Benefit Captive – An Alternative Approach
Director of Employee Benefits Captive Practice
If you are in a decision-making role as a buyer of group health insurance, you can more than likely relate to price uncertainty – and often disappointment – at renewal. Even with a solid, strategic plan to control the cost of group health insurance (a company’s second largest spend behind payroll) uncontrollable or unforeseen things can happen and hit hard at renewal time.
Self-funding works for some but, frankly, most companies are just not large enough or risk tolerant enough to go it alone. So many organizations remain at the mercy of the marketplace year after year, taking on “trend” increases in good years and larger increases in bad years. But there is an alternative – it’s called a captive.
A sound benefit captive offers:
- Advantages of being self-funded without going it alone
- Purchasing power (thus mitigating premium cost)
- Significantly reduced impact of large claims through the creation a larger risk corridor
- Dividends for performance
- Removal of taxes and fees associated with being fully-insured
- Proactive data, allowing better management of claims and risk factors
- Pooling exclusively with others who you know are taking a similar proactive approach
- Shared best practices with other members of the captive
Best of all, the days of guessing what your renewal might be with no data to justify it are behind you. By taking on ownership of your insurance with your fellow captive members, you know exactly what is happening and why. This control allows you to proactively implement processes and procedures to cope with issues while favorably bending your trend-line moving forward.