Health plan purchasing pools and coalitions: when pooling helps an employer
Employers can pool buying power or claims risk in several ways, from a pharmacy purchasing coalition to a group captive. Here is how each works, what changes for the employer, and what to ask before joining one.
Six Ways Employers Pool Risk or Buying Power.
Group Captives Explained
How employers share claims risk in a captive and where stop-loss fits in.
Evaluating a Captive
The questions to answer about governance, collateral and exit before you join.
Specific and Aggregate Stop-Loss
The protection that sits behind most pooled and self-funded arrangements.
Level-Funded Compared With Fully Insured
A simpler step toward shared risk for smaller employers, and what it trades away.
Alternative Funding With Stop-Loss
How self-funding with a stop-loss contract compares with pooled options.
Pharmacy Purchasing Options
How employers compare pharmacy benefit managers and group buying approaches.
Questions About Purchasing Pools and Coalitions.
Plain answers for HR, finance and deal teams.
What Is a Health Plan Purchasing Pool?
A group of employers that combine their buying power or their claims risk to get better terms than each could get alone. The structure varies, so read the agreement.
How Is a Captive Different From a Purchasing Coalition?
A coalition combines buying power for something like pharmacy services. A captive shares claims risk among its members, usually with stop-loss behind it.
Who Benefits Most From Pooling?
Employers whose claims are too small and unpredictable to be self-funded alone, and employers that want more control over cost than a renewal gives them.
Do Pooled Arrangements Cost Less Every Year?
No. Results depend on the members’ claims, the pool’s management and the stop-loss terms, so a pool can cost more in a bad year.
What Is a Multiple Employer Welfare Arrangement?
A plan or arrangement that covers employees of more than one unrelated employer. Federal and state law both regulate them, so check how the arrangement is structured.
Can an Employer Leave a Pool?
Usually, but exit terms vary. Look for notice periods, collateral that stays behind and any claims run-out obligations.
What Should I Ask Before Joining a Pool?
Ask who governs it, how claims and surplus are shared, what stop-loss protects the pool, and what happens to your money if you leave.
Do You Place Group Health Captives?
Yes. We place group health captives and compare them with fully insured, level-funded and self-funded options for the same group.
Does Pooling Replace the Need to Market the Plan?
No. A pooled option is one of several to compare. Marketing the plan still tells you whether it is competitive.
Can You Compare a Pool With Our Current Plan?
Yes. Send us your renewal and claims data and we will show how the options compare.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information about health plan purchasing pools, not legal or tax advice. Plan-specific questions belong with your counsel and tax advisor, and we will bring them in.
The Law Behind Pooled Arrangements.
The laws named on this page link to the statute or regulation they come from. This is general information, not legal advice, and rules change, so check the current text and ask your counsel.
Definitions Including Multiple Employer Welfare Arrangements (29 U.S.C. 1002)
Defines employee welfare benefit plans and multiple employer welfare arrangements under ERISA.
State Regulation of Multiple Employer Welfare Arrangements (29 U.S.C. 1144)
Explains how ERISA preemption applies and how states may regulate multiple employer welfare arrangements.
Related Reading on Funding.
Funding Options Compared
The page this belongs to.
Employer Benefits Guides
The full section.
Self-Funded and Stop-Loss Renewals
What to expect when a self-funded plan with stop-loss comes up for renewal.
Weighing a Pool? 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.
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