Is the VADA Health Risk Consortium Your Solution to Lowering Healthcare Cost?

It’s a CFO’s worst nightmare.   After years of thinking about the move, you finally did it.   You just moved the Company’s medical plan to a Self-Funded arrangement and took that leap of faith.   But then it happened.   An employee was just diagnosed with a serious illness and the treatment plan will cost hundreds of thousands of dollars.   What now?   Will the company be liable under this new Self-Funded medical plan?  Equally important, will the employee receive the same level of care under the Self-Funded plan as they would have received with the previous Fully-Insured plan?  It was a big decision to move to the Self-Funded arrangement and now it’s time to see how the plan is going to play out.

When VADA Benefits & Insurance talks to employers about the benefits of moving to a Self-Funded platform with their Major-Medical plan, this scenario is the most common response we hear.   Employers are afraid of those shock claims, the once every 3 to 5 year scenario when an employee finds themselves in a situation where hundreds of thousands of dollars are spent on medical care.   The Cancer diagnosis that requires the most advanced treatment.   The premature child birth that requires months in the Neonatal Intensive Care Unit.  The list goes on and on and the costs can be staggering.  So how can Employers move the Company’s Major Medical plan to a Self-Funded arrangement and still have the peace of mind that the company or the employee will not face financial ruin in the event of a catastrophic illness?    The answer just may be VADA Benefits & Insurance’s Health Risk Consortium.

As medical premiums continue their year over year cost increase, many employers are exploring alternative solutions to their traditional fully insured medical plans.   At VADA Benefits & Insurance, we offer a unique solution to join an exclusive Health Risk Consortium (HRC) in order to share risk among a similar pool of employer groups, primarily found here in Virginia.  As you may know, any Self-Funded arrangement consists of three main components, the Network for employees to access, the Third-Party Administrator (TPA) to process claims and act as a service center for the employer and employees, and finally, the reinsurance to protect the employer’s resources from the large claims that can be so devastating.  This reinsurance component is where an employer has some flexibility.  How the reinsurance is purchased and what sort of performance payoff the reinsurance carrier provides can make a world of difference to the company’s bottom line.

Through the simplicity of the VADA-HRC, employer groups are able to purchase the reinsurance through a controlled Consortium of like-minded and stable employer groups.   The benefit of this approach is the cost savings provided through the collective purchase of the reinsurance product.  Furthermore, the consortium includes it’s own acting actuary, which negotiates on behalf of each member of the consortium.   While there is a collective buying mentality involved, each employer group within the consortium stands on their own.  In other words, if one employer group has a bad claim year, it doesn’t affect the rest of the members in the consortium.  The other piece to the puzzle is the network.   The VADA-HRC utilizes CIGNA’s powerful PPO network.   Employees can appreciate the access and simplicity of a national PPO network.  No more referrals, no more HMO rules and regulations.   CIGNA’s PPO is peace of mind for employees when it comes to a diagnosis that may require specialized doctors and hospitals.

Utilizing the VADA-HRC gives small to mid-size employers the ability to purchase their reinsurance protection (stop-loss coverages) like a Fortune 500 by leveraging the collective buying power of 1000’s. The end result should provide lower, more stable renewals over the long term.

We encourage you to see if the VADA-HRC or, other unique solutions, might be a good fit for your organization.   The items needed to obtain a proposal are simple and straightforward and VADA Benefits & Insurance is here to guide you through the entire process.

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