Pre-fund arrangement

Specific Client Challenge

A public sector client entered into a pre-fund arrangement in which the termination language favored the insurance company.

Valley Forge Benefits Consulting was retained by this client to evaluate their options as they exited the pre-fund arrangement in 2005 as agreement expired.
Valley Forge Benefits Consulting was instrumental in negotiating additional surplus monies totaling $2M
- The client was paid $950,000 in 2006 with a final $950,000 paid in 2007
- Secured $1,182,000 of administration fee savings offsetting prior surplus
In 2006, VFBC:
- Secured 3-year self-insured arrangement from the insurance company
- Implemented direct Rx program with 15% savings of overall drug spend
- Implemented wellness program initiatives

Employer decision was to implement VFBC recommendations as follows: self-fund medical, direct contract prescription drug arrangement and implement a comprehensive wellness program.

This client has saved considerably and costs in 2006 were $1.47M under what they would have been had the client stayed fully-insured
Chart below illustrates the actual saving realized ($8.1M over 3 years) by exiting the pre-fund and self-insuring the programs