SPLIT-FUNDED & AGGREGATING SPECIFIC PREMIUM PRODUCTS

Healthcare costs for employers continue to climb in double-digit increments as a result of medical trend and market fluctuation. SLG Benefits feels it is important to offer Split- Funding and Aggregating Specific alternatives which are designed to help Policyholders manage premium increases. These innovative products offer the Policyholder the ability to take a limited risk position on their specific premium. The Policyholder remits a discounted monthly premium rate during the course of the Policy period. If there is an individual(s) that exceeds the Specific Attachment Point, the Policyholder forgoes reimbursement until a predetermined risk corridor has been satisfied. The minimum premium amount plus the corridor will match the traditional premium charged.

These premium options can be valuable tools for Policyholders to reduce fixed premium costs, especially for those with favorable loss experience and solid cash flow. Based on the level of risk assumed by the Policyholder, this product provides the opportunity to keep their fixed costs flat during subsequent renewals.

Producers interested in presenting these alternatives should notify their SLG Benefits underwriter. SLG Benefits offers discounts from 5% to 35% off of the traditional stop-loss premium. Variables contributing to the discount level selected are premium and deductible minimums, along with the Policyholder’s risk tolerance.

Should a specific claim(s) occur, the Policyholder will be responsible for claims until the corridor dollar amount is satisfied. The amount will not exceed the total maximum traditional premium. Once the corridor amount has been satisfied, all eligible claims become the responsibility of the carrier for reimbursement to the Policyholder. It is important that the Policyholder submit all specific claims, even if they are still within the corridor to SLG Benefits for record keeping purposes.

DEFINITIONS  top

1. Discounted Monthly Premium Rates:

These rates represent a pre-determined percentage of the Traditional Premium Rates. The level of discount is based on the deductible size and Annual Traditional Premium. Under the Specific Split-Funded Premium Arrangement, the discounted premium is remitted monthly by the Policyholder.
 

2. Annual Policyholder Corridor Amount:

This amount represents the difference between the Traditional Annual Premium Costs and the Discounted Annual Premium Cost. Specific claims eligible for reimbursement under the policy would be subtracted from the Annual Corridor Amount until exhausted.
 

3. Traditional Annual Premium Cost:

This cost is calculated by multiplying the Monthly Premium Rate (s) (prior to the split funded discount) by the first month’s enrollment, by 12 months.
 

4. Discounted Annual Premium Cost:

This cost is calculated by multiplying the Discounted Monthly Premium Rates by the first month’s enrollment, by 12 months.
 

5. Final Settlement:

A year-end final settlement will be calculated after the policy period based on the actual monthly enrollment. If the annual premium, based on the actual enrollment, fluctuates by 10% or greater than the initial premium, the Estimated Corridor Amount will be re-calculated. If the Estimated Corridor Amount increases due to enrollment change, claims have exceeded the Corridor and subsequently have been reimbursed by the Carrier, the Policyholder must reimburse the Carrier for the difference between the Initial Corridor and the Final Calculated Corridor Amount.
 

6. Maximum Policyholder Specific Claims Liability Cost:

This is the sum of the Discounted Payable Annual Premium Cost and the Annual Policyholder Corridor Amount, providing assumed annual premium based on the enrollment does not vary by 10% or greater during the policy period.
 

7. Minimum Annual Policyholder Corridor Amount:

This amount shall not be less than 85% of the Annual Policyholder Corridor Amount at contract inception.
 

8. Specific Claims:

These are eligible claims paid on behalf of a plan participant in excess of the employer’s Specific Attachment Point which qualify for reimbursement under the excess loss insurance policy.
 

9. Standard Monthly Premium Rates:

These rates represent the premium cost for the Specific excess loss coverage which would be payable by the Policyholder in the absence of the Specific Split-Funded Premium Arrangement.

SPLIT-FUNDED PREMIUM PRODUCT EXAMPLES  top

Situation 1: Best case: No Specific claims paid during policy period

Situation 2: Probable case: 2 claims: $105,000 & $95,000 = $50,000
in excess of Specific

Situation 3: Worst case: 5 claims: $125,000 each = $250,000 in excess
of Specific