What Clients Are Saying. . .
Medical Plans
All group medical benefit plans fall into one of two categories: self-funded or insured. The choice of one over the other should not be made arbitrarily. Each type carries its own set of administrative rules and legal constraints.
What is Self-Funding?
Under an insured health benefit plan, an insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid to the carrier by the employer. Employers with self-funded (or self-insured) plans retain the risk of paying for their employees’ health care themselves, either from a trust or directly from corporate funds.
Most employers with more than 200 employees self-insure some or all of their CA employee benefits. Many employers with fewer than 200 employees also self-fund, but these employers require greater stop-loss insurance protection than larger employers (stop-loss insurance is discussed in greater detail later). As a general rule, employers with less than 100 employees fully insure their group medical benefits.
In addition to their excellent service, in 2010 Barclay West recommended and assisted with the implementation of a new regional medical carrier and achieved an overall annual premium saving of $92,000 for our 120 employees."
HR Director, Sacramento, CA
Regional Bank
The risk assumed in either situation is the chance that employees will become ill and require costly treatment. When employees have few claims and few expensive illnesses, the self-funded employer realizes an immediate positive impact on overall health care costs. Conversely, if the employee group has unfavorable claims experience, a self-funded employer would incur an immediate expense beyond what may have been expected. Insured plans have a more predictable cost for the year; however, large employee claims costs from one year can affect future premium amounts.
ERISA vs. State Regulation
Self-funded health plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA preempts state insurance regulations, meaning that employers with self-funded medical benefits are not required to comply with state insurance laws that apply to medical benefit plan administrators. On the other hand, insured plans must comply with some of ERISA’s requirements, but are primarily governed by the state where covered employees reside.
The distinction between state and ERISA regulations is important when determining if self-funding is right for your organization. Multi-state companies with insured health plans must comply with the regulations of each state in which they have plans and covered employees. Multi-state self-funded plans need only comply with ERISA.
All CA group health insurance and group medical benefit plans fall into one of two categories: self-funded or insured. Each type carries its own set of administrative rules and legal constraints.
Premium vs. Unbundled Fees
The risk an insurance company takes with an insured plan can be translated into a dollar amount for the employer. That dollar amount is the premium an employer pays each month for the insured group medical benefits. The premium amount includes the following:
- Current and predicted claims cost
- Administrative fee
- Premium tax paid to the state
- Insurance company profit
Employers who self-fund their medical benefits do not pay the premium tax or insurance company profit. They do, however, assume the costs of paying for claims and administrative functions.
Typically, employers with self-funded health plans will outsource plan administration to a third party administrator (TPA) or insurance company who charges the employer a fee for performing administrative services.
Health Plan Types and Characteristics:
Fee-for-Service: Health coverage that reimburses health care providers for services for employees. This tends to be the most costly for employers.
Health Maintenance Organization (HMO)
Covers services performed solely by providers in a network. This tends to be a low-cost system, but is more restrictive than other plans.
Preferred Provider Organization (PPO)
Has a network of providers, but also allows use of medical providers outside of the plan’s network (typically with greater employee cost-sharing). Referrals may not be required. Is more flexible than an HMO, but also more expensive generally.
Point-of-Service Plan (POS)
Plan combines elements of an HMO and PPO. Each time employees need health care, they can choose how it will be received. If an employee initially sees a PCP and stays in-network, then more substantial benefits will be received versus not seeing a PCP first.
Consumer-Directed Health Plan (CDHP)
A high deductible health plan paired with a tax-advantaged account to pay for medical expenses. The most prominent options are Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) used in conjunction with savings accounts.
Dental Coverage
According to Employee Benefit Adviser, most people make a positive connection between overall good health and maintaining their oral health. Those with dental benefits have a brighter view of their health and well-being in general. Dental benefits may seem like just another expense, but the risks of not providing dental benefits could be more costly. We can provide a top quality PPO with access to all providers or a less-expensive option, the DHMO with a select list of providers in your area. Self-funding group dental using an experienced TPA makes sense for most employees with 50 or more employees.
