Claims Administration Medical Claims Dental Claims Vision Claims Prescription Drug Programs Disability Administration COBRA/HIPAA Administration Flexible Spending Accounts Surcharge Administration Flexible Benefit Plan Design United Health Plan Administrators will periodically review a clients plan design in order to achieve desired cost savings, maintain compliance with federal legislation and increase the auto adjudication level. Customer Service Our customer service personnel stand ready to assist employees with questions about covered services, benefit plan payments, etc. Trained personnel are located in CT and Ohio. Member Communication and Inservicing The account management staff will assist employers in the creation of member communications and are available for on-site HR or employee meetings. Managed Care and PPO Arrangements Relationships with a number of local, regional and national preferred provider organizations (PPOs) can offer additional savings for plan sponsors. Utilization Review Services Preadmission Certification Concurrent Review Retrospective Review Large Case Management Discharge Planning Psychiatric and Substance Abuse Review Referrals to Specialists Stop Loss Protection A variety of carriers, all of who have achieved an "A" rating or better, provide the best excess loss coverage available. Services include: Initial Marketing and Coverage Placement 50% Notifications Aggregate Reporting Claims Filing Renewal Marketing Reporting and Data Analysis Standard and client specific reports can be provided on a monthly, quarterly or annual basis. Through the wide range of data maintained in the claims system, we can report on demographic, financial and utilization information that is beneficial in determining the cost effectiveness of any program. Self-Funding Partial Self-Funding Plans Self Funding 101 Most fully insured and fully self-funded employers want flexibility in making key decisions on benefits, administration and funding, yet need to limit their liability. Partial Self Funding Plans with Stop Loss Coverage for employer group health insurance, is an attractive alternative to the fully insured market for cost conscious employers. Self-funding is an alternative that enables employers to control rising healthcare costs. A. What is a Self-Funded / Self-Insured plan? A self-insured, or self-funded plan, is one in which the employer assumes partial financial risk for providing health care benefits to its employees. The employer decides on a plan of employee benefits, which can be similar to or identical to the employer's current fully insured plan, or the employer can create whatever benefits they desire. Rather than obtaining medical coverage from an insurance carrier, the employer elects to fund the risk up to a certain level where a Reinsurance or Stop Loss Insurance carrier is brought in. The Stop Loss is designed to limit the employer's loss to a specified amount, to ensure that large, or unanticipated claims, do not upset the financial integrity of a self-funded plan. The amount of risk to be insured is a function of the employer's size, nature of their business, financial experience and tolerance for risk. A TPA administers the plan. Their responsibility includes maintaining eligibility, customer service, adjudicating and paying claims, preparing claim reports, plus arranging for managed care services such as network access and case management. B. What types of benefits are self-insured? Usually the group medical or health plan is the focus of a self-funded program. Other benefits that are often self funded are dental, prescription drugs, vision and short term disability. Life Insurance, Accidental Death and Dismemberment and long term disability are not suitable for self-insurance. I. Self Funding - A Comparison to Fully Insured Plans Basically, everything that is provided in a conventionally fully insured program is duplicated in the partial self funded plan. Everything that the insurance company does when it offers a conventionally insured program takes place in the partially self funded program. The difference is that with the self funded plan the employer holds the cash needed to fund benefits, and instead of sending the fully conventional premium to the insurance company, only a small fraction of the conventional premium is sent in to a reinsurance carrier. The employer purchases re-insurance for protection, holds the remainder of the conventional funds (claim funds), invests them, segregates them if desired, or uses them for general business purposes until they are needed for the funding of claims. The employer retains and keeps the funds when claims do not materialize, hence making a profit. Example A: (Fully Insured Example) Acme Company is fully insured with Fully Insured Carrier and pays a premium of $1,500,000.00 annually for their health insurance plan. Claims experience shows that Acme Company only had $1,000,000 in claims and admin expenses. The fully Insured Carrier keeps $500,000 in profits. Example B: (Self Funded Example) Acme Company's group health insurance is self funded with a Third Party Administrator with reinsurance. Acme Company's potential worst case scenario for the year is $1,600,000 annually. Acme company pays $20,000 a month in fixed premium costs and holds in claims reserves $1,360,000 for potential claims. The $1,360,000 is retained by Acme Company and it is theirs to utilize as they see fit until claims materialize. At the end of the year Acme Company's claims are $1,000,000. Acme Company retains the $360,000 it reserved in a worst case scenario. Acme Company realizes a $260,000 