Unbundled self funded plans allow employers to customize their programs to meet their company culture and employee needs, rather than off-the-shelf plans that an insurance company wants to offer and sell. One size does not fit all, and one plan document does not fit each and every employer group that purchases a health plan through an insurance company. You see, insurance companies stream line their plan designs, their plan administration, and even auto-adjudicate claims at a very high rate to reduce customization that an employer may desire.
An unbundled, partially self funded plan is covered under ERISA (Federal law) and allows an employer to customize their plan to fit their culture and the needs of their business and their employees. One of the requirements is that the plan does not discriminate in favor of highly compensated individuals. Most insurance company plan documents are template driven and don’t permit customization, as opposed to customized plan design that reflects the intent that an employer may have. Remember, if the Plan Document doesn’t specifically state who is eligible, or what is excluded – then it is deemed to be covered by the plan – regardless of the employers intent.
Let me give you recent examples of customization to avoid unnecessary risks: I have a client that has an employee who chose to go rock climbing without the proper safety equipment. Unfortunately, the individual had an accidental fall and crushed parts of their legs and hips. You can imagine what that claim cost! We subsequently amended the plan (which can be done at any time – you don’t have to wait until a renewal) that stated that if a member is participating in a hazardous avocation or hobby without the proper safety equipment, then it is excluded from the plan. This includes white water rafting without a helmet and safety vest, skiing or snowboarding without a helmet, climbing without proper ropes and safety equipment, biking without a helmet, etc.
Another example is a client who has two employees (husband and spouse) who fight across the country in MMA boxing/fighting. The employer does not want to cover accidental injuries due to their professional career in the MMA or elsewhere, so we were able to exclude this sort of fighting from the plan.
Yet another example is when an employee is participating in a hobby or avocation for wage or profit. This might include motorcycle and dirt bike racing, drag racing, rodeo events, etc. If there is wage, profit, or reward at the end of the event, it too can be excluded from the plan if that is the employers desire.
Why would an employer want to subject themselves to unnecessary risks and significant medical claims expense when members aren’t exercising proper safety, or participating in an event for wage of profit? Yet another example of changing behavior is to exclude claims incurred while riding a motorcycle without a helmet.
Detailed examination of a Summary Plan Description (SPD) or Plan Document (PD) can prove to be very beneficial. Not only will you understand what is, and what is not covered, but also provide the employer with an opportunity to customize and amend the plan to reflect their intent.
If you would like a complimentary review of your documents and subsequent recommendations, please reach out to me at firstname.lastname@example.org or call me at 970.349.7707.