Health Plans Pose Greatest Multi-Employer Plan Admin Cost

January 9, 2006 (PLANSPONSOR.com) - Health plans had the highest expense-to-asset ratio of all benefit program types, according to a recent survey on the fund office administration for 230 multi-employer plans.

According to a press release on the Segal Company survey, the health plan expenses were equal to 15% of plan assets. Segal said that corresponded to the generally increased technology, staffing and processing volumes and regulations surrounding the administration of health plans compared to other types of plans.

Segal also said that m ore than one-third (37%) of heath funds receive 75% – 100% of medical and hospital claims in an electronic form; however, a nearly equal amount (36%) do not receive claims in that format, despite the recent requirements of the Health Insurance Portability and Accountability Act (HIPAA).

Half of the plans spend $25,000 or less on software and information technology support. The largest group (22%) spent between $10,001- $25,000 and only 5% spent more than $500,000.

The survey found that t he staffs of fund offices averaged about 338 participants each and that:

  • 13% of claims processors work on more than 150 claims per day.
  • 12% process between 101-150 claims daily; and
  • 19% process between 76-100 claims per day.

Twenty-seven percent of fund offices typically receive more than 2,000 calls from participants each month; 11% receive between 1,001-2000 calls; 15% received between 501-1,000 calls; and 14% received between 251-500 calls each month.

As far as claim turnaround, nearly 40% said it takes five business days or less and only 13% said it takes more than 15 days.

In addition, more than half (58%) of the respondents with annuity/401(k) plans reported allowing participants to self-direct the investment of their accounts and more than 60% of plans do not allow loans of any kind.

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