The Medical Savings Account Program Model For Employers
II. High Deductible (Catastrophic) Medical Insurance

High deductible medical insurance is the second piece of risk financing for insured or self-insured employers. Self-insured employers who choose to retain the 100% coverage that exceeds the annual deposit of the MSA (deductible or threshold) need to establish risk retention limits expressed as occurrence and excess aggregate amounts. This coverage can be provided and administered under various methods and strategies:

• Self-insurance
• Excess risk insurance with a re-insurance company
• Excess risk agreements with a health insurer
• Negotiated agreements with a health provider organization (HMO, PPO)
• Agreements with a third party administrator, and/or
• Agreements for administrative services only

Self-insured employers should use qualified brokers, excess risk specialists, and health actuarial consultants to determine the actuarial criteria for both the MSA contributions and reserve required for retention or payments required for excess risk coverage. They will need specific historic and prospective census and age data, two years detailed experience and claims data, historical premiums paid for the covered population, and detailed current plan descriptions.

Insured employers who choose to shift the risk for 100% coverage above the MSA contributions need to, purchase coverage at levels no less than current benefit levels. This coverage can be provided by:

• Purchase of higher deductible single and family health insurance plans
• Negotiated arrangements with a health provider organization (HMO, PPO)

Both insured and self-insured employers should offer employees benefit packages which are similar and warrant no greater maximum out-of-pocket exposure than provided by the previous employee plan.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org