savings by going Self Funded versus Fully insured. The employer is protected by three facets of insurance protection, the specific deductible or (Specific Stop Loss) which protects against any one person claims exceeding a specified amount, the integrated aggregate which protects against any excess monthly claims (so the employer may budget and allocate only the conventional equivalent premium each month, then not have to worry about an adverse month when more than usual claims are presented), and an annual aggregate reinsurance to protect against claims greater than the conventional equivalent. II. WHAT ARE THE ADVANTAGES OF SELF FUNDING? The advantages of self-funding are many. There is tremendous flexibility in the benefit plan design. You can decide what you want to cover and what you don't, whether it's certain vaccinations, chiropractors, injectibles, obesity, or infertility. Another major advantage, is portability from one carrier to another. "There's no disruption in plan when you shift between reinsurance carriers. You don't have to start all over again with new I.D. cards, booklets and doctors, the way you do with the fully-funded plans." Also, for employers with more than one office, it is possible to offer the same plan to everyone in every location. This makes it so much more administratively simple. By Self Funding an employer can utilize one national network or multiple local PPO networks with the same benefit plans. But the bottom line, is cost savings. If you have a good expected claims year, that is the best scenario. But even if you don't, there's maximum liability in place. Another advantage of Self Funding is the ability to class out the executives and provide them with a 100% benefit where, executives and their families pay no copays, deductibles or coinsurance. A. Immediate Benefits and Advantages of Self Funding 1. Fully Insured Carriers Profit Margin: A fully insured carrier's profit margin can be as high as 52% with your current fully insured health plan. This means if your premium is $1 million, the insurance carriers "Profit" can be as high as $520,000. Note: Even with a highly profitable employer case a fully insured carrier will have no problem hitting the employer with a "double digit" rate increase. Insurance carriers continually base rate increases upon a concept called "pooling." Pooling says that if other employers the carrier insures had bad claims experience, which hurt profitability, the fully insured carrier will penalize and raise rates for all employer's. Other fictitious reasons fully insured carriers will give for rate increases is "trend." Trend means increases in the healthcare industry. The fully insured carrier will argue a double digit increase was justified by "trend" on an employer who is running at 50% of claims (highly profitable). This means even though that particular employer has excellent claims experience and is not running at "trend" where other companies have bad experience, the carrier will still raise their rates. 2. Elimination of Premium Tax: In most states there is no premium tax for self funded plans. This results in an immediate savings since between 2%-4% of your current fully insured health plans costs a premium taxes. 3. Improved Cash Flow: Moving from a fully insured plan to a self funded plan usually results in about 3 months of relatively little new claims. During this time, the previous fully insured carrier is still paying claims incurred prior to the new self funded plan year. This claims lag allows your new Self Funded plan the opportunity to build and establish a reserve to pay future claims. Also, reserves for claims are held by the employer and only released if claims materialize, resulting in an improved cash flow for the employer. 4. Control & Flexibility of Plan Design - Benefits: The employer can duplicate it's current fully insured benefit plan or it can "redesign" and tailor the benefits to meet the specific needs of the employer. This means the employer can eliminate benefits which result in plan abuses or high utilization. The employer can also create special executive benefits. 5. Eliminate State Mandated Benefits: Since Self funded plans are governed by ERISA, they follow Federal law, and are not required to cover "State-Mandated" benefits, which can be expensive and unnecessary. By eliminating unnecessary and expensive state mandated benefits employer's can realize an immediate savings. Employer's can also set the limits on certain benefits, where with a fully insured plan there may be state required limits. Since fully insured plans include state mandated benefits the cost of offering these benefits raises the costs of the health plan to the employer. 6. Control of Reserves - Return of Investment on Reserves: A good portion of your fully insured premium is held by the fully insured carrier as a state required reserve for claims and inflation. Under Self Funding the employer maintains and controls reserves and can invest these or put them in an interest bearing account. The employer retains the reserves when claims do not materialize, and there are no restrictions on reserves with a self funded plan. 7. Claims Experience - Immediate Realization of Hard Dollar Savings: Under a fully insured program, if an employer's experience is "better than expected," the insurance company gains financially and makes an unexpected profit. The insurance carrier does not refund the excess profit to the employer. Even if an employer had good experience, the insurance company will still pass on a renewal based upon the insurance companies pool of thousands of groups. You