For larger firms, self-insurance health plans increase in popularity - South Florida Business Journal:

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“This is typically for companies spendinfgover $1 million on premiums, and that are looking for alternatives ways to finance their insurance,” said Gary senior VP at in Coral Gables. A survey of 250 companiesx in South Florida showzs that about 45 percent of companies with atleast 1,00 0 employees are self-insured, compared with 48 percent that are full y insured. For the survey, partnered with the humanj resource associationsin Miami-Dade, Browarf and Palm Beach It received feedback from 250 employers with 20 to 7,0090 employees.
The self-insured percentage declines dramatically as the employee pool Twelve percent of companiea with 500 to 999 employees are self compared with 88 percent that pay a premium to aninsurancw company. Of those companies with a workforce of 200to 499, aboutt 6 percent are going it alone, whiler 85 percent are using fully-insurerd plans. Ralph F. Cheplak is seniot VP and CFO for in a self-insurer with an employese base of 250 located in Southu Florida and Sarasota. He said the company, which has been self-insuredx for more than a decade, continuesx because the numbersmake sense. Insurances companies charge too much, he added.
“They are making numbers based on generalized statistics of he said. “So, you may be paying more than is Companies smaller than Tropicaljust aren’g doing it, according to the Fort Lauderdale offics of Seitlin Benefits. TAX BREAKS, FLEXIBILITYu ARE ADVANTAGES The largetthe company, the more credible their risk assessment and the easier it is to budget costs, says Dick Leonard, senio r VP of employee benefits at ’ Southeast region, in Fort The advantages of self-insurinhg include tax breaks and more flexibility with regard to who governs the company’sx insurance-related issues.
A self-insurinyg company is not bound bystate mandates, doesn’t pay a premium tax and typically pays less in administrativ costs. For example, the averag state tax tied to insurance premiums is2 percent, so a companuy would save $12,500 on a $626,000 annual Companies also hold onto reserves for claims that are incurred and paid sometime later. “Assumingv this ‘reserve’ is maintained in an interest-bearing account, the employer can regard it as a sourceof income,” Seitli n Executive VP Shannon Alfonso said.
“Therefore, additional incomse is generated due to the intereston Self-insured companies are also not subject to which typically run between 3 percentt and 10 percent, for fluctuations in claims, Alfonso The down side for an employer is that it assumes all risks associated with claims. The employer can hire a third party to administer and process the but the third partu is not responsible for anyclai costs. That’s why figuring out a realistic projection for claimsa isso important, Alfonso said.
Employers can prepare for the unexpectecd by buying aggregate coverage for theie groupand “stop loss” coverage for The aggregate coverage protects employers from eligible claims that exceedr 125 percent. So, if an employefr had projected claimsof $1 million, the aggregatse kicks in at $1.25 million. An employer can get both type sof coverage, which is advised, Alfonsol said. It is key for companies to have information abou t the costs and risks associated withbeinvg self-insured, because going back to being fully insurefd can be costly.
Companies that return to being fully insured also will have outstanding claims that will have tobe “Somebody has to explain to the client all theser moving parts,” Leonard said. “In this day and age, you don’ need too many of these large claims to eatup everything.” Employersa and employees could also get mixed up in messyg resolutions in cases wherde the employer seeks to recover monegy paid on claims. For example, an employee is in a car accidenyt and the employerpays $100,000 on The person responsible for the car accident is the driverf of the other car, but he only has $15,00p0 in coverage.
The employer files a lawsuit against theother driver, seekinf money for pain and suffering, lost wageds and other associated problems. Federal law gived the employer the ability to recover what it can from the employe if he or she receivez any money from the otheredriver and/or their insurance company. If the other driver’d insurance company pays out the employer can offsetits $100,000 payout by claiming the entires $15,000.
If the employee gets a payouyt fromthe lawsuit, the same rule for the employer If the company was fully insured, state law would, in require a judge to determinee an equitable distribution of the money, Greenspoon Marde r personal injury attorney Mark Siedlde explained. So, the issues involving self-insurance can get complicatexd quickly for the employerand employee, he