Hello. This is Norman Noriega. I’m an insurance agent, Olivia. But I want to know more about you. Hi, Norma. It’s nice to meet you. My name is Olivia, and I am the mid-market sales executive with Allstate benefits out of our Phenix office. And everything that we do is group self-funded health plans. So traditional self-funding level funding as well as standalone stop loss. My specific area is groups 51 plus, but we go down to groups of two. And I guess I wanted to start out by asking what has been your experience with Group Health so far? What do you know about group health? What have you done in the past? Well, to be honest with you, I don’t know much. And that’s why we’re here, I guess because I want to learn more. Um, we do the group insurance, and I say when I, when I say we is because actually my business partner is the one that is doing that part of of group insurance. I don’t handle it much. I just send the census and he takes it from there. So I’m pretty much just doing the like individual like Obamacare and some other, you know, things. But we do have some clients that have small, very small groups, and they want to know more about a group plan that is not as expensive or where they can save, you know, a little bit more on on the insurance. And but to be honest with you, that’s why I want to learn more about what you do, because this is important for some of our business owners that want to provide insurance to through their their employees. So what kind can you explain a little bit more about what you do and how these plans work? Yeah, definitely. So when most people think of group health insurance, immediately what the first spot is, is a traditional fully insured plan. So with a traditional fully insured plan, you pay a premium to an insurance company. Those dollars go to the insurance company, and then in return, they pay the claims that you incur over the year. And there’s very little transparency to where those dollars are going. There’s very little control over the plan designs. They might have a couple of options that you choose from, but you’re kind of at the mercy of picking one of their product offerings and giving you or giving them yo Is that fully insured model what you’ve had experience with in the past? Is that what you generally think of with. Yes. Yes. And that’s, you know, for us, it I think that a fully insured group insurance works very well for people that have a lot of employees that have illnesses going on, you know, because it does work for them because of the like the deductibles, the out-of-pocket or whatever.ur money, and they take that in exchange. You don’t see those dollars ever again, right? But I am not familiar with what you do or the the kind of group insurance that you that you have or that you’re offering through Allstate. So and that’s to me, it’s intriguing how this works because I’m so used to just hearing as you know, as I started to work when I was like 18, I used to have the fully insured, the group and all the different places that I was at. And I’ve never heard of these other concepts, and I think that is intriguing. But at the same time, I think it’s really good for those groups that or those employers that have very young, healthy individuals, right? 100%. And the fully insured product will always have a place in the market, like you said, for groups that have people who are sick and they have populations that do need to get that coverage through that route. For some groups, it’s the only option. But more and more groups are cluing into the fact that there are alternative options out there because the fully insured model isn’t working for a lot of groups anymore. Right now with the Affordable Care Act, there was a lot of great intention behind the Affordable Care Act, wanting to make sure that everybody gets coverage that they need and getting coverage for people who maybe in the past weren’t able to. But great intentions sometimes don’t have the best consequences overall. One of the things that happens with the Affordable Care Act is when you’re bringing in riskier people, which again, great that they’re getting the coverage that they need. But because insurance is pooled risk, it raises the rates for everybody, whether that is a risky group or a really healthy group. And in addition, the Affordable Care Act put something into place called the medical loss ratio. Right. And what that was supposed to do was limit the growth of insurance companies because essentially says that any dollars brought in by an insurance company, they have to spend 85% of them paying out on claims and they can only retain 15% as profit. Right. But what that ended up meeting is that for the only way for a large fully insured carrier to grow is for them to see cost of medical procedures, cost from providers, claims cost rise, because the only way for them to make more money is for that 15% slice of the pie to get bigger. So in turn, it kind of meant that for the large fully insured carriers, they’re adversely incentivized to see health care costs rise. And as we’ve seen since the onset of the Affordable Care Act, health care costs have gone up and up and up and something that was intended to limit the growth of the insurance companies, they have grown exponentially since that was in place. And so a lot of people are kind of cluing into the fact that there are problems with the industry and we want to find routes to solve them. And as we’ve seen since the onset of the Affordable Care Act, health care costs have gone up and up and up and something that was intended to limit the growth of the insurance companies, they have grown exponentially since that was in place. And so a lot of people are kind of cluing into the fact that there are problems with the industry and we want to find routes to solve them. That’s right. So our solution to this is turning away from the fully insured model and looking at self funding. So I want to ask you, like, what is your understanding of self funding right now? Do you have kind of a high level overview or where are you at with self-funding as it stands today? Um, well, so funding would be like putting money aside right to unlike in Asia say, or something where you are funding your expenses or explained to because I know that’s not in place. So with a self funded health plan, essentially, instead of paying a premium to an insurance company and then they are playing all the claims on your behalf, right? You are holding on to those dollars and you are paying a stop loss premium so that up to a certain point you’re covering any claims for your group. And if you hit a certain point, the insurance company