Self-Funded Insurance Plans Can Provide Healthy Savings For Government Entities

Dec. 27--Lake Metroparks and the Lake County Board of Commissioners are using self-funded plans to blunt the budgetary impact of steep increases in premiums for employee health insurance.

Kenneth E. Kleppel , administrative services director of Lake Metroparks, said the self-funded plan in which 122 full-time employees are enrolled saves "hundreds of thousands of dollars" every year compared with what the agency would spend if it had a conventional plan and was paying premiums to a health-insurance carrier.

Lake Metroparks has had a self-funded plan for health care, major medical, vision and dental care, prescriptions and life insurance since 1989, Kleppel said.

Lake County Commissioner Raymond E. Sines said similar savings are realized every year by the county with a self-funded plan that covers 1,200 county employees.

Basic per-month, per-employee rates for the Lake Metroparks plan are $251 for a single employee and $760 for a family plan. In the open market, comparable coverage in 2011 would cost an estimated $400 (single) and $1,150 (family).

"I challenge you to find anyone spending that for a plan as comprehensive as ours," Kleppel said.

Shortly after he became administrative services director in 1989, Kleppel said he undertook an examination of the conventional health-insurance plan then in place at Lake Metroparks.

"We have a healthy, stable work force comprised of individuals who are concerned with their health and in generally good shape," he said.

"I looked at the numbers and thought to myself, 'This is nuts. We need to explore a viable alternative.' "

The alternative recommended by Kleppel was a self-funded plan.

As of Nov. 30, the fund had a reconciled balance of $870,358.32.

The fund is protected by a stop-loss insurance policy that kicks in whenever charges for major medical care for a single employee exceed $80,000.

According to Kleppel, the 2010 operating budget for Lake Metroparks is $15,904,276.

"Expenditures for health this year will run at about 5.97 percent of that budget.

"This couldn't have worked out better for Lake Metroparks, Lake Metroparks employees or the taxpayers of Lake County," Kleppel said.

With allowance for a larger work force and larger claims fund, the mechanics of the self-funded plan instituted seven years ago by the Lake County Board of Commissioners are similar to those in the Lake Metroparks plan.

Sines said the county also has a self-funded plan for workers' compensation.

"Before we were self-insured, we were confronted by increases in health insurance premiums of 10 percent, 15 percent and 20 percent every year," Sines said.

"That's why we explored the option of self-funding.

"We were in a financial position to do it, so we did it."

Serving as a consultant to Lake County commissioners for their switch to a self-funded plan was Jim Dustin , president and founder of Employee Benefits International of Independence.

Formerly a group sales representative for a major health insurance company, Dustin left that position to start his own consulting business.

"Any business or government entity with 150 or more employees should at least consider the option of self-funding," Dustin said.

Since he assisted the Lake County Board of Commissioners in moving to a self-funded plan, Dustin has done the same thing for various government agencies in Cuyahoga and Summit counties.

"We talk about ways to help political subdivisions contains health-care costs without jeopardizing the quality of coverage," Dustin said.

In an average year, government entities or businesses with established self-funded plans instead of conventional health insurance plans can trim up to 15 percent from health-care costs, Dustin said.

"Particularly now, with health insurance costs looming as such a big concern, you can manage your own money and not be at the mercy of insurance companies," Dustin said.

The city of Eastlake and six other local government entities have taken the opportunity to join the self-insured health care plan started by Lake County commissioners.

Eastlake Mayor Ted Andrzejewski said an estimated 150 city employees are enrolled in the plan.

"Our group is comparatively small and our work force is older," Andrzejewski said. "Being in this plan made us part of a much larger group and helped stabilize the costs of our health insurance.

Being in the county's plan shielded Eastlake's general fund from taking a big hit in 2011.

"Our premiums are going up about 13 percent this year," the mayor said. "But if we were out on our own, the increase would have been closer to 30 percent.

"We're finishing our third year in the county and have just enrolled for three more years. We're very happy," Andrzejewski said.

Here are the other entities enrolled in the county's plan:

--Lake County Fair Board

--Lake County Health District

--Laketran

--Leroy Township

--North Perry Village

--City of Wickliffe

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