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Self Funded Plans
- By Mike Maddy
- Published 08/28/2008
- Third Party Administrators
- Unrated
Mike Maddy
Mike Maddy has been a Union activist for over 30 years. He owns and maintains http://Unions.org in support of the Labor Union movement. Most recently Mike has worked for Wells Fargo Home Mortgage in the capacity of Reverse Mortgage Regional Program Manager. He is responsible for funding over 5,000 reverse mortgages valued at over $1 billion in home capital. Mike is an expert on Senior financial products and reports on all new retiree centric products in the market today. His mantra is "Retire Safe".
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Specific Deductible: The attachment point of the Reinsurance is expressed as a deductible. When the claims for an individual exceed the deductible, the reinsurance attaches and the employer is reimbursed 100% of the claims paid above the deductible during the contract period.
12/12 Basis: Claims incurred and paid during a 12-month period. An 18/18 is expressed as covering claims incurred and paid during an 18-month period for an individual claimant.
Aggregate Stop-Loss: An aggregate stop-loss contract covers all claims that are less than the specific deductible. The basis is normally the same as a 12/12 or 18/18. Best described as "sleep easy" coverage, with a low cost, the expected claims are multiplied by 125% to calculate the claims attachment point. If claims exceed the attachment point during the contract period, the employer is reimbursed at 100% for claims amounts that exceed the attachment. The attachment is calculated monthly.
Fixed Cost: The cost for administration and reinsurance. No claims costs are included. The fixed cost is not a variable.
Expected Funding Rates: When an aggregate stop-loss is purchased the funding levels for claims plus the fixed cost is established.
Maximum Funding Rates: The maximum funding rate is the expected claims cost times 125%, plus the fixed cost. This represents the maximum cost for the employer in a "worst case" projection.
Suggested Funding Levels: Based on projections and assumptions using the expected cost as guidelines, the monthly cost factors are developed for payroll and COBRA rates.
12/12 Basis: Claims incurred and paid during a 12-month period. An 18/18 is expressed as covering claims incurred and paid during an 18-month period for an individual claimant.
Aggregate Stop-Loss: An aggregate stop-loss contract covers all claims that are less than the specific deductible. The basis is normally the same as a 12/12 or 18/18. Best described as "sleep easy" coverage, with a low cost, the expected claims are multiplied by 125% to calculate the claims attachment point. If claims exceed the attachment point during the contract period, the employer is reimbursed at 100% for claims amounts that exceed the attachment. The attachment is calculated monthly.
Fixed Cost: The cost for administration and reinsurance. No claims costs are included. The fixed cost is not a variable.
Expected Funding Rates: When an aggregate stop-loss is purchased the funding levels for claims plus the fixed cost is established.
Maximum Funding Rates: The maximum funding rate is the expected claims cost times 125%, plus the fixed cost. This represents the maximum cost for the employer in a "worst case" projection.
Suggested Funding Levels: Based on projections and assumptions using the expected cost as guidelines, the monthly cost factors are developed for payroll and COBRA rates.