covers any claims above that. So instead of, again, paying dollars that you’ll never see again, you keep the money in your hands, but you put a cap on how much you’re going to be spending on your health care And on a in a average group, four out of five years, the group performs better than expected. So with a fully insured plan, the carriers the winner because the group is performing better than expected, they’re taking in the premiums and paying less claims than they were hoping to, taking that as profit. The only year that the employer would win is the one out of five years that they have a big claim or someone goes catastrophic or something really bad happens. And so with self funding, you’re moving that margin into the hands of the employer where on well-performing years the money stays in their hands, but in a bad performing year they have that stop loss cap, right? The only year that the employer would win is the one out of five years that they have a big claim or someone goes catastrophic or something really bad happens. And so with self funding, you’re moving that margin into the hands of the employer where on well-performing years the money stays in their hands, but in a bad performing year they have that stop loss cap, right? So for a large employer who has a lot of capital, they can afford to pay claims as they’re incurred. This works really well. So they put a health plan in place. And for the group members, it doesn’t look any different than what they’re used to. There is a deductible just like normal max out of pocket, co-pays, co-insurance. The health plan looks exactly like any other health plan, but the employer and they’re paying the claims as they get incurred up to a certain point. Right. And then insurance comes in and takes it from there. They still pay premiums. Premiums are only going towards the stop loss premium. So buying the insurance on that cap. So saying we’re only going to pay up to this much. Anything else? Insurance company covers stop loss, premium pays for that, and then admin fees for the administrator to administer the plan. So for large groups that have the flexibility and the capital to do that, it works really, really well for small groups. Sometimes they don’t have the money to pay on claims, I’ve got to say. Yeah, like for for smaller groups that they don’t have all the money to be paying so much because like you said, the, you know, the full covered plans, they usually are very expensive, extremely expensive. What I like about your explaining. So they they pay up to a certain amount and once you know they go above and beyond that, then our state will pay for the other claims. What if they’re let’s say that there is a group and they didn’t have any claims throughout the year, but they as you said, they are paying a you know, a monthly payment to the Allstate or to the insurance at the end of the year. Is there like a way that they get back some of that money or is there so in the traditional self-funded model that we were just talking about and the costs of the plan itself, that stop loss premium, the admin costs are comparably really, really low compared to a equitable, fully insured plan. Okay. So if we’re looking at a large group, we budget generally 80% into variable cost or what we kind of expect them to pay out in claims 20% into the fixed cost of the stop loss premium and the admin so that 20% and the admin fees go towards the administrator customer service, taking care of the claims, marketing fees, all of that kind of stuff as well as that premium for the coverage they’re getting in the case that Allstate would have to pay over the top of that. But that 80% chunk of what is expected that they pay stays in their pocket. So the benefit of that is they get time value of their money. They can invest it however they see fit for their business until a claim hits and they would need to pay it. Right. So those dollars stay in their pocket for smaller businesses who maybe don’t have that same liquidity, they if they got hit with a $20,000 claim, might not have the dollars to pay it immediately. So like I said, we go down to groups of two groups in that smaller range, probably aren’t going to have a bunch of money on hand to pay a claim as it’s incurred. Right. So those dollars stay in their pocket for smaller businesses who maybe don’t have that same liquidity, they if they got hit with a $20,000 claim, might not have the dollars to pay it immediately. So like I said, we go down to groups of two groups in that smaller range, probably aren’t going to have a bunch of money on hand to pay a claim as it’s incurred. Right? So what we do in that situation is something called level funding. And level funding looks a lot like a fully insured model in that you are paying a level monthly premium, you know exactly what you’re paying each month. No, no matter what the claims are. And a lot of times it ends up being lower cost than a fully insured model. Right. But that would go towards three things. So one, you’re not a third, but one of the three parts that that payment would go towards is the admin costs. One would be the stop loss premium and another would be payment into a claims fund. So funding a bank account to pay claims in the level funded model, The benefit is, is that you can as a small business budget exactly what you’re funding into this account every single month. The payments the same every month. Whereas with traditional you’re paying claims as incurred. This is building up a bank account to pay claims. The nice thing about this is for a small business, like I said, you can budget exactly what you’re going to be spending per month. It looks like a fully insured model where you’re paying the same amount. The payments the same every month. Whereas with traditional you’re paying claims as incurred. This is building up a bank account to pay claims. The nice thing about this is for a small business, like I said, you can budget exactly what you’re going to be spending per month. It looks like a fully insured model where you’re paying the same amount. Right. January, February, March. And then the administrator pulls from that claims fund to pay any claims that come in. Okay. At the end of the year, you were saying getting money back. So at the end of the year, different carriers will have different percentages of the amount that you can get back of unused dollars. We give up to 100% of any unused dollars in that claims fund back to the business, and that’s regardless of if they renew or not. So it works very similarly to a traditionally self-funded model in that any of those unused dollars go back to the business, but it’s in