Source: http://passionforsubro.com/naic-white-paper/
Timestamp: 2018-01-21 18:42:42
Document Index: 199348395

Matched Legal Cases: ['§ 707', '§ 514', '§ 1144', '§ 514', '§ 1144', '§ 514', '§ 1144', '§ 514', '§ 4']

PassionForSubro » NAIC White Paper
PPACA, Self Funding, Stop loss
STOP LOSS INSURANCE, SELF FUNDING AND THE ACA
Predicting the effect of the ACA on employers’ decisions regarding whether or not to self- fund is complicated by the lack of information about the prevalence of self-funding in the pre- ACA environment. There is little information about the number of employers that currently self- fund. States do not regulate self-funded employer plans3 and consequently have little information about them and the number of employers that self-fund.
In an effort to remedy this, Section 1253 of the ACA mandates that the Secretary of Labor prepare aggregate annual reports with general information on self-funded group health plans (including plan type, number of participants, benefits offered, funding arrangements, and benefit arrangements), as well as data from the financial filings of self-funded employers (including information on assets, liabilities, contributions, investments, and expenses). The U.S.
1 Public Law 111-148
3 See Appendix B for a discussion of the relationship between state law, ERISA and stop loss insurance.
Department of Labor (DOL) engaged Deloitte Financial Advisory Services LLP to assist with this ACA mandate. Three years of Reports have been completed. The 2013 Report can be found at www.dol.gov/ebsa/pdf/ACASelfFundedHealthPlansReport033113.pdf
II. How Does Self-Funding Work and Where Does Stop Loss Insurance Fit In?
Unlike the employer who purchases a fully-insured plan from an insurance company, an employer who self-funds takes on all the responsibility and risk that a fully-insured employer has transferred to the insurance company. A self-funded employer determines what benefits to offer, pays medical claims from employees and their families, and assumes all of the risk. A self- funded employer may transfer some or all of its risk of loss to a stop loss insurer by purchasing a stop loss insurance policy, but the employer remains ultimately responsible if the stop loss insurer fails to perform or denies a claim based on the terms of the stop loss contract or if there
4 See Appendix C for a bibliography of articles exploring the pros and cons of small employer self-insurance.
are gaps in coverage or conflicts or inconsistencies between the stop loss policy as administered by the insurer and the employer’s obligations under the self-funded benefit plan.5
Employers can mitigate risk by using stop loss insurance. A stop loss insurance policy usually contains two components, a specific “attachment point” (or retention level”) that protects against claim severity and an aggregate attachment point that protects against claim frequency. The policy’s specific coverage provides protection in the case of a single covered individual with
5 In the large group market, where community rating laws do not prohibit the practice, the issuer of a group insurance policy can also transfer risk back to the employer. An employer and an insurer may agree to a loss- sensitive rating plan where the employer gets a surcharge or refund at the end of the year depending on claims experience. These plans allow the employer to assume some or all of the financial risks and rewards of self- insurance, while the employees have all the protections of a fully-insured plan.
a high dollar claim or series of claims. Any costs exceeding the specific attachment point are covered by the stop loss policy. The aggregate coverage provides protection against the cumulative impact of smaller claims that may never meet the threshold of a specific attachment point. Once the employer’s total claims payments (not counting any claims paid by the specific coverage) reach the aggregate attachment point, the stop loss policy covers all remaining costs for the year (up to the policy limit, if any.) Except for very small employers, the aggregate attachment point will be significantly less than the sum of the specific attachment points.
An employer with 100 employees buys stop loss coverage with a $10,000 specific limit, and a
$150,000 aggregate limit. After meeting the limits, coverage is at 100%.
In January, February, and March, 50 employees have claims of $3,000 or more In June, one employee has back surgery costing $200,000
In January, one employee has a premature baby costing $1,000,000.
In June and July, two employees have back surgery costing $150,000 each. The rest of the employees have claims totaling $50,000.
The stop loss insurer would be required to cover all costs of the premature baby exceeding the
$10,000 limit.
The stop loss insurer would cover the cost of each surgery over the $10,000 limit.
The employer would not meet the aggregate limit of $150,000 since the employer’s liability was limited to $80,000.
