Employers will increasingly resort to self-funded plans for group health insurance as a result of the Affordable Care Act, according to a new survey of insurance executives by one of the world's largest re-insurers.
In the survey by Munich Health North America, a subsidiary of Munich Re, 82 percent of employers have experienced a "growing level of interest" in self-funded health plans over the last 12 months. Nearly one-third also said interest has increased "significantly,"
It's not the first sign of such interest and it's evident in the North Bay, according to insurance experts.
[caption id="attachment_72294" align="alignleft" width="162"] John Nacol[/caption]
"I am sure many employers will look toward self-insurance as a way to provide medical insurance for their employees," said John Nacol, chief executive officer of Redwood Health Services in Santa Rosa, which specializes in benefit plans that involve partial self-funding. "Self-insurance provides the flexibility to design a medical plan that fits their employees' needs."
According to the survey, health insurers anticipate an increase in self-funded plans or "Administrative Services Only" portfolios, with nearly 70 percent of respondents saying they plan on growing such portfolios over the next 12 months.
While self-funded plans can result in more flexibility -- and less stringent requirements -- there is an inherent level of risk that employers need to consider.
"Self-insurance comes with risks that many employers have not engaged before," Mr. Nacol said. "Self-insurance provides 're-insurance,' which allows employers to cap their risk."
The survey's findings echo what brokers in the North Bay have said over the past 12 months regarding such plans, particularly with health care reform taking full effect in less than a year, and particularly with smaller employers. For large companies with several hundred employees, the concept is fairly typical, but for those with smaller workforces, there is less room to spread the risk.
One possible reason for the uptick in inquiries is because self-funded plans can often provide better information on claims experience, giving employers a better idea of what premium dollars go toward. Such plans also typically fall under the purview of the Employee Retirement Income Security Act, aka ERISA, a federal act that requires plans to provide participants with detailed information on the plan.
The concept might not be best for every employer, though, particularly if it's a group of older employees or one with a high claims experience.
"The pricing of reinsurance and their tolerance for risk will be a big factor in deciding their willingness to enter the self-insured environment," Mr. Nacol said.
The survey by Munich Re included 326 executives from a range of health plans, HMOs and health insurance brokers and agents, specifically focusing on how much the Affordable Care Act will influence decisions regarding employee health benefits.***
[caption id="attachment_72295" align="alignleft" width="200"] Amy Keyser[/caption]
Fireman's Fund Insurance Company announced that Amy Keyser has been promoted to senior vice president of human resources. Previously, Ms. Keyser oversaw employment law, ethics and corporate investigations as a vice president in the company's general counsel's office.
Before joining Fireman's Fund in 2006, she worked for several labor and employment law firms. She hold a s J.D. and bachelor's degree from the University of Virginia.***
Fireman's Fund Insurance Company this year is celebrating its 150th anniversary, with various celebrations and exhibits planned in the coming months.