Benefit Statements for Partially Funded Medical Plan.

[Guest sgb]

Could anyone provide me with input regarding how to handle annual employee benefit statements which include a medical plan which is self insured?

I would think that we should use the actuarial fully insured equivalent rate (which is also our COBRA rate) to represent the amount paid by the company. However, how do we explain this to employees?

Any input is appreciated.

[KIP KRAUS]

I would use the COBRA rates less the 2% admin fee. What kind of explanation needs to be given other than that’s the actuarial cost of the plan spread out among all plan participants? In other words it’s the actual cost of providing the plan. Any more detail than that is too much information. You certainly can’t give everyone an underwriting lesson.

Your other alternative is to take the total cost of the plan and divide it by every employee in the plan and use that figure, but then that's not the true cost for a single person versus a person with a family.

Keep it simple.

[mroberts]

I agree with Kip. Don't over complicate it. The equivalency rates should be sufficient. After all, these are roughly the rates that you would be paying if your plan wasn't self-insured.