Stop-loss insurance does not, however, protect against timing risk. A fully-insured employer does not have this risk – the employer pays a fixed premium every month, established at the beginning of the policy term. A self-funded employer, by contrast, needs to pay claims when they are incurred, and the timing is beyond the employer’s control. If an employee has a catastrophic medical expense in January, the employer must pay the entire specific retention up front before the specific stop-loss coverage steps in for the remaining expense. If the plan reaches the aggregate attachment point at the end of September, the employer must pay the
year’s entire aggregate retention in the first nine months. The unpredictable cash flow of a self- funded plan, even with stop-loss insurance, cannot be budgeted with confidence, especially by small employers, and accelerated claims liabilities could result in significant financial hardship. As part of the TPA agreement, the TPA may allow the claims account to go into deficit with agreement that the employer will fully fund the account over the course of the year. Sometimes these provisions are an in the form of an addendum added to the stop loss policy and may be referred to as an advanced claim funding loan agreement.
III. Anatomy of a self-funded Health Plan combined with Stop Loss Insurance
An employer designing a self-funded plan with a TPA and stop loss insurance will have to make a number of important decisions in designing the plan. The contract between the TPA and the employer must detail the services provided by the TPA. The employer must determine how much risk to insure with a stop loss policy. The employer must also determine the benefits to be covered by the self-funded plan. A smaller employer often relies on a TPA to advise on what benefits and protections for employees are required by federal law and to ensure the health plan is fully compliant with applicable laws. Employees covered under those health plans do not have the benefit of the regulatory oversight provided by state insurance departments that review and approve fully insured health plans. An employer that relies entirely on a TPA may not be aware that the health plan does not comply with the provisions of ERISA, HIPAA or the ACA that are applicable to self-funded health plans until there is a problem and a complaint is made. An employer may ultimately be held liable for a mistake made by the TPA in the design of the health plan.
issues (claims incurred before the beginning of the contract year6 but not yet presented for
payment) and run-out claims issues (claims incurred during the contract year but presented after the end of the year), and the transition process when the contract is renewed or terminated. It will also cover a myriad of other issues typically contained in insurance contracts.
6 Typically, the benefit plan, the TPA contract and the stop-loss policy all have the same one-year term, but there can be exceptions – for example, if the employer chooses to change its plan anniversary date.
The specific and aggregate attachment points of the stop loss insurance policy determine how much risk the business retains and how much risk is transferred to the insurer. How much the employer is willing to pay for lower attachment points will depend on how much risk the employer can afford to assume. The stop loss policy is subject to underwriting—both at the initial point of sale and upon renewal—so the insurer will examine the employer’s claims history, and may offer coverage at an increased rate or refuse to offer coverage to that employer group. In some cases, either as a condition of offering coverage at all or in return for a lower premium rate, stop loss insurers will offer a “laser specific” attachment point, meaning a higher attachment point for one or more individuals with pre-existing high cost medical conditions or other identified risk factors. For example, if an employee’s condition is in remission, the employer may be prepared to assume the risk of relapse to avoid a more costly premium increase. However, before taking that risk, the employer should first have the cash reserves to pay for a large claim incurred by that employee if a significant medical event occurs. The ACA prohibits self-funded employer health plans from discriminating based on health status or imposing annual or lifetime dollar limits on essential health benefits.
For small employers, basic stop loss insurance reimburses the employer only for employee claims that the employer reports to the insurer during the policy year. The employer is only reimbursed for claims that were incurred and paid during the policy year. The policy may include “run-out” or “tail” coverage, which protects the employer against claims incurred during the policy year but not reported or paid during the policy year. The run-out period is a specified extended reporting period for claims incurred during the policy year but not submitted or paid
until the after the end of the policy year. A few states require insurers to provide tail coverage, or at least to offer it on an optional basis. Insurers may also sell “run-in” or “nose” coverage, which protects against claims incurred during the prior policy year but paid during the current policy year.
IV. Regulating Stop Loss Insurance
States have taken different approaches to the regulation of stop loss insurance and it is important to understand how stop loss insurance functions from a regulatory perspective. Stop loss insurance is a “third-party” line of coverage. This means the claimant who has suffered the primary loss – the medical event – is not insured under the policy. This is the fundamental distinction between stop loss insurance and group health insurance. Stop loss insurance insures only the employer; therefore the insurer has no direct contractual obligations to the plan participants. Plan participants rely on the employer, not the stop loss insurer, for benefit payments. Property insurance, by comparison, is “first-party” coverage: the claimant whose property has been stolen or damaged is the policyholder, and files a claim with his or her own insurance company.
