วันเสาร์ที่ 23 กรกฎาคม พ.ศ. 2554

SELF-FUNDED HEALTH BENEFITS


SELF-FUNDED HEALTH BENEFITS

The following are requirements established by the Department of Public Instruction for fiscal reporting self-funded "self-insurance" health benefit plan transactions in district Budget and Annual Reports. Expenditures for self-funded plans shown in these reports must include the total fiscal year costs incurred, including an estimate for incurred but not reported (IBNR) cost. The district should confer with appropriate professionals and the Wisconsin Commissioner of Insurance prior to implementing a self-funded health benefit plan. The Commissioner of Insurance has the authority under Statute 120.14(1) to specify information about the self-insurance plan to be included in the district's annual audit.

1. ESTABLISHING A PREMIUM EQUIVALENCY CHARGE:

· In consultation with professional advisors, a "premium equivalency charge" is developed annually. The premium equivalency charge should include all cost expected to be incurred as a result of offering the plan such as:

o expected incurred benefit costs - both reported and unreported

o stop-loss insurance

o plan administration costs

· The premium equivalency charge cannot include a provision for potential costs other than the expected annual costs of the plan. Adequate stop-loss insurance should be acquired to provide for greater than expected plan costs. Prior to establishing a fund balance reserve for greater than expected cost the district should discuss with legal counsel as to statutory authority or contractual requirements to do so.

2. ACCOUNTING ENTRIES: A series of General Fund (Fund 10) balance sheet accounts are used to account for liabilities and fund balance relating to the self-funded insurance plan.

· Health Benefit Expenditure Accounts - The district's share is budgeted for and expended to Object 240 using the appropriate function for individuals included in the plan.

· Self Funded Health Deposit Accounts - The offsetting liability account for the expenditure charge is account 815 100 "Self Funded Health Benefit Deposits" (sub-accounts used: 815 110 "District Share", 815 120 "Employee Share", 815 130 "Non-Employee Payments").

These accounts serve as temporary deposit accounts for premium equivalency payments made by the district, employees and retirees. The accounts may be further subdivided to separate the various types of plans (health, dental) or participant groups.

· Claims Payable Transaction Account - In the period benefit coverage is provided, the contribution deposit accounts (815 100 series) are charged (debit entry) and the "Claims Payable" account (817 000) is credited. Payments for benefit claims and associated costs are charged to this account.

· Fund Balance reserved for Self Insurance – Fund Balance Account 931 400. That portion of fund balance that is restricted for self insurance purposes. This fund balance is not available for board designation or general operating purposes. Districts should build a reasonable fund balance to ensure that the plan is able to provide benefits to covered employees during a high claim year. A high fund balance resulting from several low claim years should serve to allow the district to determine a lower premium equivalency charge.

· Incurred But Not Reported Claims – IBNR. Heath and dental services (claims) incurred by covered employees as of June 30th that have not been submitted (reported) for payment as of June 30th. The district's plan administrator should be able to provide the district with an estimate for IBNR as of June 30th.

3 FISCAL YEAR END

· Fiscal Year End Adjustment to Claims Payable Account - The Claims Payable account (817 000) is to be adjusted at June 30 to include only the unpaid claim liability and associated plan costs.

o "Unpaid claim liability" includes only reported claims and the estimate for incurred but not reported (IBNR) claims as determined by the district’s plan administrator.

o Any necessary adjustment is to be allocated against Self Funded Health Benefit Deposits (account 815 100)

· Fiscal Year End Adjustment to Self Funded Health Benefit Deposit Account – The June 30 balance in account 815 110 "Self-Funded Health Care Deposits Payable - District Share" must be adjusted on June 30th to equal the district's share of premium equivalencies for health benefits related to employee services prior to June 30 but which will be used to fund coverage after that date, i.e. "summer payrolls" and any prepaid retiree premiums.

o Any necessary adjustment is to be allocated against Self Funded Health Benefit Deposits (account 815 100) expenditures in the appropriate fund-function benefit object 240) expenditure accounts.

o Any amount above the summer payroll and retiree premiums is considered excess premiums based on estimates and must be credited back to the object 240 expenditure accounts to ensure only actual expenditures are reported.

o If the benefit charges have been claimed against state and federal categorical aid programs, claimed costs must include the effect of any adjustment to the benefit expenditure accounts. This may require filing amended claim forms or refunding over-claimed costs.

o If the June 30 adjustment to actual costs is 5% or less of expenditures charged to the plan during the fiscal year, the district at its option, may make the adjustment against object or source account 965 "Self-Funded Health Benefit Cost Adjustment" rather than allocating against the fund-function-object 240 account codes. No amendment or change to state and federal categorical aid claims is made if the adjustment account is used.

· Fund Balance Reserved for Self Insurance Year end corrections to object 240 and object/source 965 should close to Fund Balance Reserved for Self Insurance ( account 931 400)

o Districts should build a reasonable fund balance to ensure that the plan is able to provide benefits to covered employees during a high claim year. A high fund balance resulting from several low claim years should serve to allow the district to determine a lower premium equivalency charge.

o A deficit Fund Balance Reserved for Self Insurance should act as an indication that the premium equivalency charge is insufficient to provide proper coverage and may need to be increased.

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