A group captive is a partnership with other employers. Judge the partners, not just the projection.
A medical stop-loss captive lets a mid-size employer self fund while sharing a layer of risk with other employers in the same program. A good pool year can return underwriting profit. A bad one is shared too. We evaluate each program on its terms before we recommend one, and where it fits, we place it.
Three layers, and you share only the middle one.
The structure is simple once the layers are separated. The terms of the middle layer are where programs differ.
Your Layer
Claims up to your own specific deductible are paid by your plan, exactly as in any self-funded arrangement. This is the part you control through plan design and care management.
The Captive Layer
Above your deductible, a band of claims is pooled with the other employers in the program. Premiums for this layer fund the pool, and what the pool does not spend can come back to its members.
The Reinsured Layer
Catastrophic claims above the captive layer transfer to a stop-loss carrier. No single member’s worst year lands on the pool, and no pool year lands entirely on you.
The projection is the brochure. These six terms are the contract.
Every captive shows a return in a typical year. What separates a good program from a costly one is written further back.
Who Is in the Pool
How members are underwritten and admitted decides the quality of the risk you are sharing. A loose admission standard is a subsidy you pay to the weakest member.
Collateral
Most programs ask for capital or collateral up front. We confirm how much, where it sits, and when and whether it comes back.
Distribution Timing
Underwriting profit is paid after a plan year’s claims have run out, often a year or more later. We model the cash, not just the headline return.
A Bad Pool Year
Depending on the program, a bad year can reduce your return to nothing or draw on the collateral you posted. We show which, in writing, before you join.
Exit Terms
Multi-year commitments and the treatment of your share when you leave decide how reversible the choice is. We read them before we read the projection.
Required Programs
Captives typically require pharmacy, care-management and cost-containment programs. Those are a real source of savings and a real change for employees; both belong in the decision.
A captive fits fewer groups than it is pitched to.
We recommend one when the group’s numbers and appetite line up, and say so plainly when they do not.
Good Candidates
Employers already large and stable enough to self fund, with reserves to post collateral, a willingness to commit for several years, and leadership that wants the discipline of managed pharmacy and care. For them a captive can steady stop-loss pricing that would otherwise swing with one large claim.
Poor Candidates
Small groups that benefit from community-rated fully insured pricing, groups with volatile or high claims, and employers who need to be able to leave easily. For them the pool adds commitments without adding value, and we will tell you so.
What employers ask about group captives.
Is a captive the same as self funding?
Your plan is still self funded. The captive changes how the stop-loss layer above your deductible is bought: shared with other employers rather than bought alone from a carrier.
Does anyone use captives for retirees?
Yes. We place a captive built for pre-Medicare retirees, the population that most often breaks a retiree budget, with its own design decisions and trade-offs.
Who runs the plan day to day?
The program’s administrator and carriers. We evaluate and place the arrangement and manage the vendors behind it every year; we do not administer the plan ourselves.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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