Many of the distinguishing features of reinsurance regulation are based on the manner in which the ceding insurer and the underlying insurance transaction are regulated. In particular,
reinsurers do not need to be licensed in the state where the ceding insurer is located, because the ceding insurer is already subject to comprehensive regulation, including oversight of its reinsurance program. Reinsurance is exempt from premium tax, because the underlying insurance transaction was already fully taxed at the “retail” level. These features do not apply to stop loss insurance.
but also authorize health insurers to write it.8 This distinction becomes critical when determining
what state insurance laws will apply.
While stop loss insurance provides essential protection for self-funded employers against large losses, it can also be used for a completely different reason, to take advantage of favorable
7 Although liability coverage is not strictly limited to tort liability, traditional contractual liability coverage still focuses on tort-like damages. It is typically triggered by cases where either the victim alleges a contractual duty or the tortfeasor alleges a duty to indemnify.
8 See 24-A M.R.S.A. § 707(3) (“ An insurer other than a casualty insurer may transact employee benefit excess insurance only if that insurer is authorized to insure the class of risk assumed by the underlying benefit plan.”)
regulatory treatment. A stop loss policy with low enough attachment points functions like a group health insurance policy with premiums being split between TPA fees, stop loss insurance, and a fully-funded claims account, but without being subject to the same regulatory requirements as health insurance. Additionally, even though the ACA has imposed some new requirements on self-funded health plans, many other provisions including rating restrictions, essential health benefit requirements and state mandated benefit laws do not apply.
• specific: at least $20,000;
• aggregate (groups of more than 50): at least 110% of expected claims;
• aggregate (groups of 50 or fewer): at least the greater of 120% of expected claims, $4000 times the number of group members, or $20,000.
V. Rate and Form Review of Stop Loss Insurance
The regulation of stop loss insurance has historically, in many states, been focused primarily or exclusively on prohibiting excessive risk transfer so that stop loss coverage is only sold to bona fide “self-funded” employers. However, because of the manner in which the stop loss insurance market has developed, and because of the types of provisions found in some stop loss
policies, the review of stop loss rates and forms9 also should focus on protecting the interests of
stop loss policyholders, and the interests of health benefit plan members and others who might suffer collateral harm if the stop loss insurance has the potential to leave the self-funded employer unable to fulfill its fiduciary obligations.
Several aspects of the typical stop loss insurance policy are important to identify. Many of these aspects were mentioned in the previous section “Anatomy of a Stop Loss Policy.” Identifying these typical policy provisions is critical in assessing the financial exposure and risk of harm to a small employer, and ultimately to the member employees and dependents of the
9 Many states do not have the authority to review stop loss rates and some do not review or approve stop loss forms.
self-funded health plan. These aspects are also important in designing appropriate regulatory standards for the review of stop loss forms and rates.
• Stop loss policies are written with one year terms. As a result, a stop loss policy’s contract terms and price can vary from year to year, due to re-underwriting. In some
10 See, Meeting Your Fiduciary Responsibilities, February 2012, Employee Benefits Security Administration, United States Department of Labor. www.dol.gov/ebsa/pdf/meetingyourfiduciaryresponsibilities.pdf
cases, the stop loss insurer may even decline to renew or may cancel the policy, sometime even mid-term. Because the policy is newly underwritten from year to year, when a stop loss insurer offers coverage to an employer whose employees have significant medical conditions, it may offer coverage at a much higher premium rate, with higher stop loss limits (both aggregate and specific), or may offer coverage with higher specific limits on some employees (known as a “laser specific).
Stop loss insurance policies sometimes include provisions that are typically found in health
insurance plans, such as medical necessity determinations, UCR determinations, experimental/investigational determinations, case management requirements and mandated provider networks. Because there is no fully insured health plan present, these arrangements may not be subject to any state regulatory standards. However, some states will disapprove these provisions in stop loss insurance policy forms on the grounds that these determinations must be
made by the health plan fiduciary and are outside the scope of an insurance product whose primary purpose is to “reinsure” a risk incurred by the health plan fiduciary, the employer.
