Direct Care Administrators

Self-Funding – the ARC way

The percentage of workers in partially or fully self-funded healthcare plans increased, for good reason, from 49% in 2000 to 55% in 2008 and 60% in 2011. And Kaiser reports that since 2011 the number of self-insured companies has risen 13%. This seems to be a clear trend in favor of self-funding.

Health plan cost and “value for money” remains the top issue for most companies, but serious concerns are also emerging about achieving federal law compliance, both PPACA and particularly ERISA. It is our belief that the fundamental problem in the industry is a lack of cost transparency. Few plan administrators provide full cost component transparency. Associated with this has been certain unethical business behaviors, recently culminating in over 200 individuals that have been indicted by the Federal Government.

ARC and their Affiliates differentiates itself through full transparency as well as competitive pricing. ARC’s motto is “Transparency Ensures Compliance”. Although we emphasize compliance, ARC and their Affiliates firmly believes transparency is the right foundation for building trust as well as providing superior customer service.

At ARC, we proudly declare Direct Care Administrators (DCA) as our TPA. DCA has provided cost-transparent TPA services for 16 years and built a track record of successful plan audits, client growth and word-of-mouth referralsDCA is ARC’s TPA of choice, selected from amongst the nation’s best. Pete Peterson, founder and President, has worked in the self-funding industry for over three decades and leads by example through a unique corporate culture we regard as superior.

 DCA differentiates itself with a powerful package of attractive capabilities:

  • Overt emphasis on cost efficiency and transparency.
  • For example, DCA proprietary claims software that discloses, measures and reports every individual plan component, both expense and claim. No cost bundling.
  • Real time reporting capability equips managers with knowledge and supports business agility.
  • Self-funded plan administration for businesses of any size, large to small.
  • DCA claims monitoring and auditing reduction systems.
  • Close affiliations with leading stop-loss carriers and PPO organizations and their reference pricing models ensures thrift.
  • DCA plans regularly audited with success by the DOL and IRS.

 

To view the Advantages vs Disadvantages of Self Funding vs Fully Insured 

If you are fully insured, you may be wondering if you too can capture the benefits (cost, operational, regulatory, agility) that self funding can provide

FULLY INSURED 

Essentially none of the largest American companies fully insure their employees for healthcare benefits. Yet, over 75% of America’s small businesses who offer healthcare benefits still use full coverage – why?

  • Some employers value the ‘peace of mind’ (more than cost) knowing that they have completely transferred their insurance (and compliance) risk to the insurer.
  • Being fully insured may free up time of managers who might otherwise audit and review individual ongoing employee healthcare usage and costs.
  • Premiums vary by employer due to employer size, employee population characteristics and health care use. Some employers will pay low premiums.
  • Small companies are often geographically restricted and this may lead to certain healthcare efficiencies.

If your company is growing, and you want to build your reputation as an employer of choice, or you simply want to trim your costs, becoming self-funded can make sense:

  • The term “self funded” is a little misleading. Usually these plans do not require the employer to assume all healthcare insurance risk because stop-loss insurance, bought separately from an insurer, provides coverage for catastrophic health costs.
  • The cost of the healthcare program, termed the “premium equivalent”, can be substantially less than that of fully insured plans. For example, most premium taxes, insurance company reserves and risk charges do not apply.
  • Moreover our affiliate, Direct Care Administrators, often pass on an additional cost savings which can be 20% or more.
  • In fully-insured plans, the presence of a few very sick employees can raise premiums which everyone pays
  • Self-funded plans are moderately customizable, particularly “cafeteria” or “stackable” plans. Flexibility is valuable, allowing the plan to meet specific needs of diverse employees. It can also encourage thrift, e.g. through contributions via health savings accounts (HSA). Many companies view the customizability of self-funded plans as a way to retain the best and brightest employees.
  • There are fewer PPACA regulations affecting self-funded plans than fully insured ones. Self-funded plans are not governed by state insurance law (they are governed by ERISA).
  • If your business does not wish to self-administer its healthcare plan, TPAs like DCA will provide this service. Over 70 million Americans involved in private businesses rely on TPAs to handle the collection and payment of their medical expenses.

