A Self-Funded Captive Option May Be What You’re Looking For

Each year, employers face the same old considerations with their group health insurance renewals, carriers, networks, plan designs, rates and employee demographics. Wouldn’t it be great to be able to think outside the box with a Self-Funded Captive option?

Believe it or not, this can be a viable option for an employer group with as few as 50 to as many as 250 enrolled in an existing health insurance plan.

Consider a Captive

A Captive is a special-purpose insurance company made up of like-minded employers that want to control costs and have more of a say in how employee benefits are designed and managed. Becoming a member of a captive reduces your year to year volatility. I t also allows you to create a multiyear strategy to reduce the overall cost of health insurance.

With a Captive, you will become familiar with a few moving parts. Employer groups will work with a Third-Party Administrator to pay group claims and administer the plan. The group will choose a Provider Network as well as a Pharmacy Benefit Manager (PBM). With the high cost of prescriptions and specialty medications, the PBM is a key factor in cost containment.

How a Captive Works

With a self-funded plan, employers will pay the first dollar claims up to a specified maximum. We then establish a “Specific Stop Loss” as the maximum risk an employer has for each member in the group. Captive Stop Loss pays claims above the Specific Stop Loss. The Reinsurance Carrier then pays any large claims.

When the Captive and the Employer group have a successful year, any claims surplus will be shared with the members of the group.

It takes a committed employer to become educated in the workings of a Captive. As your broker, The Dowd Agencies work closely with you on education, plan design, implementation and servicing to help make this a successful option. We have been creating these captives for more than five years and have built a strong foundation on this subject.

If this sounds like something you’d like to hear more about, we’d appreciate the opportunity to have a more detailed discussion. Contact us for an appointment at your convenience.

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