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Considerations for Self-Funded Health Plans in Light of the COVID-19 Crisis

The COVID-19 pandemic has caused a major disruption to the US economy.  Businesses are struggling to cope.  If your business has a self-funded health plan, here are some things that you need to think about:

1. Plan Amendments

The recent legislation passed by Congress requires employers to cover the full cost of testing for the coronavirus.  If your plan requires cost-sharing with your employees, then you need to amend your plan document.  In addition, you may have to contact your stop-loss carrier.  It has been reported that most stop-loss carriers understand the need for the plan amendment and have agreed to not raise premiums or change other features of their policy.

2. Claims Reserves

A counter-intuitive effect of our current health crisis is that, for many employers, healthcare costs have declined.  The reason is that many hospitals and doctors have limited their practice to treating COVID-19 cases.  As a result, annual physicals and other diagnostic tests have been cancelled.  In addition, patients who are not suffering from COVID-19 symptoms are afraid to go to the doctor or emergency rooms.  However, this reprieve will not last forever.  Once “shelter-in-place” orders are lifted and doctors and hospitals have the capacity to treat patients other than COVID-19 patients, employees and their dependents will once again go to the doctor.  You should continue to make your monthly payments, as required by your TPA, and be mindful of claims that are incurred but not reported.  You do not want to face unexpected costs once the economy ramps up again.

3. Risk Group

You need to understand the make-up of your employee group.  If your employees tend to be older or sicker, you can expect their healthcare costs to increase.  So far, there has been no legislation requiring plans to cover the cost of treatment for COVID-19 without cost sharing.  However, it is possible that that could make its way into future legislation.  You want to make sure that you have planned for any additional costs.

4. Telemedicine

One thing that we have learned from the crisis is the value of telemedicine.  Many patients are turning to telemedicine when they are unable to see their doctors.  If your plan document does not cover telemedicine or you do not have a relationship with a provider, you will want to address those issues.

5. COBRA

Many employers that have laid off or furloughed employees have agreed to pay some or all of the cost of COBRA.  Before you agree to subsidize COBRA costs, make sure that you recognize the full extent of those costs.

The full impact of the COVID-19 crisis on self-funded health plans may not be known for many months.  However, what we do know is that, in order to safeguard your business, you need to prepare for whatever may come.  A healthcare professional from RMC can help you be ready for this or any future health crisis.