Self-funding of employee benefit plans is best described as "self-insurance," and there are three good reasons to do it: lower cost, greater control, and more flexibility. That's why more than 75 percent of all U.S. employers have now turned to some form of self-funding.
Traditionally, an employer pays an insurance carrier to provide benefits and pay claims for its employees. Benefits are confined to that particular carrier's products, giving an employer little flexibility to offer a plan tailored for its own employees. The employer also has limited ability to control rising insurance premiums. And if there is any profit left over - the difference between premiums paid and claims covered - the insurance company keeps it.
A self-funded employer takes the money that would have gone to an insurance carrier and invests it instead in a trust fund to finance the cost of its employee benefits plan. The amount of money set aside is based on a professionally calculated risk analysis that helps determine the projected level of claims. The employer also purchases stop-loss insurance to protect the plan from both an individual catastrophic claim as well as aggregate claims that exceed a pre-designated level. Any money left over in the fund remains there, earning a return to help pay for future claims. In a self-funded plan, the employer can decide which benefits to offer and custom design a plan best suited for its employees. In addition, self-funded plans are regulated by the federal ERISA statute, eliminating many expensive and duplicative state-mandated benefits.
To manage a self-funded plan, an employer hires a professional third-party administrator like Allegiance. Our role is to design a benefits plan unique to each employer and its workforce. We help prepare the Plan Document, the Summary Plan Descriptions, Administrative Forms and ID Cards. We also help communicate the benefits plan to employees. We manage the entire benefits process, from employee enrollment to claims payment. Our state-of-the-art technology platform integrates paperless claims processing with accounting, group billing and administration, and management reporting.
Along with the most advanced technology, we offer a professional and caring staff who are among the most experienced and well-trained in the industry. This allows us to deliver innovative solutions to employers and world-class customer service to their employees.
As healthcare prices skyrocket, businesses and government agencies find it increasingly difficult to maintain their current employee benefit plans. It's reassuring to know that with self-funding, there is an alternative to rising insurance premiums and decreasing health benefits. Allegiance works with employers to find a balance between cost control and employee satisfaction by designing self-funded benefit plans. Self-funding is a way for employers to take control of their health benefits while
The Employee Retirement Income Security Act of 1974 set standards for administering private employee benefit plans to protect the interests of people who depend on the benefits. Allegiance assists employers in meeting ERISA rules, including disclosing financial and other information to participants and beneficiaries and complying with reporting requirements. We process claims and assure that benefits are set up and managed according to ERISA.
The Health Insurance Portability and Accountability Act of 1996 made changes to group health coverage rules that affect disability extensions, pre-existing condition limitations and coverage of newborns and adopted children. Subsequent regulations addressed claims and appeals, privacy, security and standardized electronic transactions. Allegiance assures that these rules are fully incorporated into HIPAA administration.
The Consolidated Omnibus Budget Reconciliation Act of 1985 mandated the continuation of group health coverage for qualified terminated employees and their covered dependents. Allegiance assists clients by sending continuation notices to the qualified beneficiaries; coordinating enrollment, coverage and eligibility; administering billing; receiving premium payments; and handling a range of related details until the individual is no longer covered under COBRA.
Strong planning and execution can assure not only the monetary success of your program, but also its enthusiastic acceptance by your employees. We develop custom plans including benefits and features that your company managers believe are meaningful and will meet the needs of the employees. Here, we help you sort through the maze of HMOs, PPOs and insurance companies and creatively design a plan that is valuable to you, the employer, and the plan participant. Plan design includes developing necessary plan documents and summary plan descriptions.
Allegiance can conduct a comprehensive study of your current benefits program, taking into account your company's history of premiums, claims, age range of employees and other details. Such an analysis may help you determine if a self-funded plan is right for your company. Should you decide to stay with your existing benefit plan design and providers, this study will enable you to negotiate with your present insurance carriers from a stronger, more enlightened position.
Allegiance can assist you with a broad range of employer compliance issues including the development of employee manuals. Please email: firstname.lastname@example.org, so we may contact you to discuss your options.
We can guide your company in complying with this provision of the Internal Revenue Code by assuring that plans allowing certain expenses to be deducted are implemented fairly and uniformly.
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