In the late 80’s Minimum Premium plans were offered by carriers as a method to entice plan sponsors from self-insuring their group medical plans. Self funding was becoming increasingly attractive to some employers and carriers were worried that they would lose the “float” generated by fully-insured cash cows. Competition brews innovation.
As a rep. for a large health insurance company at the time, I remember going to a training session in Dallas and told “we are about to teach you all about self-funding, but we don’t want you to sell it. Only do so if you have to due to competition and instead try to offer a Minimum Premium Plan as a last resort!”
My employer knew that a Minimum Premium Plan allowed full book value in year end financials, while ASO administration fees (self-funded plans) eroded corporate financials.
Minimum Premium Plans began to fade in the 90’s and eventually became extinct. Self-funding grew in market acceptance because plan sponsors realized the difference.
But now we see a resurgence in Minimum Premium Plan offerings. It is our understanding that Humana, Aetna and Cigna (Cigna Funding Alternatives) are actively marketing Minimum Premium Plans in select markets.
Could this be the “last gasp” for carriers under ObamaCare?