Healthy Savings With Team Effort

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To save on the high -- and still escalating -- costs of conventional health insurance coverage, 37 Chicago businesses banded together to form their own insurance trust fund. Ordinarily, "self-funded" insurance has been an option only for large corporations and unions, but this group of manufacturers and retailers saw no reason self-funding couldn't work for them.

Here's how self-funding works: Each member of the Northwest Chicago Employers Insurance Trust (NCEIT) makes an annual contribution to cover the cost of claims and operating expenses. If contributions run in excess of claims payments, they are held in interest-bearing accounts, and any profit results in decreased premiums or increased benefits for the next year. Large claims over $15,000 are uncommon, but they are covered by Boston Mutual Life Insurance Co. in Canton, Mass.

The self-funded concept, says the NCEIT, minimizes the overhead associated with large insurance companies by eliminating profit margins, sales commissions, and premium taxes. And, they say, claim payments are processed in about one-tenth the time it takes large insurance companies.As for cost savings, member companies report saving about 23% annually over conventional insurance costs.

For more information on a multiple-participant program for self-funded insurance, contact June Lavelle, NCEIT, 325 N. Hoyne Ave., Chicago, IL 60612, or telephone (312) 421-3941.