Southern Ohio Chamber Alliance (SOCA)

The Southern Ohio Chamber Alliance (SOCA) Benefit Plan is a unique self-funded option that is offered by SOCA and administered by Anthem. The SOCA Benefit Plan is a multiple employer welfare arrangement (MEWA) that is backed by Anthem's stop loss and is filed with the Ohio Department of Insurance. It is governed by Trustees and by-laws that satisfy ODI requirements. It is available to small employers that have at least 2 enrolled on their medical plan, with no more that 50 total employees. These employers are required to be members in good standing with a Chamber of Commerce that is qualified to offer the SOCA Benefit Plan. This alternative self-funded solution can be a good fit for small group (2 to 50 total employees) for many reasons including: Competitive rates; Predictable, fixed monthly payments; Protection of being part of a larger self-funded pool backed by Anthem's stop loss; Anthem's broad Blue Access PPO network; Flexibility in choice of benefits plans. Jeffrey Metzger, working with MMA Insurance in Pickerington, has partnered with Anthem and the Pickerington Ohio Chamber to offer this plan to our central Ohio Chamber Members.

Buy-Sell Agreements Funded Using Life Insurance

Concept Description

With a buy-sell, either the business itself, the surviving owners or a key employee can purchase a deceased owner’s share of the business at a previously agreed upon price – and the deceased owner’s estate is obligated to sell for that price.
•Owners of small, closely held businesses
•Owners of sole proprietorships and partnerships
•Business owners who hold at least 10 percent of the business
•Business owners who have very little personal assets outside of their business assets

How it Works

There are three primary ways to structure a buy-sell agreement that is funded with life insurance.
•With a cross-purchase buy-sell, each participating business owner purchases a life insurance policy on the other owners’ lives. Each person owns, pays the premiums for and is the beneficiary of the respective policies. At the death of a business owner, the other owners use the life insurance proceeds to purchase the deceased owner’s share of the business.
•An entity buy-sell is generally used when there are several owners since fewer policies will be required. The business purchases a life insurance policy on each owner’s life. The business owns, pays the premiums for and is listed as the beneficiary of each policy. At the death of a business owner, the business uses the life insurance proceeds to purchase the deceased owner’s share of the business.
•With a wait and see buy-sell, the specific purchaser of the deceased business owner’s share remains unknown until death occurs. Like a cross-purchase agreement, each participating business owner owns, pays the premiums for and is the beneficiary of the respective policies. The business entity has the first opportunity to purchase the deceased owner’s shares and if it chooses not to, the other owners may purchase the interest. If the other owners choose not to buy, then the business entity is required to complete the purchase. If this happens, generally, the owners will contribute the life insurance proceeds to the business in order to fund the business redemption plan.

Bridge to Medicare

What is a Level Funded Health Plan ?

Self Funded Aggregate Only, or LEVEL FUNDING has been developed for employers with 25 to 150 employees and closely resembles a traditional fully insured plan yet provides the potential for a refund of surplus dollars at the end of the plan year. Level funding is a packaged plan that includes stop-loss insurance, administrative services with a guaranteed monthly maximum liability.
• All the benefits of traditional self-funding with the ease, look and feel of a fully-insured group health plan, a True ERISA plan
• Complete flexibility with benefit plan design
• Maximum plan costs are lower than traditional self funding
• More competitive against fully-insured quotes
• Employer writes just one check each month (based on plan enrollment)
• Monthly payment for LEVEL FUNDING includes premium, funding, stop-loss insurance, administrative services and guaranteed maximum liability.
• LEVEL FUNDING is spread over 12 monthly payments that do not fluctuate with claim activity; only with plan enrollment
• LEVEL FUNDING accumulates monthly – claims are based on the accumulated attachment point
• No SPECIFIC retention to satisfy
• LEVEL FUNDING could be satisfied by just one catastrophic claim, Carrier pays the balance
• Employer retains all unused LEVEL FUNDING monies at year after any run out.
• Multiple contract options and Terminal Liability available.
• Standard disclosure statement required within 60 days of the effective date
o Plan Participant Disclosure Statement on all individuals
• Monthly Reporting

