Here folks is an ADDENDUM to my last posting, again, penned by a FORMER Winchendon resident who now works for an insurance carrier. He had to have bought self funded coverage; otherwise, the town would not have had to pay for claims. When you self fund, there is what is called a specific deductible. This deductible amount is the total amount the employer, or town, is responsible for when it comes to claims for employees and dependents. Any thing about that amount is paid for by the reinsurance carrier. For example, if the town bought coverage at the 50k level, that means the town pays the claims for any employee or dependent until that persons claims are in excess of 50k. Then the reinsurance carriers pays. The town should also buy aggregate coverage, meaning all claims up to the specific deductible level for everyone on the plan goes towards the aggregate. Most aggregate goes up to one million dollars. Once that level is met, the reinsurance carrier pays all new claims for the rest of the contract year. The cost of this coverage and the maximum liability is determined when the underwriter gives the group a final, firm quote. So, you can see, that the town would know what their max liability would be and would fund accordingly so they would be prepared in the event they had to actually pay claims up to the maximum liability. That is unusual since there is a cushion, or margin, build into the claims by the reinsurer that should almost guarantee their will not be a breach over the maximum cost. If Winchendon bought this type of coverage, they would have put the funds aside and no matter how many catastrophic claims there were, they would never have been responsible for more than the maximum cost that they were paying premium on. Thus the argument is FALSE!
Posted on: Thu, 06 Nov 2014 02:34:03 +0000
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