• Fees for hospital bill audit services;
• Fees for access to “non-directed” provider networks (policy does not define what non- directed networks are);
States insurance departments may consider the extent to which these and other types of innovative policy provisions might create a direct relationship between the stop loss insurer and the health plan beneficiaries that goes beyond the relationship between the stop loss insurer and the employer. If the stop loss coverage is no longer functioning as third party coverage, state
policymakers and insurance regulators need to consider how best to address the issues raised, including whether such provisions are appropriate in a stop loss insurance policy at all, whether they need to be explicitly disclosed to the employer, and whether plan participants should be entitled to insurance law protections commensurate with the insurer’s involvement in the benefit payment process.. These types of policy provisions must be carefully studied and appropriately regulated in order to ensure that they do not adversely affect the interests of policyholders, employees and their dependents and health care providers.
o Some stop loss insurers do not acknowledge that decisions of Independent Review Organizations (IROs) in the external appeal process are binding on them. In fact, some policies expressly state that the stop loss insurer has the final say regarding which claims it will acknowledge and pay. The claims that are externally appealed are often the most expensive and if the claim takes longer
than 3 (or 6 or 12) months after the end of the policy period to resolve, the employer may be solely responsible for those costs.
the case of products targeting small employers, these TPA’s are designing the health
plan, preparing the Summary Plan Descriptions (SPD’s) and legally required notices, processing the claims, including making medical necessity decisions, and collecting all of the various required payments from the employer. Sometimes it appears that the stop loss insurer is directing the TPA’s activities to a greater extent than the employer is.
o Some stop loss policies specifically state that no matter how the employer (the health plan fiduciary) and presumably any external review organization interprets
the plan’s benefits, the stop loss insurer is free to interpret it differently. In other words, the stop loss insurer is not bound by the plan’s or the IRO’s decisions regarding which claims should be paid and for how much.
o Many employers may not have this information available to them until after claims have been submitted, particularly concerning dependents.
• All stop loss insurance policies require immediate notification of any new risk. That notification will then trigger various actions, up to and including mid-term rate increases, retroactive rate increases, and policy cancellation. Some policies even include detailed
o Insolvency of the employer’s claim fund; or
o Change in the TPA.
• Some stop loss insurance policies have rescission provisions. The ACA limits rescissions by health insurers, except in the case of fraud or intentional misrepresentation of a material fact. That provision does not apply to stop loss insurers. Many stop loss
insurance policies allow for rescission on the basis of any mistake or misrepresentation, even if it was unintentional and made by only one employee or their dependent. Any rescission leaves an employer exposed to great risk, and all employers should be aware of all rescission provisions and the impact on the solvency of their self-funded health plan.
o Some stop loss insurance policies charge a “provisional premium rate.” The premium is then adjusted 6 months after the end of the policy period to reflect actual claims paid. The adjusted premium is a variable percentage of the claims paid by the stop loss insurer.
o The concept of an “unforeseen risk” is problematic. The risk of plan participants developing medical problems during the year is precisely the risk the employer might reasonably believe it is insuring against when it buys a stop loss policy.
A wide range of options are available to regulators to address concerns in a stop loss
insurance policy issued in connection with a self-funded health benefit plan. Which regulatory options, if any, are suitable for a particular state will depend on many factors, including but not limited to the following:
A. The American insurance regulatory system is a state-based system, with an umbrella of uniform, national standards, coupled with significant discretion for each state to tailor its regulatory policies to the unique needs and environment of the state. A regulatory approach that is suitable in one state may not be feasible or effective in another state.
B. The legal authority to regulate stop loss insurance varies widely from state to state. States insurance departments may not impose insurance regulations on self- funded employers. In some states the regulatory agency is obligated to disapprove a policy form or rate if the agency determines it is not in compliance with laws and regulations, and is not in the public interest or “deceptively affects the risk purported to be assumed.” In other states a more limited review standard is in effect, but the agency may have the authority to adopt regulations establishing minimum standards for stop loss insurance. In some states, insurance departments may be able to address concerns through complaint or market conduct examination procedures that reference general insurer obligations in the Unfair Trade Practices Act, or the Claims Settlement Act. Other states may determine that the potential for harm to the public is more prevalent in the case of small employers, whether the term is defined as 50, 100, or 200 employees.
1. Disclosure. A small employer is unlikely to have a human resources manager or other designated employee whose job it is to manage the health plan and understand commercial insurance products. Because stop loss insurance products are not generally required to conform to state or federal health insurance law, including the ACA, there may be exposure to additional risk in some stop–loss insurance products that is not immediately apparent. Small employers may benefit from education on or disclosure of the risk they are assuming in “self-funding” a health plan, as well as protections that they should be looking for when they shop
for a stop loss insurance policy. Approaches to disclosure that can be considered include the following:
2. Risk transfer. The NAIC Stop Loss Insurance Model Act (Model No. #92) sets minimum attachment point requirements, which states should review to determine whether they are appropriate to market conditions in their states.
