Advantages & Disadvantages of Spaggregate™
To the TPA:
Spaggregate™ offers TPAs a competitive edge in total cost comparison in a market where much attention is paid to major increases in maximum cost that are occurring on a more frequent basis. In a mundane commodity environment, Spaggregate™ is a new package that avoids the divide-and-conquer attacks on traditional stop-loss components such as the specific deductible, aggregate factor, and the different premium elements. Spaggregate™ allows the TPA to be more proactive and creative in benefit consulting services since things such as low benefit options are now more attractive to the stop-loss carrier. TPAs find additional benefit in the fact that there is no filing specific and aggregate claims. Perceived disadvantages to the TPA include the fact that the plans must be situated in one particular place. TPAs are likely to lose some leverage with their local banks mainly because they will not be allowed to maintain the employer bank accounts locally. Claim paying ability at the TPA will be monitored and managed in a more detailed way, similar to the manner in which first-dollar fully-insured TPAs are reviewed and managed. Spaggregate™ monthly flow of funds requires TPA hold funds in a way that has not been typical under standard specific and aggregate stop-loss products.
To the Employer:
Spaggregate's™ main advantage to the employer is that the maximum cost of a budgeted self-funded plan is lower. Along with that, employers find that the flexibility of plan design is enhanced as compared with standard stop-loss products. This increase in flexibility is attributed to the simple fact that the carrier/reinsurer (risk takers) have a more direct interest in the success of such plan designs. Spaggregate's™ full-funding design means a well-defined budget without surprises, an obvious benefit to any business owner. Claim hassles that can occur under a traditional specific and aggregate arrangement are simplified under Spaggregate™. Employers find the main limitation of Spaggregate™ to be the obvious fact that a much higher proportion of total costs are paid as fixed costs and the retained self-funded portion is much lower with traditional stop-loss. This set-up also means that some extra amount is being paid towards premium tax than would otherwise be the case. The full-funding requirement, while having value, may be viewed in a negative light by some employers. The total package offered by Spaggregate™ provides the more competitive total cost combined with the peace-of-mind obtained from a known budgeted amount without the surprises and hassles of irregular cash flow and traditional claim filing requirements. When seeking predictability of cost, competitive total cost, and flexibility of benefit design, Spaggregate™ is the best choice.