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Sunday, 31 August 2014 22:00

Priority Health to administer self-funded health policies for state bankers group

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Priority Health’s partnership with the trade association representing banks across Michigan potentially provides a model the insurer could use in the future when making similar arrangements with other organizations.

The Grand Rapids-based Priority Health serves as the third-party administrator for self-funded health policies developed by the Michigan Bankers Association’s new MiBankHealth. Launched by the association Aug. 1, the initiative offers member banks self-funded health coverage for employees and their dependents with a shared risk pool.

Priority Health doesn’t plan to actively pursue additional partnerships, although the arrangement with the Michigan Bankers Association can provide a basis for similar ventures if another organization ever comes knocking, said Scott Norman, the health plan’s vice president of sales. The arrangement with the Michigan Bankers Association illustrates the health plan’s willingness to adapt to market demands in a time of significant change for the health care industry, Norman said.

“As the market has evolved, we’re identifying new ways to deliver health care and to approach the markets that weren’t there before,” he said. “This is one of those. I do anticipate we’ll see more.

“(The partnership) gives us the ability to say, ‘We’ve done it before. How can we do it in other places where it makes sense?’”

MiBankHealth offers MBA members 10 different self-funded plans with varying benefits packages that include health savings accounts, health reimbursement arrangements and wellness components. In the early weeks of MiBankHealth, nine banks with 569 employees and covered dependents signed up for the new self-funded policies. Grand River Bank in Grandville was among the first to sign on.

One of the nine banks is in the Detroit area and seven are in the Upper Peninsula, a market that Priority Health has never previously entered. Covering employers and their dependents at those seven banks gives Priority Health a toehold in the U.P. that it could build on, Norman said.

“It does open the door for further discussions on how we can serve that market on a broader level,” he said. “That does create the brand awareness up there that we haven’t had before.”

Matt DeWolf, president of the Michigan Bankers Association’s subsidiary MBA Service Corp., estimates that the self-funded plans can save member banks 6 percent to 8 percent off of their present employee health premiums.

For more than three decades, MBA Service Corp. has offered members self-funded worker’s compensation insurance, a service now used by 90 banks. The leap into self-funded health insurance coverage was an extension of that service, DeWolf said.

“With everything going on in health care, reform and the rising costs, we felt comfortable as an association that pooling our resources together will save money and provide benefits for them,” he said. “This is what a trade association should do for its members.”

The MBA represents 135 of the 149 banks doing business in Michigan.

DeWolf expects MiBankHealth will initially appeal to smaller banks. Large banks are generally already self-funded, although a number of them have shown interest in buying coverage through the MBA in the future once the risk pool grows, he said.

A bank with 1,000 employees, for instance, would assume considerable risk joining a risk pool that’s already of a similar size, DeWolf said. If the MBA can build a large pool that spreads the risk further, then it makes far more sense for larger banks to join, he said.

“We need to get to that critical mass,” DeWolf said.

He expects another dozen or more banks that have a Jan. 1, 2015 policy renewal date to join MiBankHealth later this year, growing the number of covered lives to about 1,200. His goal is to grow the pool to 1,500 people by the end of the first year and to 4,000 covered lives within three years.

The MBA formed MiBankHealth as interest in self-funded plans grows among small businesses. Both Priority Health and Blue Cross Blue Shield of Michigan a year ago introduced self-funded plans for companies with as few as 25 employees.

Priority Health “is seeing a lot of interest” in quoting self-funded plans, Norman said. Among the policy renewals and new policies sold in 2014, 60 percent have been for self-funded plans, he said.

“We’re seeing tremendous growth in self-funded,” said Norman, who expects the trend to accelerate in 2015 as employers with 50 or more full-time equivalents are required under the federal Affordable Care Act to offer employees coverage or else pay a penalty.

By self-funding their health benefits, employers can at least avoid the state and federal benefits mandates and have more flexibility to craft benefits packages and manage medical claims, he said.

“Next year is the year you’ll really see the market move,” Norman said.

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