Group Self Funded plans

Traditionally, Self-Funding has been a platform only the large employer could use to manage risk and decrease costs. With the changes we have in the Health Care field due to health care reform, even smaller employers are looking to this option to help accomplish their goals, even with the added risks.
A fully insured health plan has burdened employers with new taxes, fees and restrictions with the implementation of the Patient Protection and Affordable Care Act (PPAA). A Self-Funded plan can relieve the employer from new restrictions, and also some of the new taxes and fees. Some other expensive new rules that can be avoided with self-funding are modified community rating and a rise in required benefits that require insurers reduce their coverage options resulting with less plan flexibility. These new rules, and others placed on employer health plans by the Affordable Care Act, have had a negative effect on fully insured health plans.
An effective way for small employers to enter the Self-Funding arena is through a plan called Level Funding, or Aggregate Only. This is a form of Self-Funding which allows small employers the ability to budget its health care while minimizing risk. With a Level-Funded plan, a small employer pays a set amount each month. Plans differ but better TPA plans will allow the employer to use their own bank account for their monthly premium deposits. The TPA (Third Party Administrator) will then pull from their bank account to cover the cost of administration, a stop loss premium and the maximum amount of expected claims. This plan allows the employer to pay a set amount each month. The Groups premiums are paid into the employer’s bank account, building their own asset.
Two important keys to this plan working are monthly accommodation and advance funding provisions. In Level Funding, the employer is responsible to pay their “Expected Claim” amount, which is included in the total monthly premium. This is the maximum amount of expected claims based on underwriting projections. Any amount of claims over that amount is paid by the stop loss carrier. Advanced Funding provision will protect the employer from any month that their claims are over the expected claim planned.
The monthly accommodation will make sure that the amount the employer pays each month remains the same and there is no exposure to the employer for claims above the level amount funded toward the Plan’s cost.
For the smaller employer, advantages to level funding are:
1. If at the end of the policy term, payments exceeded claims, those funds remain with the employer.
2. If claims exceeded what was paid into the claims reserve, depending on the terms of the employer’s stop-loss insurance, the employer will have no liability for the overage amount. With the Advance Funding provision they have been taken care of.
3. Level Funding allows for a group to their claims data. Group Plan Solutions provides claim data on utilization trends giving the employer important information where employees may be causing overspending.
4. Level-Funded plans, offer regulatory oversight because they are partially self-funded plans and therefore exempt from state regulation and subject solely to ERISA.
Level-Funding plans do require a group complete medical questionnaires and go through other rules or guidelines to qualify for participation. The group is medically underwritten on their own claims and not shared in a larger pool.

An Open Letter to Employers:

How do Small and Mid-Size companies deal with the rising cost of Health plans and Healthcare? The tools that were once reserved for only the largest of companies to control their Healthcare costs are now available to groups with as few as 25 employees.
Does your current Health plan:
Reduce or eliminate the need for annual rate increases?
Provide detailed information about your plan’s performance?
Provide the tools necessary to plan for the future?
Eliminate the need to reduce benefits?
Provide a measurable return on Investment?
If NOT we need to talk…It all starts with a long term plan that is flexible with your goals and the ACA and recognizes that you cannot manage what you cannot measure. Your goal is not to spend more money on Healthcare but to spend your money in a more targeted way to minimize the risk while maximizing the plan’s potential.
The first step can be the hardest but to change results it must be recognized that one cannot continue to do the same things that are being done today.
My name is Jeffrey Metzger, Self-Funding Certified of Group Plan Solutions. My team and I specialize in helping employers make that first step and move down the road to accomplishing your goals. Our clients appreciate the fact that we think “outside the box” when it comes to employee benefit plans and seek alternatives that work.
I will call soon to find a convenient time for us to meet. If you wish to contact me, please do so at 614-551-5351. I look forward to our conversation. Thank you.

Sincerely,
Jeffrey Metzger

Get your Health FSA's, HRA's, and HSA,s into compliance

Employers are turning to consumer-directed health care to help lower costs more than ever. Many employers turn to health flexible spending accounts ("health FSAs"), health reimbursement arrangements ("HRAs") and health savings accounts ("HSAs") to accomplish this goal. These are all types of consumer-driven health care, each with its own compliance-related issues. Surprisingly, many employers do not realize that health FSAs and HRAs require ERISA compliance. Plus, healthcare reform and recent IRS regulatory guidance impacts consumer-directed accounts. Employers must be more cautious than ever to ensure they are not inadvertently operating their consumer-directed plans out of compliance with a variety of employee benefits laws.
Please be very aware of the changes and contact me if you need some guidance. Rules have changed.