School leaders often ask questions about edHEALTH and how we work with our member-owner schools. We’re using this edHEALTH space to answer some of the most common questions we receive.
We work closely with our schools' Finance and Human Resources departments. Together, they play an important role in the success of our consortium for educational institutions. As edHEALTH’s mission is focused on helping higher education institutions and secondary schools save money on their employee health insurance costs, we begin by answering seven common finance-related questions.
1) How does edHEALTH save my educational institution, faculty, and staff money?
edHEALTH’s coalition of member educational institutions provides purchasing clout that helps drive down healthcare costs. By coming together, the members of edHEALTH realize lower costs than fully insured plans or go-it-alone self-insured options:
- Larger group = better pricing and less volatility
- Low negotiated Third-Party Administrator (TPA) fees
- Transparent advisor payments
- No payments of profits to TPAs on top of claims (unlike fully insured plans)
- Reduced Affordable Care Act (ACA) taxes
Most programs and services are identical between a fully insured and self-insured healthcare arrangement. The difference is in the funding and potential savings. With a fully insured arrangement, the employer pays an insurance company a negotiated premium that includes expected claims payments based on the employer’s risk pool; plan design and claims history; broker fees; net profits; and administrative fees. With edHEALTH, each school is individually self-insured and co-owner of a medical stop-loss captive. With self-insurance, schools choose their own risk tolerance. Schools pay the actual cost of claims, stop-loss premiums, and a group-negotiated administrative fee, but don’t pay broker commissions and administrator profits. Bottom line: Individual schools have the opportunity to pay substantially lower employee healthcare costs.
A captive is an insurance company that is wholly owned and controlled by its members to insure the risks of its member-owners. Additionally, schools may have an opportunity to share in any surplus earned by the captive.
4) Is there added risk in a self-insured plan?
The captive structure, including external stop-loss, pooled risk, and individual member funding (self-insured retention) provides protection for 100% of the risk. edHEALTH works with member institutions to determine their risk tolerance and provides protection to minimize it.
5) How is my school protected from a bad claims year?
Each member school chooses its own self-insured retention rate based on its risk tolerance, philosophy, financial status, and experience. This allows schools to determine how much risk they are comfortable with for a specific claim. Any claims above the institution’s self-insured retention rate (SIR) are paid by the captive.
edHEALTH’s purchasing power allows us to negotiate low third-party administrator (TPA) fees. Each member school selects its own TPA and plan design from our suite of healthcare options. We underwrite an institution’s rates based on a school’s plan design, claims experience, census data, and the selected self-insured retention rate.
Our member-centric approach to rising healthcare costs provides valuable savings, ownership, transparency, and innovation.
Savings - Through our purchasing clout, we consistently negotiate lower administrative fees and enjoy less healthcare cost volatility than schools can realize on their own. Our pharmacy carve-out has saved member institutions an estimated $51M between 2017 and 2021. Person-centric clinical health initiatives help us improve quality of care and reduce costs for the employees and family members who need it most. Results show that our innovative approach is working. The nine-year average health insurance premium increase is 3.5%, well below the industry average of 7.8%.
Bottom line — employee satisfaction, high quality of care, and valuable savings you can pass along to students and families.
Ownership - edHEALTH is a member-owned consortium run by and for its educational institutions. As a member, the schools share in the savings generated by the group. To date, edHEALTH has awarded dividends of over $3.2 million. Member-owners control and have a meaningful say in the decision-making process and enjoy direct access to plan administrators. edHEALTH provides multiple forums for member-owners to share and learn from one another.
Ask any of our members and they’ll tell you — collaboration is a key benefit of belonging to edHEALTH.
Transparency - Health insurance works when employers have the data they need to make informed decisions. edHEALTH’s transparent approach means member educational institutions are apprised of all rate components. And, our collaborative approach enables colleges and universities to compare cost utilization, trends, and best practices with other member schools.
Innovation - edHEALTH is the innovative healthcare solution for higher education institutions and secondary schools along with their faculty, staff, and family members. Our self-insured healthcare offerings are tailored to meet the needs of our members. Through data analysis, groundbreaking programs, and decision support, we help educational institutions select programs that meet their needs while containing rising healthcare costs.
