Traditional Benefit Premium plans are made up of distinct and separate components. Only the "pooled" components, such as Life, AD&D, Dependent Life, Critical Illness and Long Term Disability are actually insured benefits.

What's not Insurance?

Experience Rated Benefits such as Health and Dental coverage are not insurance. These benefits have predictable costs for the most part with very little to no risk involved and are therefore not insurance.  A carrier will outsource a drug card, dental card, and claims payment services.

Paying too Much or Retail Pricing

Most carriers private-label health and dental services and re-sell them at retail prices. To prevent the probability of a large catastrophic claim from impacting a carrier's profit, a re-insurance plan or "Stop-Loss" may be included in your rate calculations.

Risk In a Self Funded ASO Plan 

Buy Insurance against Real Risks

Reducing risk would include buying Insurance to cover death, dismemberment, disability and critical illness; Exactly what your company buys now.

As a component of your group benefit plan, the cost associated with these risks typically amount to less than 30% of overall premium costs.

Directly purchasing this coverage effectively removes catastrophic risk from your health plan.

Remember, only about 10% of claims fall outside of the predictable range. Insuring the unpredictable and  budgeting for the remaining predictable claims makes sense. Predictable claims are managed and supported by a self-funded employer program.  Stop-Loss insurance coverage costs vary depending on the level of protection requested.  The higher the Stop-Loss, the lower the cost.

Stop-Loss is a pooled insurance policy. If you currently pay Stop-Loss inside a Traditional Premium Plan you may be insuring the carrier's profit rather than controlling your costs

Capping

Alternatively, a company may use a capping method to determine in advance the highest claims level their self-funding program will support.

Out-of-County Coverage