Understanding a Group Captive Program

Health Insurance Captive Senior LivingA group captive is a health insurance pool formed by companies joining together to reduce the cost of their medical benefit spend. It is an alternative insurance option that is owned and controlled by its insureds.

Unlike fully-insured options where the insurance company keeps all the profits and premiums generally continue to rise, or self-insured options where fixed costs can approach 40% and companies assume 100% of the claims volatility, a group captive option gives members the opportunity to retain profits on the majority of their claim spend for very little risk.

In a captive program, the employer self-insures claims up to a specific limit (known as the aggregate stop loss). After that, employers pool stop loss premiums and claims up to the captive aggregate stop loss.  For claims higher than the captive aggregate stop loss, reinsurance can be purchased.

As an example, if an employee is being treated for breast cancer with an annual claim cost of $100,000, the employer plan would pay the first $10,000 (after the employee satisfies their deductible and out of pocket responsibility). The captive would fund the remaining $90,000 with its shared pool.  There is also an additional layer of protection to members by reinsuring all claims in excess of a large amount (i.e. $500,000) by a traditional insurance carrier.

Deciding on the right captive for your company can be challenging. You want to research the captive manager’s expertise and history, underwriting and accounting procedures and the ease and consequences of getting in and out of the plan.  AssuredPartners NL has knowledgeable captive experts with access to a variety of captives and will help you navigate those elements.  To learn more, contact an AssuredPartners NL Senior Living Agent.

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