Still – is there a downside to becoming self-funded? Yes, and we are not shy about them. For starters, becoming self-funded tends to commits a business to that throughout at least the medium term. And your team will have to educate itself somewhat about healthcare coverage and associated administrative requirements. If you use a TPA, you need to be prepared to share all the required information, and you will only do that comfortably if you have a trusting relationship. We also recommend that you use a TPA that excels in compliance because ERISA compliance is solely the employer’s responsibility, regardless how you fund your healthcare.

Trusting benefit plan dollars to any outside party must be taken seriously. Those who do not can end up breaching their fiduciary obligations under ERISA.

At ARC, we have utter confidence that Direct Care Administrators (DCA) will fully meet your needs. You will need to build trust in DCA. This is the process DCA uses with all of its customers (or “partners”, in DCA lingo):

  • DCA works with you, the employer, to clarify your known healthcare benefit needs, and openly explores with you any key decision options. Your needs, e.g. cost control, are spelled out.
  • A plan design is agreed upon and fully costed.
  • DCA identifies who your key management stakeholders are, which may include both internal managers and external billers. Reporting requirements and expectations for these stakeholders are clarified.
  • Plan costs are managed transparently, with ability to bore down to every specific item, often in real time.
  • Plan achievables are reviewed periodically and live changes made, as appropriate.
  • Employers are provided clear communication channels, including rapid escalation procedures that ensure prompt response times to any urgent emerging issues.
  • All audits are conducted openly with the employer.

Direct Care Administrators plans often provide a cost savings of 20% or more compared to that of other TPAs, in part, again, simply because of cost transparency. Choose a TPA you can trust, both for low cost and compliance, and for the convenience and peace of mind that transparency provides.

 

If you are already self-funded, you may have lagging concerns about your TPA over things like non-compliance risks and cost opacity.

 

 SELF INSURED 

That you are already self insured suggests that you are a larger, more complex business with the strategic and financial depth to understand how being self-insured can generate clear healthcare benefits to both employer and employee.

Yet, if you are reading this, you also clearly hold some nagging worries. Maybe you are self-administering your healthcare and are unsure about your ERISA compliance. Or maybe you want a TPA that is more responsive, more transparent, more clearly compliant and lower cost.

Whatever the reason, we applaud you for taking the time to reflect on your needs. Compliance alone is an “under the iceberg” problem that can completely disrupt a business, damage its reputation as an employer of choice and, at worst, result in litigation and awards for fiduciary obligation breaches.

It is not our approach to say that our TPA is better than yours. We honestly hope you already have an excellent TPA.

What we do know is how we chose Direct Care Administrators (DCA) as our TPA of choice. DCA is one of a few TPAs that value transparency as much as we do. And they have a 16-year track record that speaks for itself. Pete Petersen is the face of his business and his business ethics and personal warmth sets the tone for all the business DCA does. His existing clients include firms from about 50 to over 2,000 employees. Many of his internal systems are scalable and state of the art. His plans have enjoyed a perfect audit record.

This is the process DCA uses with all of its customers (or “partners”, in DCA lingo):

  • DCA works with you, the employer, to clarify your known healthcare benefit needs, and openly explores with you any key decision options. Your needs, e.g. cost control, are spelled out.
  • A plan design is agreed upon and fully costed.
  • DCA identifies who your key management stakeholders are, which may include both internal managers and external billers. Reporting requirements and expectations for these stakeholders are clarified.
  • Plan costs are managed transparently, with ability to bore down to every specific item, often in real time.
  • Plan achievables are reviewed periodically and live changes made, as appropriate.
  • Employers are provided clear communication channels, including rapid escalation procedures that ensure prompt response times to any urgent emerging issues.
  • All audits are conducted openly with the employer.

Direct Care Administrators plans often provide a cost savings of 20% or more compared to that of other TPAs, in part, again, simply because of cost transparency. Choose a TPA you can trust, both for low cost and compliance, and for the convenience and peace of mind that transparency provides.

For a complimentary cost analysis and plan design proposal please register by clicking “HERE” or email us at admin@arcrecovery.com and we will have a professional call you immediately to assess your needs.

 

To view the Advantages vs Disadvantages of Self Funding vs Fully Insured