Self-Insurance in 5 Minutes

You may have heard the term self-insurance,because the state is currently considering whether or not to move the State Group HealthInsurance Program to a self-insurance model.

This decision is that of the Group InsuranceBoard; the GIB determines the program structure and program benefits.

You might be wondering, what is self-insuranceand how does it work? Self-insurance is simply a way to financeemployer health insurance programs.

It means that instead of the state payinghealth insurance companies a fixed premium, ETF would maintain funds in a reserve to payhealth care claims.

If this sounds familiar, it may be becauseETF currently has three self-insured benefit programs: pharmacy benefits, uniform dentalbenefits and the It’s Your Choice Access plan (formerly known as the Standard Plan).

No decisions about self-insuring the GroupHealth Insurance Program have been finalized yet.

We do know, however, that your health coverageis important to you, so we want to educate you on the concept of self-insurance.

Before we get any further, let’s exploresome questions you may have.

1.

Does a self-insuring model mean I will haveto pay more for health insurance? No, while health care costs in general areon the rise, a self-insurance model does not mean higher premiums or out-of-pocket costs.

Self-insurance relates only to how claimsare paid.

2.

As an employee, will my health insurance premiumstill be deducted from my paycheck? Yes, self-insurance does not affect how youwill pay for health insurance.

3.

Will my health benefits change if the programis self-insured? No.

Self-insuring is not related to the benefitscovered under the program.

At this time, there are no plans to reducecovered benefits.

4.

Will I be able to stay with my current healthcare providers? A possible decision to move to a self-insurancemodel will offer flexibility over provider networks.

While ETF cannot make any guarantees thisearly in the process, know that consistent provider access is a top priority for allinvolved.

5.

As a retired member, how will self-insuranceaffect me? A self-insurance model would affect all memberscovered under the group health insurance program.

Having said that, it is important to us thatretirees maintain options in their health care.

6.

As a local government employee, how will self-insuranceaffect me? A self-insurance model would affect the entiregroup health insurance program, including local employees.

Let’s explore how the self-insurance modelwould compare to the current model.

Currently, when you pay your monthly premium,the money is combined with your employer’s portion, and it all gets sent to the healthinsurance company.

When you go to the doctor, your health insurancecompany pays for those health care services from the premiums collected from both youand your employer.

Under a self-insurance model, when you payyour monthly premium, the money is combined with your employer’s portion and all fundswould be held in trust by ETF.

Then, any health care services you receivewould be paid for by the funds in the ETF trust.

ETF would still contract with health insurancecompanies to handle certain administrative tasks.

The main difference between the current modeland the self-insurance model is how the program is financed, and whether the premiums paidby employees and employers are housed at ETF or with the health plans.

If the self-insurance model were to be implemented,ETF would have more control over how funds are spent, which comes with the potentialto decrease administrative costs.

Other possible advantages might include increasedtransparency related to cost and quality of care, the ability of ETF to further increasethe quality of services provided, and the ability to create customized programming thatcould help to improve overall member care.

The Group Insurance Board still has many decisionsto make, including whether to adopt the self-insurance model.

In February 2016, the GIB directed ETF torelease a Request for Proposals for a self-insurance model.

That means prospective third-party administratorsmay submit proposals stating what administrative services they would offer and their associatedcosts.

The GIB plans to make a decision regardingself-insurance in November 2016, and the earliest such a change would take effect is January2018.

Our priority is to keep you informed aboutyour health benefits.

Stay connected with ETF by signing up forETF E-mail Updates on our website and follow ETF on Twitter (@WI_ETF).

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