Employers select, direct and outsource services to the appropriate organizations to implement a self-funded employee benefits plan.
The key partners needed are:
- An independent professional Third Party Administrator (TPA) to administer and manage the daily administration of the plan.
- The appropriate Managed Care Vendors to best fit your needs and control costs
- Purchase Stoploss Insurance to limit risk
The TPA already has a turn key operation that can be customized to your specific program. They receive and process claims from providers, make weekly reports concerning payments and monitor legal and regulartory issues. Typically, it is the TPA that also provides the plan document outlining covered benefits, deductibles, coinsurance, eleigible expenses and managed care procedures.
Your managed care vendors provide employees with an insurance card similar to those provided by fully funded plans and, in many cases, use the same networks of doctors and hospitals. They also monitor utilization and provide case management for chronic conditions. Pharmacy benefits are provided through these vendors as well.
The stoploss coverage has two key features: the specific and aggregate policy. The Specific Policy stablizes the plan by insuring that large, individual catastrophic claims will not have a serious impact on reserves. The Aggregate Policy provides coverage should there be multiple large claims where the maximum claim liability is reached in the plan year.