International Benefits Plan Examination
Overview
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Maintains healthcare and AD&D benefits program for expatriate employees who retire or leave the company
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Program covers approximately 1,000 former employees and 10,000 active employees; plan sponsor has over 75,000 employees in over 80 countries
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Former employees covered by the plan reside worldwide
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Plan is financed partly by contributions made by participants while actively employed, partly by premiums after termination of employment and partly by company contributions
Business Challenge
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Plan sponsor had developed a funding model to finance the benefits under this plan and actual funding had strayed from the model
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Per capita healthcare claims under the plan had been increasing at about 7% per year
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Adequate due diligence on program design and funding was required
Solution
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Plan claims and expenses were thoroughly reviewed for a three-year period
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Claims and expenses were compared to premiums and active contributions for the same period
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Records of the insurer and TPA were reviewed for accuracy
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A ten-year actuarial projection was completed to determine ongoing solvency of funding model
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Viability of various plan design and funding changes were analyzed
Results
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Upon review, discovered that service level was questionable and data was inconsistent between TPA and insurer
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TPA claims overpayment of just under $400,000 was discovered and recovered
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Benefits were improved to respond to non-indexed annual plan maximums
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Revised contribution schedule during active employment was created to return to funding model
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TPA and insurer improved service level and responsiveness
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TPA and insurer are working together to ensure data is consistent going forward