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Self-insurance may be key for small businesses in N.J.

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Mike Munoz, senior vice president of sales and marketing for AmeriHealth New Jersey.
Mike Munoz, senior vice president of sales and marketing for AmeriHealth New Jersey. - ()

Small businesses looking to reduce health care costs by switching to self-insurance have a new option:

AmeriHealth New Jersey announced Monday that it’s offering self-funded plans to employers with 51-99 employees. Previously the company had offered self-insurance to groups of 100 or more.

AmeriHealth said its research has found there are about 295,000 employers in New Jersey with 50 to 99 employees, of whom about 30,000 are currently self-funded.

A number of health plan providers, including QualCare and MagnaCare, specialize in self-insured plans for small employers and have seen demand rise as employers look to control their health care costs.

Experts say employers can save money with lower claims under self-insurance, if their employees are relatively healthy — and self-insured plans include stop-loss insurance that protects the employer against unexpected spikes in claims.

Mike Munoz, senior vice president of sales and marketing for AmeriHealth New Jersey, said AmeriHealth launched the product because small businesses were looking for alternatives.

He said AmeriHealth is seeing demand from employers and their health insurance brokers: “A lot of employers are interested in looking at this.”

AmeriHealth is offering six standard plans with a range of deductibles and prices. Employers will pay no more than $25,000 for an individual claim before the stop-loss coverage kicks in. Stop-loss coverage also covers aggregate claims that exceed 125 percent of expected total clams.

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Munoz said employer interest in self-insurance has been spurred by the Affordable Care Act, which in 2015 will require employers with more than 50 workers to offer coverage to full-time workers or pay a penalty.  Self-insurance plans save money in part because they aren’t subject to most of the new health insurance premium taxes imposed by the ACA.

Some industry experts estimate employers can save as much as 10 percent on their health plan costs by switching to self-insurance.

Munoz said self-insurance works for employers who “are willing to take the risk of being able to benefit from any savings you might be able to achieve from your employee population being healthier. That is why most employers look at self-insurance — they feel their employee population may be healthier than the norm and hence benefit from lower claims.”

Medical claims “are the key driver of costs for any employer,” he said.

If the employee population is healthier than the norm, “They will benefit because their claims expense will be less,” he said. And if the employees turn out not to be as healthy as hoped, the stop-loss insurance caps the employer’s exposure.

“If you are willing to take a gamble you might benefit from self-insurance,” he said.

AmeriHealth covers 350,000 lives in New Jersey, of whom 230,000 are covered through employer groups and the rest are individual customers, Munoz said.


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