If you’re looking to maintain a high level of control over how you are insured, while still protecting your company financially, captive health insurance may be the best option for you. A partially self-funded captive insurance company allows you and your employees to share risk and purchase reinsurance together within a tiered structure. Captives provide market leverage and allow members to increase the predictability of medical costs.
What is an Insurance Captive?
Fully-insured premiums cover claims, taxes, reserves and more—which you may not see if you pay out fewer claims than expected. On the other hand, captive health insurance, also known as medical stop-loss, allows you to pay employee claims directly. A captive structure is generally planned out in three tiers:
- First tier: employer layer or the maximum you’re responsible for on a large claim
- Second tier: captive medical stop-loss or a shared risk layer that is funded by reinsurance premiums and pays members’ claims that are beyond the first tier
- Third tier: traditional reinsurance or the layer that protects the captive stop-loss from substantial claims and pays out after the first two tiers are reached
Why Use Captive Insurance?
There are several benefits to establishing and managing captive insurance companies for health insurance. The Dowd Agencies will help you:
- Have more control over your medical costs, budgeting your spending similar to other expenses
- Receive underwriting profit returns, which can motivate employees to develop strategies for improved health and risk management
- Provide more protection than fully self-funded plans, providing an extra layer of protection between you and your stop-loss carrier
While captive insurance allows you the freedom to make the choices you need for your business; it requires an increased administrative presence. That’s where Dowd comes in, partnering with you to assist with claim administration, loss control and underwriting.