Flex Funding is a self-funded program that is based on a traditional Specific & Aggregate chassis, but require the employer group to fund all fixed cost components as well as the aggregate funding factors.
The goal is to treat the funding of the program like one would for a “hybrid” self-funded program (i.e. aggregate only, level funded, etc.), but include a specific deductible to reimburse amounts over the deductible level chosen.
The main difference is when and how the reimbursements would take place, as well as how amounts under the specific deductible would be funded. The idea would be to delay the reimbursement until the end of the contract, and include this calculation as part of the year-end reconciliation. Additionally, the reconciliation would provide a “debit” for amounts accrued under the specific deductible for those individuals that exceeded the deductible.
The net result with respect to client responsibility, as well as carrier impact, will be the same under this program as it is under a typical traditional specific & aggregate program. The main difference simply lies in the timing of the reimbursements. Instead of paying out the specific reimbursements during the year, this is delayed until the end of the contract. However, the final results are the same. As you will see by the claim worksheet examples provided, the expense to the client and the impact on the carrier work out to the same figures be it the proposed funding mechanism or a traditional Specific & Aggregate platform.
Utilizing a funding mechanism that functions in this manner represents a viable funding option for groups of all sizes and deductible levels, and creates a program that caps employer liability, but enables the group to mitigate individual claim exposure based on the fact that a specific deductible is built into the program.
Multiple carriers are utilized for flex funded program quotes. All programs include a claims refund component in the event claims fall below the attachment point, with a 100% refund of all remaining funds. Each group has a specific deductible amount to provide reimbursement by the carrier for individual claims over the specific deductible.
Available for groups of 25+ lives, though we try to focus on groups of 50+..
Specific deductible – Varies based on group size, claims risk, etc. Contract options – Defaults to 12/21 (i.e. includes run-out liability), with option to do 12/12 w/ TLO
TLO Cost – Depends on the carrier, but most charge 35% of the aggregate factors for three (3) months of TLO coverage.
Individual applications required regardless of group size. However, this requirement can be waived based on receipt of claims data and group disclosure statement. Acceptable claims data may be detailed monthly premium vs. claims statement, or something as simple as the renewal worksheet provided by the current fully insured carrier.
Applications may be completed and signed within ninety (90) days of the effective date of coverage. The underwriter can accept other carrier/vendor forms including BUCA forms, FormFire, EasyApps, etc. If updated applications are not available, we can provide a carrier form for the employees to complete.
For claims data and disclosure statement, the underwriter will require the disclosure be signed no earlier than forty-five (45) days prior to the effective date of coverage. Additionally, the underwriter would like to see claims as close to the effective date as possible. This is sometimes impacted by the fully insured carriers’ rules re: data release.