are not truly rated based upon your claims experience and can be treated unfairly. With Self Funding your renewals are based on "YOUR" companies claims experiences, and it is not based on thousands of other companies that have no relation to your company or industry. You, the Employer, not the insurance company enjoy the advantage of favorable claims experience. You, the Employer, keep the savings. B. OTHER IMPORTANT ADVANTAGES 1) Improved Employee Satisfaction- Personalized Employee Service:, Third Party Administrators specialize in one thing, Customer Service. Their sole purpose is to provide the best quality service possible, and to personalize that service to members. This includes dedicated account representatives who know not only the employer's account but the individual employees of each company. Employee's and HR get on a first name basis with claims examiners, and are not transferred to a random person that does not know anything of the employee or the employer. 2) Lower Costs of Operation: Third Party Administrators have lower overhead and expenses than a fully insured plan, which result in an immediate direct savings for the employer, when switching to Self Funding. 3) Claim Utilization and Cost Controls: Third Party Administrators review utilization of the plan and benefits and see where the employers claims and costs are. This allows the employer along with the TPA to make informed decisions as to plan benefits, costs, and any adjustments that need to be made. TPA's also implement unique programs such as hospital bill auditing, case management, pre-certification review, lab programs, etc to keep costs down. C. NATIONAL OR REGIONAL COMPANIES & PROVIDER NETWORKS The fully insured, insurance company's inflexibility to deal with national or regional employers means a multi-location employer cannot offer the same benefits or insurance carrier options to all of its' employees. Some mutli-location employer's have to use multiple fully insured carriers with varying benefit plan designs. This results in far higher plan management costs, and extra administrative work for humans. With a self-funded plan, a multi-location employer can choose from one network to dozens of networks, offering a single standard benefit plan design across several states with significant savings on plan management expenses. This saves your human resource department from dealing with multiple confusing health plan designs and multiple insurance carriers. D. PRESCRIPTION DRUGS With rising prescription drug costs it can be unnerving that an average employer's prescription drug plan can be the cause of almost 25% of the cost of the company's group health plan. Fully Insured carriers pass along minimal prescription drug discounts to employers and keep any pharmaceutical rebates. The result is larger Rx costs and claims experience, which then result in higher rate increases. With a Self Funded Plan, Employers' will actually receive substantial rebates ($ money back each quarter from pharmaceutical managers). Company's will also receive the strongest prescription drug discounts (depends on the TPA) in the country, reducing the employers' prescription drug costs, and hence resulting in lower costs for the group health plan. E. PERCEIVED DISADVANTAGES of Self Funding Question: Won't my own poor current claims experience means that the plan will be costly? Answer: Poor claims can affect costs, this is true, but they will be less costly than a fully insured plan, as you are not paying for taxes and profit in addition to insurance coverage. Question: Will budgeting the Plan be difficult? Answer: Prior claims experience guides your financial commitment, and stop-loss insurance guarantees performance. Question: Will termination of the Plan be difficult if we find it necessary? Answer: Stop loss coverage is structured to pick up claims incurred in, but reported after plan year. Question: Is there added fiduciary and legal responsibility? Answer: The professional administrator provides advice and guidance, whenever help is needed. TPA's Third Party Administrators (TPA's) Third party administrators (also known as TPAs or health benefit plan administrators) fill a critical role in managing self-funded health plans for small and mid-size companies. Traditionally, third party administrators have provided a menu of services ranging from initial enrollment and eligibility management to claims administration. Their emphasis has been on efficiency and cost-effectiveness as they have supplemented the HR and administrative resources of clients. Standard service areas covered by third party administrators include: Initial enrollment Eligibility management Claims administration Claims issue resolution Stop-loss insurance negotiation and administration PPO management Provider discount negotiations Broadened Focus of Third Party Administrators Today, the focus of third party administrators has broadened. As double-digit health benefit cost increases have become the norm, small and mid-size companies are demanding higher-level services from their third party administrators. Among these companies' highest priorities is developing cost control strategies. Meeting this demand calls for a new class of third party administrators. At the top of this class is United Health Plan Administrators. United Health Plan Administrators: A Leader among Third Party Administrators United Health Plan Administrators is a leader among third party administrators. Its services have increased in response to market demands - and so has the expertise of United Health Plan Administrators consultants. United Health Plan