Employers accrue savings with ACTIN’s plan in 4 ways.
- Employers keep 100% of unspent claims dollars at the end of the year.
- Employers receive a dividend (or rebate) on stop loss premiums varying with the financial performance of the ACTIN group of employers.
- Annual premium increases for level funded self-insurance are less than annual insurance premium increases.
- As the work force gets healthier, spending should decrease over time (see “How we Improve Care” tab).
ACTIN’s initial quotes are usually equal to or somewhat higher than insured, high deductible plans, but at the end of the year ACTIN usually outperforms them. ACTIN’s plan design is not comparable to a high deductible plan. Employees pay their portion of healthcare spending in 2 ways: 1) the portion of the premium deducted from their paycheck and 2) in cost sharing at the point of care. In a $6000 deductible plan, employees effectively pay 40% of the cost of care, the maximum allowed by law. Premiums can be kept surprisingly low when plans combine a deductible of $5000 or more with a 30% cost share after the deductible is satisfied up to the maximum out-of-pocket allowed by law. In such plans an individual can pay up to $7,150 and a family, $14,300. There is always a cheap plan.
If an employee pays 20% of the premium in payroll deductions and the plan has a $6000 deductible, employees effectively pay 60% of the cost of the health plan. In a high deductible plan, employees pay at the point of care in 2 ways-- in services forgone and in paying the first dollar when there is no choice but to spend, such as in an emergency. Services forgone for hourly workers with chronic illnesses result in worse health outcomes. Not filling your insulin prescription because you can’t afford to has consequences. For this reason, ACTIN does not use deductibles to manage cost. We manage cost by small, highly managed networks of providers integrated with a robust wellness program.
The maximum out-of-pocket for medical spending in ACTIN’s plans is $500 which equates to employees paying 11% of the cost at the point of care. The difference with high deductible plans is that employees can afford care because the out-of-pocket cost is manageable. The table below for 4 companies compares ACTIN’s beginning-of-the-year and end-of-the-year financial performance with high deductible insured plans they were quoted for 2016-2017.
|Plan||Deductible||Out of Pocket Maximum||Premium per Employee||End of year Premium per Employee|
|Insured Quote #1||$5000||$5600||$688||$732**|
|Insured Quote #2||$5000||$6350||$461||$505**|
**Company 2 spent $53,972 in prior year in covering half the cost of the deductible. This factor is added to end-of-year premium cost.
# Company 4’s fixed cost is only 25% of total spending because the employer funds a much higher percentage of claims as compared to the other 3 companies.
Employers receive a rebate on stop loss premiums varying in amount with the financial performance of the ACTIN group of employers. Stop loss insurance is an employer’s protection against high-dollar claims. In ACTIN’s plan, employers pay a set amount each month for stop loss insurance and for claims, just like an insurance premium. The employer has no liability beyond this monthly premium equivalent. Stop loss insurance generally is 40-50% of the monthly cost, medical claims being the remainder. The table below illustrates the expected return of stop loss premiums for each of the 4 companies if $0 of stop loss premiums are used to fund claims and if 50% of stop loss premiums are used to fund claims. The more ACTIN employers, the larger the stop loss premium pool. The larger the stop loss premium pool, the more predictable the amount of return from year to year.
|Expected Dividend-0% of Premiums Used by Group||Percent of Stop Loss Premium Returned||Expected Dividend-50% of Premiums Used by Group||Percent of Stop Loss Premium Returned|
Annual premium increases for level funded self-insurance are less than annual insurance premium increases. The table below shows the year over year increase in stop loss premiums and claims fund and the total increase in monthly cost in year 2 as compared to year 1 for same stop loss contract types.
|Stop Loss Premium Year 1||Stop Loss Premium Year 2||Claims Fund Year 1||Claims Fund Year 2||% Increase in Premium|
*Company 4 self-funds claims at a much higher level than other companies and is not comparable. Its total cost is also significantly lower because its stop loss premiums are.
**Company 3 enrolled a family with an expensive chronic illness during the plan year - substantially increasing its claims spending. At renewal, the stop loss premium scantly changed but the claims fund was increased to cover the fixed cost of medication.