Frequently Asked Questions

Table of Contents

EMPLOYEE BENEFIT ADMINISTRATION

What is self-funding?
An employer choosing to self-fund takes charge of the company's health benefit program from design to financing. Please refer to "SELF-FUNDING AND USE OF A TPA - ISSUES TO CONSIDER".
How does self-funding differ from traditional insurance?
Under self-funding, the employer assumes financial responsibility for the claim costs that it can afford. Claims are funded as they are incurred. Different levels of risk protection are afforded the employer in the form of specific and/or aggregate stop-loss coverage. Under traditional insurance, the employer purchases an insurance policy, pays a fixed monthly premium and transfers the entire risk to the insurance company.
What are some of the advantages to self-funding?
When an employer self-funds its health plan, it often enjoys fiscal advantages, but flexibility is usually perceived to be its greatest value. Tailored plan design, cost management features and "plug-in" components like a prescription card, PPO and EAP reflect just few examples of such flexibility.
Who should consider self-funding?
Despite popular belief that only large employers are candidates for self-funding, ABA has successfully managed groups with as few as fifty (50) employees.
Where can I get more information about self-funding?
Please contact your health insurance broker. He / She should be knowledgeable to answer most of your questions. Your broker can obtain from us information specific to your group.

MANAGED SERVICE ORGANIZATION

What are the advantages to having a TPA administer my Managed Health Contracts?
The two prominent advantages derived from having a TPA administer your Managed Health Contracts are Financial advantage and Independent Service Advantage.Financial advantage is realized from not having payroll and having to pay payroll taxes, workers' compensation, employee benefits, various liability insurance and rent to name some.
Independent service advantage brings the independence of the outside service. This eliminates any personal interest or bias that may exist internally due to the number of medical groups, market shares or size of the group or number of directors, etc.
What does a TPA provide to IPA's Managed Health Contracts?
In today's healthcare delivery system, independent physicians and small and large medical groups have entered into agreements that enhance their power to negotiate market shares and financial reimbursement. In most instances they have formed an IPA. A TPA can, to a very large extent, be the back office for the IPA. Depending on the sophistication of the TPA and the risk it wants to take, a TPA can offer a full spectrum of services.