Resources & Insights

Rethinking Corporate Healthcare Programs with Group Captive Insurance

October 20, 2023

Andrew Gibbs
Senior Insurance Advisor, CCIG

Curious Corner: October 2023 Insurance Trends

For the second year in a row, U.S. corporate employers are predicting that median healthcare costs will increase by seven percent. As costs accelerate, employers are paying more for less in a carrier-controlled marketplace.

Rather than deciding between raising deductibles or passing increased healthcare costs to employees, employers have a third option: group captive programs.

Group captives offer an alternative program structure that allows employers to exercise greater control over their costs – for the benefit of their company and their employees.

What are group captive health insurance programs?

Group captive programs are a specialized form of health insurance that allows multiple employers to come together and collectively fund and manage their employee health benefits. It’s a win-win: companies gain more control over their health insurance costs and potentially save money by sharing the risks and rewards of their healthcare program.

Here’s how it works:

  • Formation of a Captive: A group of employers, often from the same industry or geographic region, forms a captive insurance program that is owned and controlled by its member companies.
  • Pooling Resources: Member companies pool their financial resources and premiums into the captive. This pool of funds covers the medical expenses of their employees and dependents.
  • Risk Sharing: By sharing the risk among a larger group, member companies can potentially reduce their exposure to high claims and premium volatility. Companies in a group captive often benefit from more stable and predictable health insurance costs.
  • Customized Plans: Group captives allow member companies to customize their health insurance plans to meet the specific needs of their employees.
  • Cost Transparency: Members typically have greater transparency into the costs and performance of their health insurance program. This transparency can help companies make more informed decisions about healthcare benefits and cost management.
  • Profit Sharing: If the captive experiences lower-than-expected claims and generates profits, these profits are shared among the member companies.

What are the benefits of a group captive to employers?

Rather than remaining subject to carrier costs and changes, employers can come together to create data-driven, employer-controlled programs.

Companies participating in group captive programs undergo a rigorous vetting and underwriting process to ensure the participants are aligned on their commitment to employee benefits and the group captive model.

Companies that opt for this route can realize a multitude of benefits, including:

  • Increased purchasing power
  • Reduced stop-loss costs
  • Cost stabilization
  • Stronger data analysis and trend forecasting
  • Pharmacy cost savings through pharmacy benefit managers and transparent pricing

How do group captive programs impact employees?

Employee benefit programs are at a crucial inflection point. A recent survey found that employee satisfaction with benefits fell to 61 percent in 2023, a three percent decline from 2022 and the lowest point in the past decade.

We all know that benefits are vital to engagement and retention, so employers and leaders must find the delicate balance between supporting employees and ensuring programs are financially sustainable.

While the structure of every group captive program varies, employees in a group captive plan benefit from:

  • The ability to waive co-pays and deductibles for in-network providers
  • Enhanced care coordination
  • Customizable programs to meet the needs of the employee population
  • Concierge services
  • Transparent medication pricing and pharmacy benefit management
  • Access to generic medications at low or no cost

Explore Your Group Captive Options

Our team has the connections and expertise to help you take control of your healthcare costs. Reach out to us today for a conversation about your program – and how we can help you realize the benefits of this approach.

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