$495,000 in Premium Stabilization Through Family Advantage Health Plan Risk Transfer
- Cottingham & Butler
- Nov 14
- 3 min read
What began as unsustainable funding with loss ratios exceeding 100% transformed into three consecutive years of flat premiums through strategic risk transfer. This transformation delivered $540,000 in total savings while maintaining coverage for employees and their families.
The Situation
A state-funded school district with approximately 200 full-time employees, faced mounting financial pressure from escalating healthcare costs. As a state-funded entity, the district lacked the ability to raise revenue independently, making cost containment critical for operational sustainability.
Like many public school districts with limited funding flexibility, they needed innovative solutions to manage healthcare costs while maintaining competitive benefits essential for attracting and retaining quality educators and staff.
Why They Needed Change
Fragile Funding Model: As state-funded School District they lacked the ability to raise revenue independently, creating budget constraints.
Compounding Financial Pressure: Year-over-year loss ratios exceeded 100%, straining the district's budget and threatening the long-term affordability of employee healthcare coverage.
"Magnet Plan" Concerns: The plan offered disproportionately rich coverage, making it highly attractive to families and resulting in an elevated dependent ratio (~3.5 vs. benchmark 2.0), driving unsustainable utilization.
Limited Revenue Options: Unlike private employers, the district cannot simply raise prices or fees to offset healthcare cost increases, requiring strategic cost management solutions.
Competitive Necessity: Maintaining attractive benefits packages is essential for recruiting and retaining quality educators in a competitive job market.
Key Wins
Loss Ratio Transformation - Reduced loss ratios from over 100% to 70%, creating sustainable financial foundation for the healthcare plan
$495,000 Premium Stabilization - Maintained flat premiums for 3 consecutive years, avoiding significant cost increases that would have strained district budget
$540,000 Total Savings- Cumulative savings through Year 3, with $155,000 in net savings achieved in Year 1 alone
Family Advantage Health Plan Success - Strong early FAHP adoption doubled after Year 1, demonstrating employee acceptance and program effectiveness
Risk Transfer Strategy - Successfully leveraged risk transfer mechanisms to stabilize financial exposure while maintaining coverage
Future Innovation Pipeline - Positioned for next phase improvements with proposed MyAdvocate360 implementation
What is Family Advantage Health Plan (FAHP)?
The Family Advantage Health Plan is an innovative program that provides 100% healthcare coverage to eligible employees' families. Employees with access to a spouse's health plan can transition to dual coverage, receiving full reimbursement for out-of-pocket expenses through an HRA plus monthly premium assistance.
This creates a win-win scenario where high-utilization employees gain coverage while employers save an average of $10,000 per family of four that transitions. The program requires no changes to existing plans or relationships, allowing employers to improve their risk profile and reduce costs while maintaining valuable employee benefits.
The Cottingham & Butler Approach
Expert Risk Analysis
Our experienced consultants conducted comprehensive 3 C's analysis to understand the district's unique challenges and identify optimal risk transfer opportunities aligned with their state-funded constraints.
Analyzed loss ratio trends and cost drivers
Evaluated dependent ratio impacts on plan sustainability
Assessed funding model limitations and budget constraints
Identified risk transfer opportunities and solutions
Strategic Risk Transfer Implementation
Understanding the district's funding limitations, we implemented Family Advantage Health Plan as a strategic risk transfer mechanism, providing employee protection while stabilizing district costs.
Designed FAHP program with $50/month per person benefit
Focused on out-of-pocket cost coverage to maximize employee value
Structured program to transfer risk away from primary plan
Created sustainable cost model aligned with district budget realities
Ongoing Optimization and Innovation
Our commitment extends beyond implementation to continuous improvement, monitoring results and identifying next-phase enhancements to maintain competitive advantage.
Monitored adoption rates and employee satisfaction
Tracked financial performance and cost savings
Identified opportunities for further optimization
Developed roadmap for future innovations like MyAdvocate360