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Segal Case Study
Over a course of two years, a Midwestern client has changed from a fully-insured arrangement with a rich benefit plan to a self-funded arrangement with a more modest plan design. Through the process of preparing annual budgets and reserve targets, it was determined the additional administrative fees charged by the insurance company were excessive. Further, it was identified that the PPO network was no longer competitive with other organizations operating in the area.
The first step in Segal's work with this client was to prepare an RFP and bid analysis of PPO providers operating in the area. The various PPO savings levels proposed by each organization were then used to develop pro-forma budgets that compared the fully insured arrangement to several self-funded arrangements. After reviewing the options and the long term affect on reserves, a decision was made to self-fund the medical benefits and to partner with a different PPO provider. This change alone resulted in savings of approximately $750,000 the first year.
The second step occurred approximately eighteen months later. The very rich benefit plan was driving a high level of claims that could no longer be financially supported. Segal, after thoroughly evaluating the plan goals and employee needs, developed six plan design options. These options were augmented by the client and ultimately a new more affordable plan was chosen.
Worldwide Employee Benefits Network, Inc.
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