Identifying fully insured and self insured employee benefit plans can represent quite an opportunity for employee benefit brokers. Fully insured plans obviously represent very high commission opportunities for brokers, but can conversely also represent very interesting prospective targets to convert to self-insurance. Hunting for fully insured plans should be a component of every health plan lead strategy.
Identifying self-insured plans from the outside is not always straightforward. But you can make good headway by using the DOL ERISA 5500 Data to make some approximations and identify self-insured and fully insured plans.
The algorithm for identifying self insured health plans is not simple, but is detailed extensively in the Appendix B to the Congressional Report SELF-INSURED HEALTH BENEFIT PLANS 2019. The attached graphic describes the classification algorithm most succinctly.
In a nutshell, it uses the Schedules A, H & I of the ERISA 5500 forms to separate insured vs self funded plans. To vastly oversimplify, those plans that are identified as funding significant benefit payments through general assets or a trust are tagged as self-funded or partially self funded employee benefit plans. This results in a rough breakdown of 42% of plans being tagged as self-insured, 7% mixed funded, and 51% tagged as fully insured.
As an example of the sales tactics which can be used to flip fully insured plans, The Self Insurance Educational Foundation has assembled a compelling list of talking points for brokers to use in these meetings. Given the escalating costs of healthcare and the often missing alignment between brokers and employers in assembling cost contained benefit plans, this is likely to be an ongoing and very useful trend to watch.