January 21, 2022

Captives for Group Medical Benefits

3 min read

Jarid S. Beck, ACI, ARM; Managing Director, Risk Management Advisors

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.

Health Insurance Costs Are Soaring

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.

How to Use Captive Insurance Companies

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 for the costs they pay to cover employees' expenses. 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 contribute only to actual medical expenses and get money back if those expenses don’t occur. That’s a lot different than paying a set amount to a commercial insurer regardless of medical need.

Save Money With Captive Insurance

If you’re ready to take control of your medical group plan expenses instead of letting them control you, consider a captive insurance option.

We can help. Contact us for more information today!

Discover if a captive insurance company is the right fit for your business.

Click the link to start the assessment:

https://www.riskmgmtadvisors.com/captive-insurance-fit-assessment

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.

Jarid S. Beck, ACI, ARM; Managing Director, Risk Management Advisors

Jarid S. Beck is a Managing Director at Risk Management Advisors. He is a career specialist in the design, implementation, and management of alternative risk management (ARM) strategies, including self-insured plans and captive insurance companies. Jarid's diverse insurance background allows him to deliver technical insurance solutions to clients in a wide variety of industries, including construction, real estate, staffing, manufacturing, trucking, and finance. Jarid was awarded the Associate of Captive Insurance (ACI) designation from the International Center for Captive Insurance Education (ICCIE) and the Construction Risk Insurance Specialist (CRIS) designation from the International Risk Management Institute (IRMI). He is a noted authority on using self-insurance and captives as a tool for companies to reduce the cost of providing group medical benefits. Jarid graduated from the University of California, Riverside, with a degree in Business Administration.