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flat cartoon design for web mobileHealth insurance captives offer a long term solution to shopping your health insurance every single year.
Captive health insurance programs provide the stability and flexibility that large employer’s experience, down to small and mid-size employers with 25 to 1,000 enrolled members. They also decrease the risk of being self-insured on your own through a captive layer of funding, and since you become the insurance company, you keep any underwriting profit the carrier would normally take.
Our captives allow you to choose your own third party administrator, carrier network, and pharmacy benefit manager. The fixed costs are typically 15%-20% of your total medical spending. When you are fully insured, your fixed costs are 100% of your spend. Even a typical self-insured plan includes fixed costs of approximately 40- 60%.
The retention rates are in the high 90% range with the average increase in total spend averaging less than a 2% increase year after year since 2010. Typical first year realized savings average 5% – 20% below fully insured options.
Our Alera actuaries show a typical company will have a poor claims year 1 out of every 5 years. The four years where claims run well, companies are over paying for their insurance. In that bad claims year, you have the protection of the captive to avoid the roller coaster of renewal increases. Even if you receive a 20% renewal increase in a captive, it is a 20% increase in your fixed cost not your total spend if you were in fully insured or level funded plans.
We have captive options for companies with 25 – 1,000 enrolled employees. Companies that have more than 1,000 employees can still take advantage of some tax benefits of creating a single cell captive.
Contact our benefits department to learn more.
Todd Linn
Employee Benefits Manager