the level funded program, then paying up front as opposed to a traditional self-funded where they hold on to their money and pay them as they’re incurred. I know I just rambled for a while, so if you have any questions, it’s really good. All the information is really good. One of my questions that just came up is like, do they have to qualify for these to get these plans for our group? Do they have to have like mostly healthy people or anything like that? Is there a qualifying mark for this? So there’s not necessarily a qualifying mark on how healthy they have to be. However, their rates will change depending on the risk of the group. So for the state of Arizona groups under 20, we do gather I am cuz individual medical questionnaires and do medical underwriting because we underwrite based on expected claims. We want to set the group plan up for success. We want to set them up to be getting a refund at the end of the year. So we fund those claims funds on a level funded plan at 125% of their expected costs. So building in a corridor there, even if they perform exactly as expected, there’s still that 25% they would get back as a refund at the end of the year. And if a group is riskier than that, 125% of expected costs would be higher. Right. For groups of 20 to 99, we don’t need to gather individual medical questionnaires in the state of Arizona. We can underwrite based on the census and do expected claims through underwriting process that way. And if we have claims data, if they’re a large group and the fully insured carrier will provide it, or if they were already self-funded, we can get claims data that we can use to underwrite as well. So that’s kind of why there’s always going to be a place in the market for fully insured, because some groups, if they have a unhealthy population, might not be a fit for self-funding. But for the groups that are healthier, for the groups that want to kind of turn away from the traditional model and look at something a little more innovative, keeping those dollars in their pocket can be a really good solution. Okay. And you can put these self-funded groups up on more than 99 employees or it’s going to be you can do it 4000, 3000. Okay, So we can do it self-funded in general, there’s not really a cap. Our sweet spot on our level funded product is down to two, but the sweet spot would really be like a 20 to 150 200 person group. Once groups get above that, then they start wanting to look at the traditional self-funding, where they’re keeping their money in their pocket, paying the claims as they’re incurred. Bigger than that, groups might want to get just standalone stop loss and find their own administrator and their own pharmacy benefit manager and unbundle it. So as groups get larger and larger, there’s a lot more flexibility and different risk strategies that you can put in place. But sweet spot for that level funded product would be like that. Yeah, 22 to 50 size range. Okay, so that’s more comfortable for either the group without having to go with a really, really big group and for the companies as well, Right? Yeah, you guys. Yes, definitely having that level monthly payment. Right. People like being able to budget for exactly what they’re going to be able to spend. Yeah. And I was asking that because usually when you have a huge group, usually it’s mostly healthy people. I mean, you’re going to have a few maybe out of 200, maybe five are going to have problems. But that’s what I you know, I usually find out, yes. By writing individual, individual insurance, I see usually the same two or three people are the ones that have, you know, a lot of things going on. So I get it. It’s just so cool. I mean, I’m learning a lot of what it is. And this is perfect because as I said before, many people don’t really think about these plans that are available for them. And it’s something that we should be bringing up to our to our business owners, because some of them are like, I only have two employees or three employees. Some of them have ten. So something like this would be perfect. Yeah, and it allows that level funded model allows a small business, like you were saying, to get the same benefits of self funding that a large business had. That’s something that they maybe wouldn’t be comfortable with or be able to financially do. But with the level funded product, now they’re able to kind of reap those same benefits, right, as a large company would be able to. Exactly. Another really cool thing about the self-funded plans is that they’re fully customizable. So it’s not like there’s any one box solution that groups have to pick from, right? Everything is a lever we can pull. So if they want their deductible a little lower, max out of pocket, co-insurance, co-pays, pharmacy copays, everything is flexible. So it lets us be very strategic about putting together a plan for a group that’s a perfect fit for them, depending on what their priorities are, what they’re looking for. If they want something that looks exactly like what they had before with their fully insured carrier deductible max out of pocket, all of that kind of stuff, or if they want something a little bit different, they get flexibility in customizing those plans. Okay. So it’s like if they had access to certain hospitals, then you can do that, do that at the same time, you know? Yes. So in these plans, like Yes, so there’s a full suite of different options that they can choose from that works. So we have full nationwide networks. They can use rental agreements with Aetna, Signature Administrators, Networks, Cigna, OHIP, Cigna, PPO, so they can choose a network like they would be used to. We also have narrow network options like Cigna Local Plus here in Arizona. Our health care highways in Texas is one where it’s just a smaller, cheaper network, essentially. And then we also have a full range of reference based pricing products, which instead of having a network, they pay based off of a percentage of Medicare. Right. And that’s also a good solution for groups who, like I said, may be more unhealthy, maybe have higher claims because it manages the cost of the claims instead of using top down approach of a network discount bottom up approach of paying based on a percentage of Medicare. So we try to give as many options as possible. Like I said, customize flexibility. Groups can kind of choose what they’re looking at. Yeah, well, thank you so much, Olivia. I think I’ve learned a bunch right now, so I had a great day. I appreciate all you have shared with me, and I’m pretty sure a lot of people are going to learn so much about this, too. Thank you. Of course. Thank you for having me.