the new reaches of insurance.

• Author: Moore, Melissa
• Position: Insurance services

Is your benefits plan eating up company profits? Perhaps self-funded coverage is an answer.

The world of insurance has been a constantly changing and ever-confusing entity. Partial self-funding, constant customer relations, and loss-cost ratings are fairly new concepts to the insurance business, and are terms that can spin even the most level business mind.

And provide benefits.

Take Barbara Brady - a good example of a typical hard-working, levelheaded businesswoman. As president of Alaska Rent a Car, which does business in the state as Avis Rent-A-Car, Brady got tired of seeing the bill for her employees' health benefits go up every year. She tried several insurance companies, including Blue Cross Blue Shield and New York Life, but said the bill increased 10 percent to 12 percent nearly every year. She never knew where the money went after she sent in the check for the premiums, and the companies took weeks to send claim checks to her employees. She said she wanted something better.

SELF-FUNDED BENEFITS PACKAGES

Four years ago, she hired Risk and Benefit Management Services, a consulting and third-party administering firm, to handle the benefits program for her company.

"Now, I get a statement and I see where that money goes," Brady said. "They pay the claims right away, and they are there the minute you call. And my premiums haven't gone up in the last four years. It's the only way to do business."

While self-funded benefits packages aren't for every business, officials at RBMS said they can offer substantial savings for many companies with more than 30 employees. With self-funded plans, the business, not the insurance company, pays for the insured portion of medical expenses for employees and other covered members. To reduce risk, the company can opt to purchase insurance to pay for expenses above a certain dollar amount.

A self-funded plan offers savings because it eliminates cost for insurance-carrier overhead and reduces cost for administration and premium taxes, said RBMS. The reserves are held by the client, not the insurance company.

Employers can create their own plans, designed to meet the needs of their workers. They will receive monthly statistical reports showing claim activities for medical, dental and vision services rendered by the employees and their spouses and children, if applicable.

"Big careers take off-the-shelf packages and that may not be suitable for every business," said Greg Kershaw, vice president of marketing...