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Health insurance captive considerations
1. Health Insurance Captive Considerations
Captive insurance companies can rock the world by increasing the efficiency and reducing the net cost
of employee health insurance plans. ERISA regulations assure that the norms must be sustained but for
those with vision, the norms can be expanded, the overall effectiveness of the health plans can be im-
proved and overall net costs can be lowered. It will be different. It will raise eyebrows and rile skeptics
and the pioneers may suffer the usual array of arrows, but the pain will be well offset by the gain. If
this claim interests you, call 1 (760) 366 4670.
Stand Alone Single Parent Captives that employ less than a few thousand employees will probably find
it wise to pool their employee benefit risks with those of other small and medium-sized companies.
Pooling is arranged by Captive managers. It is a good idea to know what experience your Captive
manager has had with pooling before you get far into the process. As we say elsewhere, your selection
of a Captive manager may be the single most important decision you will ever make about your Cap-
tive.
This material is intended only for enterprises having more than fifty employees and up to several
thousand. The idea is simple: form a Protected Cell Captive Insurance Company as part of a group of
similar Protected Cell Captives, and then arrange for health coverage from a highly rated health insur-
er to cover all the employees in all the groups. The insurance contract with the highly rated insurer will
include a Jumbo deductible and the group of Captive insurers will insure the deductible. Typically, each
individual cell Captive will take responsibility for the first $30,000 or more of each and every claim. The
Group of Captives will be collectively responsible to pay the first half a million (or more) of each and
every claim. The highly rated insurer will be responsible for payment of every claim and the Protected
Cell Captives individually and as a group will be responsible for reimbursing the insurer. Both the indi-
vidual cells and the group are protected by reinsurance against aggregate losses that exceed their
means.
A protected cell captive used for Medical Stop Loss Insurance will result in higher than expected loss
payments, on average, in one year out of five, and in a profit for the other four years. The owner of
the captive (the party who pays for the group insurance) will have more control, will know exactly how
his premium dollars are being allocated, will have the TPA of his choice, and will benefit from active
wellness programs. Current trends (as of February, 2012) suggest that his renewal premiums will
trend downwards while national health insurance expenses continue to rise at a rate of 9% to 10% per
year..
Questions? Call1-760-366-4670 or Email to esb@captivedynamics.com
or visit www.captiveinsurance.info