Vision Coverage
To encourage your employees to have regular eye exams, consider offering vision insurance as part of your benefits package.
Many times, optometrists can detect conditions such as diabetes, hypertension and high cholesterol before your employee or his or her primary care doctor is aware of any such concerns.
-Diabetes: Causes diabetic retinopathy, which can lead to vision problems if it is left untreated. Optometrists can easily identify diabetes when examining the blood vessels of the eye and discovering bleeding in the back of the eye.
-Hypertension: Optometrists can detect hypertension by looking at how the blood vessels of the eye cross one another. If certain patterns become evident, high blood pressure is likely the cause.
High Cholesterol: This condition causes plaque to get stuck in the forks of the blood vessels in the back of the eye.
Group Life Insurance
Life insurance isn’t a fun thing to think about, and it may seem like an unnecessary expense. But if you have people that depend on you for financial support, then life insurance is really about protecting them in case something happens to you—your designated beneficiary would collect a financial benefit upon your death.
Group Disability Insurance
Disability insurance protects workers and their families against financial catastrophe by helping them meet daily expenses—bills, mortgages, and other expenses—and maintain their standard of living. Disability insurance replaces a percentage of pre-disability income if an employee is unable to work due to illness or injury for a specified period of time. Employers may offer short-term disability coverage, long-term disability coverage, or integrate both short- and long-term disability coverage.
Short-term disability coverage
Short-term disability (STD) coverage provides disabled employees with a specified percentage of pre-disability income—typically 60 percent—once their sick leave has been exhausted. The duration of STD coverage varies, but is typically not more than six months.
Conditions that may trigger payment of STD benefits include pregnancies, strains, sprains, and minor surgeries. These conditions typically resolve quickly and employees usually are able to return to work before the benefits are exhausted.
Long-term disability coverage
Long-term disability (LTD) insurance provides income to workers whose earnings are interrupted by lengthy periods of disability. Long-term disability benefits usually begin when sick leave and short-term disability benefits are exhausted, and typically replace about 60 percent of pay. LTD benefits can continue for anywhere from five years to the remainder of an individual’s life. LTD is generally considered protection from the effects of a catastrophic illness or injury, but claims are often a result of common ongoing medical conditions that worsen overtime (e.g., heart disease, hypertension, and diabetes).
Voluntary Benefits
Because of their cost-efficiency and portability, as well as their contribution to an employee’s work-life balance, offering voluntary benefits can become a central component of your company’s overall benefits strategy with help from these tools. Choose from life insurance, disability, accident and cancer insurance. Many plans have significant wellness benefits included.
Executive Benefits
Retaining top talent is a major priority for most businesses, especially members of the executive staff. Executive benefits are designed to provide your top employees with a higher level of benefits and compensation, especially since 401(k)s restrict the amount of money an individual can contribute on a tax-favored basis. Executive benefits can be designed to provide solid tax advantages for both employers and employees.
Key-Person Life and Disability Insurance
Most organizations employ at least one individual who is essential to the company’s success. This person may be a partner, owner, majority stockholder or another individual who is crucial to the business. If this person unexpectedly leaves the organization—due to a death, disabling accident or an immediate resignation—it may be hard for the organization to survive without the person who makes the business run smoothly. If your organization employs individuals who are vital to its success, key-person life insurance or key-person disability insurance can help protect your organization. These insurance solutions can give your organization options other than immediate bankruptcy should you lose the key person or people without warning.
Whether you have two employees or 500, a California insurance broker at Barclay West can deliver the most cost-effective plan at the highest perceived value to your team.
Copyright 2012 Barclay West Employee Benefits: Insurance Broker California. All Rights Reserved.
1731 E. Roseville Parkway Ste. 270, Roseville, CA 95661, (877) 825-7144
CA Group Health Insurance Plans
