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CCH® BENEFITS — 05/10/12

Fewer Group Health Plans Were Self-Insured In 2009, But They Covered a Much Greater Proportion Of Plan Participants: DOL

from Spencer’s Benefits Reports: The proportion of group health plans that self-insured or had a mixture of self-insurance and insurance, fell from 45 percent in 2001 to 42 percent in 2009, according to a recent report from Department Of Labor (DOL). However, the second Annual Report to Congress on Self-Insured Group Health Plans noted that the proportion of plan participants covered under these plans rose significantly during the same time period: from 64 percent to 73 percent.

The Patient Protection and Affordable Care Act (ACA) requires the DOL to annually prepare and provide to Congress this report, which contains aggregate information on self-insured employee health plans and financial information on the employers sponsoring the plans. The report, which was published on April 25, is based on plans’ Form 5500 filings. The report also includes a table comparing aggregate statistics for self-insured and combination self-insured/insured plans for 2008 and 2009 plan years.

According to the DOL, more than 50,000 health plans filed Form 5500s for the 2009 plan year, an increase of almost 7 percent over the 47,000 filings in the 2008 plan year. The 2009 plan year was the first for which all plans were required to file Form 5500 electronically. In addition, of the 14,800 self-insured heath plans that filed 2009 Form 5500s:

• Just over 2,100 were funded using a trust only.
• Roughly 5,700 were funded exclusively through the plan sponsor’s general assets.
• Nearly 5,200 were funded using a combination of plan sponsor general assets and insurance.
• The remaining 1,800 filers used a combination of funding arrangements or did not report any funding arrangement.

Deloitte Financial Advisory Services LLP, which performed the 2011 and 2012 analysis for the DOL, reported the following summary for the 2012 analysis:

• From 2008 to 2009, the percentage of self-insured or mixed-funded Form 5500 filing health plans remained at 29 percent and 13 percent respectively, Deloitte found. The total share of Form 5500 filing health plans with a self-insured component remained at 42 percent. This percentage has declined or remained flat every year from 2002 to 2009.
• Although only 42 percent of Form 5500 filing health plans had a self-insured component in 2009, the majority of Form 5500 filing health plan participants were in plans with a self-insured component. The total fraction of Form 5500 filing health plan participants in a plan with a self-insured component increased from 72 percent in 2008 to 73 percent in 2009. This fraction has increased every year of Deloitte’s analysis.
• As reported in Form 5500 filings, stop-loss coverage among self-insured plans declined from 24 percent in 2008 to 20 percent in 2009. This fraction had ranged between 23 percent and 25 percent since 2001. Stop-loss coverage among mixed-funded plans was in the 28 percent-29 percent range since 2001 and reduced to 25 percent in 2009. These percentages may be underestimates of the prevalence of stop-loss insurance.
• Most Form 5500 filing plans with fewer than 100 participants were self insured. This is presumably due to Form 5500 filing requirements rather than being representative of all small plans, Deloitte explained.
• Among Form 5500 filing plans with 100 or more participants, the prevalence of self-insurance generally increased with plan size. For example, 26 percent of plans with 100-199 participants were mixed-funded or self-insured in 2009, compared with 79 percent of plans with 5,000 or more participants. The 2008 percentages were similar: 27 percent and 77 percent, respectively.
• Larger plans that filed a Form 5500 were more likely to be mixed-funded than smaller plans. For example, 5 percent of plans with 100-199 participants were mixed-funded in 2009, compared with 44 percent of plans with 5,000 or more participants. The 2008 percentages were similar: 5 percent and 43 percent, respectively.
• Multiemployer and multiple-employer plans were more likely to self-insure than single-employer plans. In 2009, 67 percent of multiemployer or multiple-employer plans were self-insured or mixed-funded, compared with 40 percent of single-employer plans. The 2008 percentages were similar: 69 percent and 40 percent, respectively.

The DOL cautioned that the report’s data is limited and should be interpreted with care because:

• It includes information only for plans that are required to file Form 5500. For example, small self-insured plans (that is, those with fewer than 100 participants) are exempt from the Form 5500 reporting requirement.
• The aggregate financial statistics only reflect amounts held by the self-insured plans in trust, not any amounts paid directly by plan sponsors from their general assets.
• In some cases, health benefits may be reported on the same Form 5500 with other benefits, including disability or life insurance benefits, making it difficult to distinguish how different benefits are funded.

For more information, visit http://www.dol.gov/ebsa/pdf/ACAReportToCongress041612.pdf.

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