Underwriting Self-Funded Medical Plans

By Molly Mulebriar

Underwriting a self-funded group medical plan involves assessing the risk and cost of providing health insurance coverage to a specific group of employees or members.

Here are the steps to underwrite a self-funded group medical plan:

  1. Evaluate the group’s demographics and health status: Gather data on the group’s age, gender, location, occupation, and other relevant factors. Determine the overall health of the group by looking at claims history, medical conditions, and other risk factors.
  2. Determine the benefits to be offered: Decide on the specific benefits to be offered to the group, such as deductibles, copayments, coinsurance, and out-of-pocket maximums. This will help determine the expected cost of providing coverage.
  3. Develop a funding strategy: Determine the level of risk the group is willing to assume and develop a funding strategy that aligns with their goals. Decide on the level of stop-loss insurance coverage needed to protect against catastrophic claims.
  4. Assess the financial stability of the group: Evaluate the financial stability of the group by looking at their financial history, projected revenue, and other financial indicators. This will help determine their ability to pay for claims and any potential financial risks.
  5. Determine the rating factors: Identify the factors that will be used to rate the group, such as age, gender, and health status. Consider any state or federal regulations that may impact the rating process.
  6. Determine the premium rates: Use the data gathered to determine the premium rates for the group. Consider any discounts or surcharges that may apply based on the group’s risk factors.
  7. Provide ongoing monitoring and support: Continue to monitor the group’s health and financial status to ensure that the funding strategy and premium rates remain appropriate. Provide ongoing support and education to help the group manage their healthcare costs and make informed decisions about their coverage.

Underwriting a self-funded group medical plan requires careful evaluation of the group’s demographics, health status, financial stability, and risk factors. By following these steps, an effective funding strategy and premium rate can be established to provide the group with the coverage they need while managing their healthcare costs.