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A Closer Look Avoid the Sting of 'Affordable Care's' Coming Rate Increases Your AED membership pays off again: The AED self-insured captive program provides opportunity for large savings to most member dealers, and averts many ACA wrinkles. Judy Dunn, controller, and Doug Hansen, president of W.I. Clark Co., the John Deere dealer in Connecticut, got a check for more than $100,000 back from their 2012 health care premiums from Veritas Risk Services, which offers the AED dealer captive program. By Joanne Costin Many experts believe that with the year. However, it is not risk free, regards to rising health care costs, the because the risk is all in the renewal," worst is yet to come. When the Affordsaid Truax. able Healthcare Act is fully implemented, In contrast, self-insured companies large increases in costs for fully ensured pay health care costs out of company small business plans are expected. The funds, purchasing a stop-loss policy primary reason: The law will prohibit that caps the loss from a claim at a carriers from using health history as a predetermined amount. "If someone factor in setting premiums and acceptgets cancer and sends in a $200,000 ing participants; and it will reduce their claim and the company has a $50,000 ability to adjust rates based on age. stop loss policy, they pay $50,000 in Doug Truax, president and managing claims and the stop loss carrier pays the partner of Veritas Risk Services and Illinext $150,000," explained Truax. nois' Republican candidate for the U.S. Under a captive plan, self-funded senate, minces no words about what companies in the group can purchase small businesses should do. "If a group stop loss insurance at a cheaper rate, is fully insured right now, it needs to be and they can get some of that money running from that as fast as it can." back. According to Truax, if the stop Truax predicts that the Affordable loss policy is $250,000, they can get up Care Act will wreak financial chaos on to $175,000 back, depending on the insurance companies over the next group's actual claims. three or four years. Due to a lack of W.I. Clark Company, a John Deere transparency in how the premiums are dealer based in Connecticut, was set, Truax believes there is opportunity experiencing coverage increases of to push those costs onto the groups 15-25 percent a year before turning who are fully insured. to the AED captive insurance offered Under fully insured plans, the through Veritas in early 2010. "We insurance provider assumes the risk never really understood the real reasons of health care expenses for an annual for the increases," said Doug Hansen, cost known to the business. "It is president. "According to our agent, our perceived by some business owners as increases were less than the industry norm." Now self-insured and participating a risk-free environment because they in the AED captive health care plan, have stability in pricing throughout the dealer says its costs are completely visible. So Hansen wasn't surprised when he received a check for more than $100,000 as a result of lower claims the prior year. According to Truax, W.I. Clark is just one of many companies that have realized savings in a self-insured captive plan. "Once you go self-funded, you save money," said Truax. "We have seen this consistently with every group we take on. "When you self-fund, the only increase that you have to worry about is the stop loss insurance and it's only a third of your total costs. Would you rather take a 20 percent increase on a third of your costs, or a 20 percent increase on 100 percent of your costs?" Hansen said, "You are paying in as you go with some anticipation of what expenses are going to be, and if you do better than expectations, you reap a reward from that. There is always the possibility it could go the other way. If our people can help us and themselves by living healthier, we can mitigate that downside." W.I. Clark is encouraging employees to improve their health. In 2012, they offered employee health screenings. This year, the screening will continue and a newly formed wellness committee 44 | www.cedmag.com | Construction Equipment Distribution | October 2013 44_A Closer Look_KP.indd 44 9/27/13 12:35 PM