Administrators consultants excel at designing customized health plans - including consumer driven health plans - with sophisticated strategies to control rising costs and increase the value employees perceive in their health plans. Through consultation with United Health Plan Administrators, your company may uncover cost-saving opportunities that have been overlooked. Expanded Services of Third Party Administrators United Health Plan Administrators excels in providing enhanced services to help businesses achieve their human resource and financial objectives. Services include: Plan design and management Participant and client Internet sites Enhanced management reporting Aggressive negotiation of stop-loss insurance terms Case management Pharmacy benefit management COBRA administration Plan Flexibility The architecture of each client's plan depends on its specific objectives. United Health Plan Administrators provides customized employee health and benefit plans that supports the client's current and ongoing objectives, meets the needs of a diverse employee population, is affordable to the company and its employees, and may be modified in response to changing internal and external factors affecting the company. United Health Plan Administrators accomplishes this through a continuous, consultative process that begins as an initial meeting with company management. Discussion topics include the company's human resources, financial and broader business objectives, alternative plan structures, and potential cost-saving strategies. United Health Plan Administrators develops a proposal containing multiple plan options, including ancillary products (e.g., vision plan, life insurance, long-term disability insurance), and recommended risk management and other cost-saving strategies. The proposal contains plan administration and other costs. United Health Plan Administrators maintains contact with client personnel throughout the plan year, keeping abreast of changes in the client's industry, markets and operations. Consultations focus on modifications that may improve the plan's effectiveness in supporting client objectives and containing costs. Primary Features Customized plan that supports client objectives. Routine client consultation Multiple plan options Cost-containment strategies Ancillary products (e.g., vision, life insurance, LTD insurance) if requested Monitoring and analysis of plan performance Strategies to control plan costs Key Benefits The client gains control over plan costs, while preserving employee satisfaction, motivating employee performance, and maintaining a competitive edge in recruiting employees. Prescription Plans What benefit do employees value most? Prescription coverage. The Purpose To enable employers to continue to provide affordable prescription coverage as the prolonged and rapid escalation of drug costs stretches into the future. To provide employees with a sound understanding of their prescription drug benefits and educate them regarding effective use of prescription drugs. The Process United Health Plan Administrators works with clients to incorporate highly effective cost-containment strategies in the design of employee prescription plans that employees value. United Health Plan Administrators educates employees regarding current and predicted future drug cost trends, the difference between generic and name brand drugs, and how drug formularies can reduce their prescription costs. United Health Plan Administrators consults with clients regarding strategies to drive down expenses in this major area. Primary Features Extensive pharmacy network Cost-containment strategies Negotiated drug discounts Multi-tiered plan Pharmacy network options Key Benefits Employees play a significant role in managing their own prescription costs, including talking with their physicians about drug options. Participants are offered multiple plan options and are able to make informed choices based on their lifestyle and how much they want to spend. Clients exert increased control over prescription drug costs. PPO Networks One of the most daunting challenges facing businesses today is providing health benefit plans with features that are attractive to employees and costs that are within corporate budgetary constraints. A well-built PPO network is a key component of such a plan. What constitutes a well-built PPO network? A blend of inter-related factors: network penetration, convenience and discounts. PPO network penetration. This is a measure of the extent to which a company's employees utilize PPO network physicians and other in-house health care providers. The higher the utilization, the deeper the penetration. And the deeper the penetration, the greater the cost savings for employers who will have a greater number of in-network claims. PPO network convenience. A key driver of PPO network penetration is convenience, that is, how easy it is for employees to use PPO network providers. Convenience depends on the geographic proximity of PPO network providers to employees' homes and workplaces, the ease of transportation to the provider's location, and the ease of billing and reimbursement matters from the employee's perspective. Convenience also relates to the ease of identifying PPO network providers. PPO health network provider listings generally are available both in hard copy and online. Online listings tend to be more up-to-date and probably are the easiest way for employees to identify in-network providers. Online listings also provide maps and directions to providers' offices and enable employees to select providers based on area of