Self-funded plan information
I have heard that the new city plan is a self-funded insurance plan. What does that mean?
In a self-funded plan, the employer (in our case, the City of New York) pays the medical bills directly when claims come in. “Self-funded” does not mean that individual members are paying their own medical bills. The “self” is the city in our case.
The insurance company is still there, but now they’re acting as the administrator — processing claims, running the network of doctors and hospitals, and providing customer service.
This has no effect on us and the health care we receive. You will still use your health insurance card, go to doctors and hospitals, and pay the copays and deductibles like you’re used to.
Moving to a self-insured plan, from the current plan — which is technically a “minimum premium” plan — allows more flexibility in our case, with larger provider networks and fewer denials, since it’s not about what makes an insurance company money, but about meeting negotiated standards.
Well, could the city run out of money and not pay our insurance claims?
The city currently pays our insurance claims and has for many years. The GHI CBP plan is a minimum premium plan that operates very similarly to a self-funded plan and means the city will continue to pay our insurance claims as they do now. The city budgets carefully because they know that it is their responsibility to pay for city workers' health care. The city has never yet hit such an extreme financial emergency that it has not been able to cover our health care costs, and the switch to a self-funded plan does nothing to make that more likely because it operates essentially the same way our current plan does.
Does "self-funded" mean that the plan is not subject to city Department of Financial Services oversight?
No. NYCE PPO would be fully protected by law. The New York City Department of Financial Services (DFS) does not have direct oversight of self-funded plans (as they are not an “insured” product), but the agency still has oversight of EmblemHealth and UnitedHealthcare. The new health plan must comply with state and federal mandates, and consumers can still go directly to the Department of Financial Services with complaints.
NYCE PPO must also follow state consumer protection laws, including grievance and appeals processes. The proposed plan maintains internal grievance and appeal rights, as well as the ability to further appeal externally. In addition, plan members may file complaints directly with the Department of Financial Services even before completing the internal appeals process.
Does self-funded change what NYCE PPO is required to cover as a result of state and federal mandates?
No. NYCE PPO must follow New York State and federal mandates regarding benefit coverage. Because the MLC insisted that NYCE PPO be based on the laws of New York, the plan must comply not only with federal mandates, but also with state mandates on benefit coverage, such as prescription drug formularies and preventive care standards. Further, because ERISA does not apply to government plans, the state can enforce its own insurance laws, including:
- Mental health parity: Mental health coverage must be equivalent to physical health benefits
- Autism spectrum disorder services: Required coverage for diagnosis and treatment
- Infertility treatment mandates: Certain plans must cover medically necessary infertility services
- Prescription drug coverage standards: Plans must follow state formulary and access rules
- Gender-affirming care: Plans must cover surgery for participants who are 18 or older.
- Reproductive health: Plans must follow state mandates with regard to access and costs.
What is the benefit of a self-funded plan?
Self-funded benefit plans are very common with large employers, including many large unions across the country. A primary benefit of a self-funded plan is the flexibility in plan design.
Remember: all changes to any plan design are still subject to collective bargaining. Unions have a seat at the table to both advocate for improvements and fight back against any attempts to diminish benefits in the future.