What happens when someone leaves the the self funded plan?
Under federal law, employees meeting the requirements for COBRA must be provided with a notification of their rights under those guidelines. As an employer, it is vital that the TPA, or your in house staff, track, and properly manage, COBRA administration.
Medical conversion privileges are also available, but most employees will choose COBRA. Under COBRA, the benefits extended to qualified beneficiaries MUST BE the same type, and the same coverage, as your full-time employees. Any plan changes, including plan redesigns, premium changes, etc., must be communicated to the ex-employee (qualified beneficiary) promptly. (See also Short Term Medical)
What types of benefits are self funded?
Usually the group medical plan is the primary focus of self-funding. Occasionally, other health benefits are included, such as dental, vision, drug card, and short term disability. Most other employee benefit plans are not suitable for self-funding.
Why use a Third Party Administrator?
Employee benefit plan administration is complex. There are always pressures, especially in the area of claim management and payment, that are best handled by a third party. In addition, recent changes in the area of medical record privacy dictate that an employer not be involved in the medical claims process or history of its employees, for obvious reasons.
Many employers use a third party administrator (TPA) to administer their employees' claims because professional TPAs offer more aggressive claims adjudication standards and procedures than fully insured plans. TPAs may offer precertification, second-opinion programs, catastrophic case management, as well as other utilization management techniques. A TPA provides a means of reducing costs by providing outside experts to monitor, evaluate and control health care services. And, TPA's tend to be more aggressive than the typical insurance carrier in subrogation and coordination of benefits.