What Are the Financial Impacts of COVID-19 on a Self-Funded Health Plan’s Budget?

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Three considerations for forecasting costs

We are all aware of the obvious impacts of COVID-19 on the Tribe’s financials. Revenue coming to a screeching halt when the casinos were forced to close. Continued operating expenses that includes attempting to leave employees enrolled in the health plan with little to no revenue coming in the door. The added expenses associated with adjusting the operation to try and re-open facilities. The list goes on and on …

As we enter the health plan renewal season for calendar year plans, there are some additional impacts of COVID-19 that many had not thought about. This pandemic has impacted our ability to accurately project future costs for self-funded health plans using traditional methods. In this article, we will outline three of the items that will need to be considered when forecasting plan costs which will demonstrate the importance of having a trusted advisor with strong underwriting and actuarial expertise.

1. Historical Data

Future health plan costs are projected using historical claim data. Therefore, actuaries and underwriters would typically use 2019/2020 data to predict the 2021 health plan costs. As Coronavirus numbers started to increase significantly during the middle of March, healthcare providers began to see a drastic decrease in people seeking non-emergent care. Emergency room numbers were down, ambulatory surgery centers stopped all elective procedures and primary care clinics were not seeing wellness/preventive patients. Since we have a 30 to 60 day lag from the time a claim is incurred (date of service) until the claim is paid by an insurance carrier or third party administrator, we started to see claims experience decrease towards the end of April and this trend has continued through the point in which this article is written. So, if we use the most recent 12-24 months of experience to project future costs, our projections will be significantly understated.

2. Cost of Treatment

Another item that will impact future health plan costs that actuaries and underwriters have not had to consider in the past is the cost of testing and treatment of COVID-19. Projecting the cost to treat COVID-19 is difficult as it’s somewhat of a moving target. The cost of treatment is largely based on the demographics of a population and the geography in which the plan participants reside. For example, a health plan with an average age of 55 where the Casino is located in New York will see much different plan costs then a casino in a rural area with an average age of 30.

3. Cost of Testing for Tribes

Finally, Tribes and the enterprises need to consider the added costs of testing for COVID-19. Most self-funded plans are covering the cost of testing as a covered benefit under the plan. This is much more straight forward to predict when compared to the treatment of COVID-19; however, it is still a significant cost and will need to be factored in to the renewal projections. In addition, the casino’s will need to budget for testing outside of the health plan so they are able to provide the necessary testing in order to re-open and remain open.

The health of our team members and our organizations will be impacted well into 2021 from COVID. Understanding today’s legislation and your options is critical.


Face Rock Enterprises is a Native-owned consulting firm that was established in order to help Tribe’s and their enterprises manage its financial resources. Got questions? Want a sounding board? You can reach me and my team at [email protected]. We’re here to help.


Tyler Moore