Note: The below information refers only to a ClaimLinx Simple Option Solution plan. There are other types of self-funded plans that these details would not apply to.
As our members know, the ClaimLinx SOS plan uses a different type of strategy for providing the health insurance benefits employees need. It combines two types of insurance coverage: a traditional insurance plan with a major carrier for primary coverage and a self-funded Medical Expense Reimbursement Plan (MERP) for secondary coverage.
See how these two levels of coverage work together so an employer can provide better benefits at a lower cost. But what exactly is a self-funded plan and how does it make benefits less expensive for the company?
A self-funded plan, also referred to as an employer-sponsored plan, is one in which a company pays directly for medical services.
In the case of a ClaimLinx SOS plan, an employer pays only for qualifying services according to a MERP determined at the beginning of the plan. Following its effective date, all medical claims are processed by ClaimLinx as a third party administrator and are paid with funds directly from the company.
Using an employer-sponsored plan allows companies to continue to provide benefits at a lower cost because they are no longer prepaying for services to an insurance company in the form of premiums. Insurance carriers charge for a plan under the assumption that every employee will be using large amounts of services. In most cases, that just is not true.
Instead employers can purchase a high deductible plan and pair that with a MERP. That way they are only paying for services actually rendered to employees.
In addition, because ClaimLinx provides a full customized schedule of benefits with a member ID card, members should not be required to pay up front for services and wait for a reimbursement (excepting special circumstances). Claims are processed and payment is sent at a later date directly to providers. This means members should experience the same conveniences as with a traditional insurance plan.
In its simplest terms employer-sponsored, or self-funded, plans are those in which qualifying medical services are paid by the company.
All of this is made possible using a 60-year-old tax code that allows companies to deduct medical expenses for its employees. What it means for employees, though is that their employer can provide the benefits they need at a cost the business can afford.