3. Minimum policy standards. In some situations where the state insurance regulator determines that disclosure alone does not adequately address certain risks, some specific minimum policy standards could be adopted to protect employers and ensure a level playing field for all insurers. Areas that some states might choose to address through minimum standards include:
o Annual dollar limitations on coverage.
o Provisions allowing the stop loss insurer to deny coverage for claims the employer is legally obligated to pay.
o Provisions allowing mid-term rate increases.
o Rescissions for reasons other than fraud or intentional material misrepresentation.
o Misleading or deceptive terms and conditions.
o Prohibiting employee recourse to the stop loss insurer in connection with a covered but unpaid claim.
5. Functional Analysis. Are the provisions in the contract consistent with stop loss insurance as third-party liability coverage? (See previous section “Regulating Stop Loss Insurance” ) States might view stop loss insurance policy provisions that create a direct relationship between the stop loss insurer and the plan beneficiaries because
of the insertion of “care management” requirements into a stop loss policy more suitable to health insurance than to stop loss insurance. For example:
a. Whether the rate is reasonable in relation to the benefits conferred, especially in the case of policy provisions which significantly limit the coverage of claims;
b. Whether or not the rate is allowed to vary based on the claims submitted by the employer; and
a. The number of policies issued to employers of certain group sizes.
b. The SERFF tracking number for the policy form issued.
c. The actuarial memorandum for each employer could include:
i. The actuarial assumptions and methods used by the insurer in establishing attachment points for the policy issued to the employer, identified by group size;
iii. Specific attachment point.
iv. Expected claims in the absence of the stop loss insurance coverage.
v. Expected claims under the specific attachment point.
vi. Aggregate attachment point.
vii. Earned premium.
viii. Claims paid under the policy broken out by specific losses and aggregate losses.
Since the passage of the ACA, health insurers, regulators, employers and insurance consumers have all been working to understand the changes in the insurance marketplace. State insurance regulators are charged with the regulation of insurance, including stop loss insurance. This paper explores some of the stop loss policy provisions observed by state departments of insurance and highlights some of the regulatory issues state insurance departments should consider. Regulators must be aware of what is happening in this rapidly evolving marketplace and work together to ensure that employer policyholders, especially small employers, understand their obligations if they choose to self-fund their employee health plan, in combination with the purchase of stop loss insurance. Stop loss insurance products vary significantly in the protections offered and also vary according to the laws of the state where the stop loss policy is issued. Certainly, insurance producers and the insurers themselves will assist employers in understanding these products. However, state insurance regulators have a legal duty to protect consumers and this issue presents an important opportunity to educate employees seeking information. In addition, insurance department staff involved in all parts of regulation should be aware of how stop loss insurance interacts with self-funded health plans, how the public may be affected, and which existing state insurance laws may apply to stop loss insurance products.
ACA and the Small Group Market
The ACA makes various changes to the insurance market that impact small group market plans, and the concern has been that some of these changes will lead to higher premiums. For Small businesses that are particularly sensitive to variability in revenue and expenses, a substantial increase in health benefit expenses is difficult to absorb. For some small employers faced with a significant increase in health insurance premiums, the options are limited to: (i) reducing operational expenses or investments, if possible, (ii) dropping coverage, and thereby permitting employees to access federal subsidies on a health benefits exchange, or (iii) exploring the possibilities of self-insurance.
Health insurance rates have increased due primarily to the age band compression, elimination of composite rating, some enrichment of benefits (Essential Health Benefits and the elimination
of underwriting. Healthier younger groups are likely to pay more and older, less healthy groups often pay less under the new regulations.
Some of the specific provisions in the ACA impacting the small group market include:
• Community rating. Rates in the small group market may not vary by more than a 3:1 ratio, and variations based on tobacco use of members is limited to an additional 1.5:1 ratio. States already limited rate variations pre-ACA, but broader ratios applied in many
demographic characteristics of the group.
• Age rating curve. Federal rules establish a rate development methodology that requires per member build up using year-to-year rate factors. For those states and insurances that used a different rate development methodology, there are rating winners and losers. Small
services, and to support lower out of pocket costs and deductible. However, this depends on the plans that were common in that state’s marketplace. Depending on what was being marketed, in many states, the max OOP requirements are the same or even higher than
2013 plans. Most states are allowing a variance from the $ 2000/4000 deductible limitation.
