A Risk Management Strategy Supported By The American Taxpayer
By Bill Rusteberg
The Compassionate Care Plan™ is a risk management strategy for self-funded employer groups providing an effective method of transferring high risk plan members to the individual health insurance market.
The process is made possible by certain Plan Document language.
Moving high risk members from group health plans to the individual health insurance marketplace is made possible by the Affordable Care Act (ACA). Pre-existing conditions are covered. No one can be turned down for coverage based on health status.
Section 1343 of the ACA indemnifies health insurance companies offering individual policies against adverse selection through a permanent Risk Adjustment Program. Government tax supported dollars provide payments to health insurance companies that disproportionately attract higher-risk populations such as individuals with chronic conditions by transferring tax payer funds from plans with lower risk enrollees to plans with higher risk enrollees. Federal subsidies amounted to $997 billion, or 4.0 percent of gross domestic product in 2022.
Plans in the individual market receiving risk adjustment payments may also receive ACA transitional reinsurance payments for the same high risk enrollees.
Self-funded health plans can essentially eliminate lasers by utilizing this risk transfer method. Compassionate Care plan members gain additional coverage and plan assistance through a side agreement with the plan sponsor at a time when they need it the most.
There is nothing preventing a plan sponsor from adopting this strategy. And more are.