By Bill Rusteberg
Self-funded? Curious about how much it costs to pay a claim? To find out you have to ferret out all the fixed costs. Be aware, some are hidden on the claim side of the ledger.
You may be surprised to find your fixed costs are every bit of, or close to, $200 pepm. If it’s less look again on the claim side of the ledger because chances are high you missed something.
With that in mind let’s assume:
- Your fixed costs are $200 pepm.
- You’re financing $500 towards the employee only rate and $1,500 for employee + dependents.
- Dependent participation is 12%.
- There are 100 employees.
- Total monthly premium is $62,000 (based on the contribution levels stated above)
Fixed costs take up 32% of plan contributions before any claims are paid. One third of plan cost does not go directly to pay claims, instead vanishing into the swirling black hole of the Great American Healthcare Industrial Complex benefiting third party intermediaries.
Bypassing as many of these third party intermediaries as possible reduces the cost of paying claims. Cash transactions = Net Zero.
Moving to the other side of the ledger, do you have any idea how much your claims are inflated over cost? That information is readily available if you know where to look. You may be surprised to find your claims are inflated 200-1,000% over cost.
There are remedies to that.
Total plan costs can be reduced 50% or more if you know how.
