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Published August 08, 2023

Captives Part 4: Captives as an Employee Benefits Solution

A clipboard, pen and stethoscope in an office setting

In part four of our captives blog series, we discuss why some businesses are turning to captives as an employee benefits solution.

Group medical captives can also be a creative solution to your employee benefits needs when it comes to contractual protections, stable renewals and access to cost-containment programs.

We advise small- to medium-sized employers who want to move away from a fully-insured arrangement to consider the captive option for the following reasons:

  • Increased visibility into health plan performance
  • More control over plan design & clinical outreach options
  • Transparent vendor compensation
  • Increased control over risk
  • Fewer regulations & lower administrative costs

Group medical captives can also benefit self-funded employers who want affordable stop-loss protection against the high cost of ongoing and catastrophic claims.

No New Laser* at Renewal

This eliminates the option for the carrier to carve out an ongoing, catastrophic claimant from the stop-loss policy. An employer can have the peace of mind of knowing they won’t ever be fully financially responsible for an ongoing high-cost claimant.

* Insurance carriers can assign a higher specific deductible, also known as a laser, to an individual with a known condition or an expectation of high claims. This additional risk becomes the employer’s in exchange for a reduced premium load. If the lasered claims do not materialize, the plan can benefit.

Stable Renewals

Average stop-loss renewal increases range from 7-9%, maxing out at +30% for unusually challenging claim years.

Similar to how captive programs function in commercial insurance, your company will have an opportunity to earn back dividends if your group performs well.

Members also have access to several industry-leading cost containment solutions:

  • Care Coordination Services
  • Data Analytics
  • Surgical/Imaging Bundling Solutions
  • Medicare Advocacy Program
  • COBRA Advocacy Program
  • Prescription Consortium
  • Specialty Prescription Management

To better understand if a group medical captive program would be the right fit for you organization, be sure to discuss these options with a broker or consultant who specializes in employee benefits.

Click here to continue reading in part five, “Is a Captive Right For My Business?”


Or, to view any entry from this six-part series, check out the links below.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.