Have you noticed there’s a lot of buzz about using a captive insurance company to provide group medical insurance? You might be wondering if it’s something that your company should consider.
There’s a good reason a lot of businesses are starting to look for ways to use captive insurance companies to provide health benefits. Let’s take a look.
We all know that prices go up over time — that’s basic inflation. But the cost of group coverage has outstripped inflation by a huge margin for a long time. As a result, health coverage is the biggest line item after payroll for many companies.
It’s important to provide good coverage to your employees, but you need to do so responsibly so that your business doesn’t suffer. That’s where captive insurance options come in. There are some innovative ways you can improve your situation without sacrificing healthcare.
A captive insurance company for group health is owned by a pool of businesses. You use an operating agreement and stop-loss insurance for risk management. Individual company costs are capped, as are the captive insurance company’s costs.
By using several layers, a group health captive insurance company can provide member businesses with affordable, useful health insurance for the employees, without the soaring costs.
The first layer is the self-funded retained layer. Member companies have a set maximum where they pay costs to cover what employees spend. The second layer, the shared captive insurance layer, allows all member companies to pay a specific monthly amount based on their risk profile and employee demographics. Money that isn’t used comes back to the companies.
Finally, the transferred risk layer is stop-loss insurance which pays for health costs that are beyond the shared captive insurance limits. This helps keep the captive insurance company stable even if there are significant costs from time to time, without requiring more money from the member companies.
Businesses using this method save a lot of money because they are only contributing towards actual incurred medical expenses, and get money back if those medical expenses don’t occur. That’s a lot different than paying a set amount to a commercial insurer regardless of medical need.
If you’re ready to take control of your medical group plan expenses, instead of letting them control you, it’s time to consider a captive insurance option.
We can help. Contact us for more information today!
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