Costs and Risks of Self-Insurance

HDM can help you minimize BOTH the cost and risk of health benefits. In 2007, the average annual cost for an employee healthcare plan for a family of four was $12,100. Single coverage averaged $4,000 annually. Typically, five to eight percent of these amounts are waste. All of this inefficiency is magnified by your employee count, and it comes right off the bottom line.

You can outsource health plan administration, but not the responsibility. The vast majority of employers outsource plan administration to Third Party Administrators (TPA), Pharmacy Benefit Managers (PBMs) and/or Dental Plan Administrators (DPAs). These vendors do the complex and error-prone work of plan administration, claims administration and financial reporting, but you are responsible for their results.

The risks of outsourcing administration include:

• Payment of claims may not be made according to your SPD
• The quality of Internal controls of TPAs and PBMs
• Relying on policies/procedures of TPAs and PBMs and their cost implications
• Discrepancies in funding
• Lack of stop-loss management, which will result in overpayments
• Recovered overpayments may not be credited to your account
• Weak subrogation monitoring may increase your exposure
• Contracted care management services may lack ROI