A Midwestern company with 100 employees across seven locations discovered that an employee in their Northeast office was disqualified from coverage under their new self-funded health plan. As a result, the company had to consider returning to a more costly fully-insured health plan for all employees.
The company did not discover this problem until it was able to analyze health data from their self-insured plan, which wasn’t available under their prior fully-insured carrier.
One way for companies to deal with higher risks is to segment groups into risk tiers and charge different premiums for each tier.
By adopting a risk segmentation strategy, the Midwestern company was able to segment its Northeast office onto a fully-insured plan that covered the high-risk employee. Meanwhile, employees at the other six locations remained on the company’s self-insured health plan.
By removing the 16 employees in their Northeast office, the company had enough employees to meet the legal requirements to maintain a self-funded health plan.
As an added bonus, risk segmentation helped the company achieve significant savings. By creatively structuring its self-funded health plan and segmenting out the Northeast location, the company realized greater underwriting profit. This savings went straight to the company’s bottom line.
To assess a self-insured health plan or risk segmentation is right for you, contact an RMC professional today.