• In 2016, ACA laws and regulations require a change in the definition of “small group” from over 50 employees, to over 100 employees. In those states that have regulated the small group market, this change will impact groups of 51-100 employees in different
Whether a small business sees a financial benefit or a financial loss as a result of the ACA’s regulatory changes depends upon the characteristics of the small business, and the state market rules applicable to small group insurance before 2014. Broadly, the ACA’s regulatory changes may create financial incentives for the small employer to offer health benefits to its employees through a self-funded plan. The changing definition of the small group market in 2016 may create a new incentive for small groups between fifty one and one hundred lives.
ERISA and the Roles of State and Federal Regulation of Insurance When we think of health insurance, in general, we think of the fully insured health plans
insurance policy and regulatory supervision of the insurer’s compliance and financial strength.
By contrast, self-funded employers and their benefit plans are exempt from state insurance regulation. ERISA’s “deemer clause” prohibits states from deeming a self-funded employer to be an insurer.12 As a result, self-funded plans are subject only to federal requirements, which are much more limited than those established by state insurance laws. They reflect a philosophy that
11 ERISA § 514(b)(2)(A), codified at 29 U.S.C. § 1144(b)(2)(A).
12 ERISA § 514(b)(2)(B), codified at 29 U.S.C. § 1144(b)(2)(B). By its terms, the deemer clause prohibits states from deeming an employee benefit plan to be an insurer, but ERISA was subsequently amended to permit states to apply licensing laws and most other state insurance laws if an employee benefit plan is a “multiple employer welfare arrangement” (MEWA). ERISA § 514(b)(6), codified at 29 U.S.C. § 1144(b)(6). MEWAs and other multiple- employer plans are outside the scope of this paper.
self-funded employers are not in the business of insurance, and that benefit plans are voluntary programs that should not be discouraged through the imposition of extensive regulatory requirements. Unlike insurance insurances, self-funded employers are not subject to any licensing or financial strength requirements or solvency monitoring.13 Unlike insurance policies, self-funded benefit plans are subject to very few minimum coverage requirements, although some ACA requirements now apply to self-funded as well as fully-insured plans. And by their
In general,14 the line between federal and state authority is not based on the nature of the
health plan, but on the nature of the regulated entity: states can regulate insurance insurances, but cannot regulate employers. The Supreme Court explained this principle in one of the first cases construing the impact of the saving clause, Metropolitan Life v. Massachusetts,15 in which an insurance company had challenged a state law mandating coverage of mental health benefits, arguing that this law “is in reality a health law that merely operates on insurance contracts to accomplish its end, and that it is not the kind of traditional insurance law intended to be saved by
§ 514(b) (2) (A).” However, the Court held that the saving clause does not distinguish between
13 By contrast, self-funded workers’ compensation plans are not subject to ERISA. ERISA § 4(b)(3), codified at 29
15 471 U.S. 724 (1985).
“traditional and innovative insurance laws.” Although the Court had held two years earlier that a New York law requiring employers to provide pregnancy benefits was preempted, the Court held that the Massachusetts law was different because it applied to the insurer, not to the employer. Employers that did not want to pay for the benefits mandated by state law were not required to buy insurance on the state-regulated market. The Court acknowledged “that our decision results in a distinction between insured and uninsured plans, leaving the former open to indirect regulation while the latter are not,” but held that this was the line Congress had drawn.
While an employee benefit plan’s self-funded or fully-insured status is obviously an import ant characteristic of the plan, it is important to understand that this is only one element of the plan design, and the operational details of either type of plan will vary from plan to plan. Both insurers and self-funded employers can delegate or outsource various aspects of plan administration, as long as they retain responsibility for their subcontractors’ performance. Often, self-funded plans are administered by insurance companies, and their outward appearance is indistinguishable, to the untrained eye, from a fully-insured plan. Plan beneficiaries are given an “insurance card” with the name and logo of a major national insurance company, and the only indication that the plan might be a self-funded plan is the statement on the back that “Benefits are administered by … Insurance Company or affiliate.” When health care providers ask for “insurance information,” they are looking for the name of the insurer or TPA that administers the plan. If the plan operates as designed, the providers have no direct contact with the self-funded employer.
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