in New Jersey, which has among the highest premium rates for the standard, fully insured health plans.
There’s just been one problem. For companies with fewer than 50 employees — and certainly below 10 — there have not been many options.
That is why UnitedHealthcare introduced its All Savers Plan in July.
The plan, which has proved popular in other parts of the country, will begin to target New Jersey’s small businesses in the next few months.
Here how it works: UHC says All Savers is a hybrid plan of traditional self-funded and fully insured plans. It offers benefits for a smaller pool of employees at a lower cost, compared with the rates of fully insured plans, and gives employers a chance to save if they end up spending less on health care costs than anticipated. UHC will take on the loss of overspending and will send a check back to the company if the company saved money.
“New Jersey has traditionally been a fully insured market for the most part for the small group marketplace,” said Paul Marden, CEO of UHC in New Jersey. “To some decision-makers, they want opportunities to save money if they don’t incur a lot of claims during the year. They want the opportunity for a surplus or refund. They are tired of just paying an insured rate increase year after year.”
George Griffaton, a partner at Branchburg-based Crisp Insurance Advisors, feels the plan makes sense.
Griffaton said there aren’t nearly enough options for self-funded plans for employers with fewer than 50 employees in the state.
And while insurance brokers say Aetna, MagnaCare and Cigna are existing options for the sort of hybrid self-funded policies that are ideal for small businesses, they said these plans rely on the insurance carrier to assume the risk and process claims, which means they are geared toward healthier populations.
Fully insured health plans are contracts with insurance carriers to handle the risk and claim payments of an employer’s health care needs. Conversely, self-funding shifts the risk to the employer, who is responsible for the payment of claims. Hybrid plans are a combination of using an insurer to oversee the plans and contracts with health providers; meanwhile, the employer is still on the line for paying the claims from the premiums collected from employees.
The benefits of these hybrid plans include taking advantage of the existing provider networks of health insurance carriers and giving the administrative burden to the carriers, all while potentially lowering costs to the company and employees through lower premiums and possible savings.
If a company has a generally unhealthy population, however, it may not qualify for the self-funded plans and is stuck with commercial plans.
“Unlike your fully insured market in New Jersey, where the rates are based on the demographics of the group, with these level-funded or hybrid self-funded plans, they are asking for medical information and making a determination up front on whether they can take the group at all, and at what rate they can take it,” Griffaton said.
“So they are really trying to cherry-pick a little off of the fully insured marketplace. They are looking for the healthy groups to offer this to.”
Marden confirmed the premiums and rates in the All Savers Plan are based off of the health of the employees. But, he said, if approved for a lower rate than fully insured plans, there are even more savings in store for the employer.
Some of UnitedHealthcare’s competitors currently offer these hybrid plans for employers with 25 or more employees, and some offer half of all savings at the end of the year as a reimbursement back to the employer.
Marden feels UHC’s All Savers is going one step further.
All Savers covers 10 or more employees, with plans to reduce to five or more in the fourth quarter this year, Marden said. In addition, the plan returns two-thirds of savings to the businesses.
If the employer spends more than what is estimated, UHC takes on the cost, Marden said.
Basically, it’s a win for the small businesses.
Griffaton said the smallest groups look for plans that have $30 to $50 physician copays and $2,500 deductibles.
Self-funding and the ACA
David Mordo, a broker with Slattery GA, a division of Arthur J. Gallagher, said the increasing popularity of self-funded plans is all a result of the failure of the fully insured marketplace under the Affordable Care Act.
“Employers are frustrated by the lack of options and choices,” he said. “They want to do the right thing for their employees, but it’s become prohibitively expensive.
“It used to be you don’t even think about self-funded for groups less than 100. Now, Cigna, for instance, has had a whole lot of success with (businesses with) 25 employees. National General goes all the way down to three or five employees.”
Mordo, vice legislative chair for the New Jersey Association of Health Underwriters, said more self-funded plans for smaller employers are now a better option “with the small group marketplace having carriers that are leaving or, unfortunately, going through premium increases.”
“New Jersey has the second-highest fully insured rates in the country from a state-specific basis,” Marden said. “Our businesses have been paying high medical premiums.
“I think some business owners are looking for any alternative that can potentially save them money. They have an opportunity to get into the program and really only pay for medical care based on what they actually consume.”
The cost of care is so high that more restrictive plan designs are the only affordable ones for coverage, Griffaton said.
April Masefield, a broker in Oakland, said the restrictive plans have become more complicated with less competition in the space.
“I am seeing a lot more commercial business quoting on the small group level funded platform,” she said. “Many of the carriers are marketing this type of program for small group business (Aetna/National General [formerly Assurant Health]/Starmark/Cigna).
“Rates are four-tier. Plans are flexible. There are individual questionnaires involved if the group is a certain size, but it can be a win at the end of the year for a healthy small group.”
The four tiers typically include a plan for employees only, employees and spouses, employees and children without spouses, and a whole family plan.
About the plan
Marden said choices are exactly what All Savers will offer with its customizable plans, and unlike competitors with tiered or narrow networks, the All Savers plan is on the broadest network in New Jersey. There will be 11 HSA, 32 PPO and 32 EPO plan options.
The goal is to seek out new prospects, and UHC anticipates several thousand new members in the first year of the plan.
Marden feels UHC is ready to capitalize.
“Since August of 2014, UnitedHealthcare has added about 180,000 members in the All Savers product nationally,” he said. “It has had explosive growth. It is very popular. And because of the popularity of it and the growth we wanted to bring it to the New Jersey market as well.”
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