specialization, gender, language and other relevant factors. PPO network discounts. The discounts associated with PPO network health services can vary substantially, depending on the network, the type of service and the geographic location of the provider. An experienced benefits administrator should be able to find the best PPO network for an employer based on their needs and the needs of their employees. Deep network provider penetration and negotiated pricing discounts equal employer cost-savings. The Purpose To maximize PPO penetration and achieve deep pricing discounts for employers by making it simple, convenient and cost effective for plan participants to use in-network providers. The Process United Health Plan Administrators facilitates optimal PPO penetration and deep pricing discounts through its extensive Provider Network. Primary and secondary network matches are based on workforce size, location and other relevant factors. United Health Plan Administrators negotiates pricing discounts with out-of-area network providers when possible. Multi-location clients are connected with multiple networks, and network matches are routinely reviewed. Plan participants choose from an extensive list of in-network health care providers and facilities located in both urban and remote locations. United Health Plan Administrators provides educational resources and learning tools to familiarize participants with Preferred Provider Organizations and how they can save money by using in-network providers. Primary Features More than 85 PPOs available to clients Primary & secondary client-network matching In-network providers located in remote areas Deep pricing discounts with in-network providers Fee negotiation with out-of-area network providers Online provider search capabilities Key Benefits Clients achieve significant cost savings through primary and secondary in-network pricing discounts and fee negotiations with out-of-area network providers. Plan participants have convenient, broad access to excellent medical care no matter where they are located. They understand PPOs and how to reduce their medical costs by using in-network providers. Online Internet Access As employees are asked to play a larger role in managing their health care, employee education becomes essential. The Purpose To simplify plan administration processes, optimize administrative efficiency, and facilitate monitoring of plan performance; to increase the self-sufficiency of employees, enabling them to manage their own benefits and make informed health care decisions. The Process United Health Plan Administrators makes a significant continuing investment in client and employee communication. Along with traditional print media and the kind of person-to-person communication that builds enduring relationships, United Health Plan Administrators invests in sophisticated technology and Internet capabilities. The company continually updates and enhances their online access tools. Plan administrators and financial managers have online access to plan documents, up-to-date claims status, employee eligibility data and self-service tools. Employees use online access to locate preferred providers, look up the status of their claims, find answers to questions and research health conditions. Primary Features Online health information resources Online preferred provider locator Up-to-date plan information Online claims status look-up Customized plan management reports Online pharmacy benefits Health Savings Accounts (HSA's) Delivering Value to Employers and Employees Definition of Health Savings Accounts Health Savings Accounts are tax-exempt health care accounts used by employees to pay eligible medical expenses. In a health care market that foresees no slowdown of rising costs, employers' interest in Health Savings Accounts is rapidly growing. A benefit for employees is that the health savings account is theirs. They can keep the money contributed to their HSA even after switching jobs or retiring. Establishing Health Savings Accounts According to legislation passed by Congress in December 2003, Health Savings Accounts can be established and funded by both employers and employees. However, as a prerequisite to establishing Health Savings Accounts, employees must be enrolled in High Deductible Health Plans (HDHPs). Employees enrolled in partial self-funding plans through their employers are eligible to establish Health Savings Accounts. Advantages of Health Savings Accounts Health Savings Accounts offer advantages to both employers and employees. They allow companies to offer employees valuable benefits for a lower cost, while providing employees tax-free vehicles to cover current health care expenses and save for longer-term health care needs. Health Savings Account Rollover and Portability The advantages of Health Savings Accounts are based on two features: rollover and portability. Funds remaining in Health Savings Accounts at year-end are not forfeited. Instead, year-end balances, including interest earned, roll over into each subsequent year. The portability feature of Health Savings Accounts means that employees who change jobs can take their Health Savings Account funds with them. Health Savings Account Administration Employees who elect to open Health Savings Accounts can choose between two investment options: one, an interest-bearing Visa debit card for employees who expect to use their Health Savings Accounts to pay for current medical expenses, and two, a variety of no-load mutual funds for those interested in longer-term investments.

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