Agents Present Proposal For Self-Funded Health Insurance

Huntsville, TN (2011-02-07) With the controversy of increased health insurance premiums to County employees seemingly behind the Intergovernmental Committee, a duo of agents made a proposal to the Committee Monday night to change the way Scott County provides the benefit.

Jerry Milstead and Jim Malone, agents with the Malone Group of Fayetteville, came before the Intergovernmental Committee Monday night to discuss the option of the County changing their health insurance plan to a “self-funded” plan, rather than the existing “fully insured” plan. “It has the potential to potentially save the County some money,” said Malone.

In self-funded health care, the employer assumes the risk for payment of claims by policy holders. Terms of eligibility are similar to those found in traditional “fully insured” programs. In the case of Scott County, the County would be effectively collecting premiums from the employees, setting aside a large portion of that money in a fund to pay for claims made by enrollees. Milstead explained, “When you have a policy with a carrier, any money left over, the company will keep one way or the other. With self-funded, if you have a good year, you have the potential to save thousands of dollars.”

In order to mitigate the County’s exposure, some of the money would be used to purchase stop-loss insurance, a measure that would cap the claims liability through a traditional insurance carrier. “Overhead usually runs at around 50 percent,” said Milstead. Milstead noted that the presentation made Monday night was highly shortened. “If you could give me an hour of your time, I can give you all the information you would need,” he stated.

To provide a counterpoint to the argument to change plans, Ken Coffey, the County’s current agent, was also in attendance. Coffey stated that while self-funded insurance has its time and place, “This is not it,” he remarked. “The financial stability of Scott County is a big concern for me,” Coffey stated. He went to note that in his experience, self-funding very rarely worked for groups of less than 100 insured, a group which includes Scott County. In addition, the risk rating for Scott County is significantly higher than in other groups. “We currently have 4 people on the plan in the County that have cancer,” Coffey said, which increases the amount of claims filed. “I am not opposed to self-funding at all. I just don’t think the time is right for Scott County to do this,” Coffey concluded.

In the end, the Committee made no action on the proposal, nor did the Committee set a date for any additional work sessions.