In our pooled plans, premiums are based on an average of thousands of claims generated from all groups, combined. In other words, when one group’s claims are high, their rates do not spike because the groups in the pool with lower claims facilitate a balance. This plan is favorable for small businesses.
In our partially pooled plans, firm rates are assessed and adjusted based on the makeup of the individual group. Partially pooled plans do fluctuate–but always prediably, and oftentimes to a firm’s advantage. For example, if a firm displays exceptional claim history, a discount is applied to their rate. On the contrary, if the firm faced an unfavorable following year, because rates are partially pooled, their rates wouldn’t spike to directly reflect that year. Instead, a portion of their discount from the year before might simply be removed. The aim for partial pooling is to maintain stability in the long-term. This plan is favorable to small-medium sized businesses.
Group insurance plans that are experience based, are individually rated, based on the difference between the annual claims submitted and premiums collected. The insurance companies Target Loss Ratio (TLR) is factored in, plus Trend (or inflation) and that is how your premiums are re-calculated on an annual basis. You are a “group of one” as opposed to being part of a pooled program.
ASO (Administrative Services Only)
ASO plan costs are the most customizable and controllable, calculated based on actual claims filed by a company, rather than anticipated claims. With this plan, the employer administers claim costs for their employees on a monthly basis. Claims are paid by the administrator, then billed retroactively the following month, plus the (administration fee). Cash flow is controlled, as opposed to paying a monthly premium, then adjusted annually for the following year. At the annual renewal date, there is no Trend (inflation), or IBNR (reserves) factored into the following years premiums. It’s “pay as you go” based on your claims. There are “stop loss” & “out of country” premiums billed, to prevent “high cost” catastrophic claims.