Insured Health Plans
- Full risk is borne by the carrier in
exchange for collecting all premium.
- Carrier determines plan design, filed
with State in compliance with State benefit mandates.
- Carrier determines timing of premium
payment, sets rates.
- Carrier pays claims, determines insurance
rates, sets managed care network, chooses pharmacy card arrangement,
etc. Carrier sets these fees.
- Full premium subject to State premium
- Carrier holds reserves (some set this
at 20-40% of annual premium).
- Carrier follows its plan protocols.
Self-Insured Health Plans
- Specific and/or aggregate stop loss
coverage covers catastrophic losses. Plan Sponsor keeps premiums,
funds claims as they occur.
- Employer designs plan, subject to ERISA.
- Employer determines funding cycles,
sets rates (in conjunction with stop loss, where applicable).
- Employer contracts TPA to pay claims,
competitively shops stop loss insurance, chooses managed care
network, pharmacy card, etc.
- Premium tax applies only to stop loss
- Employer holds reserve funds.
- Employer establishes plan protocols