Health Benefits Captives
- Thread starter brandeeno
- Start date
Hi and welcome.
Actuary in the captive world...you must get a lot of "deer in the headlights" looks. lol
All kidding aside, I do. We have three captives up and running. Two are closed and used for specialty benefits and one is for medical coverage for small group (50+) lives. We have two others in the process of becoming active.
Difficult to say where the future is with captives. On one hand you have a lot going for you; health care reform, the extra added security of co-sharing of risk, emerging market for health care providers and others. The downside is that most brokers/employers in the under-200 market are way behind the curveball on not only captives, but self-funding.
I see it as an adjunct to our business, but if you can get a few, it can become very profitable.
Let me guess...you work for the two andrews?
Actuary in the captive world...you must get a lot of "deer in the headlights" looks. lol
All kidding aside, I do. We have three captives up and running. Two are closed and used for specialty benefits and one is for medical coverage for small group (50+) lives. We have two others in the process of becoming active.
Difficult to say where the future is with captives. On one hand you have a lot going for you; health care reform, the extra added security of co-sharing of risk, emerging market for health care providers and others. The downside is that most brokers/employers in the under-200 market are way behind the curveball on not only captives, but self-funding.
I see it as an adjunct to our business, but if you can get a few, it can become very profitable.
Let me guess...you work for the two andrews?
- Thread starter
- #3
- 4,096
I still don't understand why someone would choose a Captive over an ASO plan through a carrier?
- Thread starter
- #6
- 4,096
So when you take the 150 life case and treat them as 1500, does that mean you are able to deliver the network discounts as deep as a 1500 life case?
What networks do captive have access too?
What about lasering?
What networks do captive have access too?
What about lasering?
Brandeeno is correct, but let me expand a little more. And bear in mind, I am referring to acooperative risk-sharing captive. Captives can be structured in a variety of ways.
Larger groups can certainly self-fund on their own andshould, by large I mean somewhere around the 500 life size…give or take alittle. Smaller groups don’t have thecredibility, size, stability, and other characteristics you would look for in aself-funded candidate. The captiveoption I am discussing here costs a little more up-front because of the extrastability. But over time, if operatingwell, it will cost the groups much less than the community-rated market.
The mechanics are simple. Upon meeting the eligibility rules for the captive each employer isunderwritten and obtains their own stop-loss contracts. Let’s assume that the spec is always at$25,000 and the cooperative layer is $25,001 to $250,000. For all claims below the $25k the employer isresponsible. But let’s assume 10 employergroups and employer A had a claim of $35,000. $25,000 is taken from the spec account and the other $10,000 from thecooperative layer. That means that eachof the 10 employers paid $1,000.
A captive is sponsored by someone; a broker, provider entity, etc. They are the ones who areresponsible for the operation of the program. If you think about it, it is just like operating a health plan. So the broker set’s it up to operate withcost controls in place; biometric screening, smoking cessation programs, valueplan designs, and other tools and incentives to control costs and increasequality of care. Over time you can beginto drive down the costs. And don’tforget, you pick and choose who gets into the plan…aka cherry picking. The sponsor has now created something that isunique and can provide a better alternative to the groups (who qualify and arecompliant) and has control over their income/commissions.
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We do not use lasering. The cooperative layer adds enough protection. Networks are as easy as renting, or as you progress developing your own, if you want.
Larger groups can certainly self-fund on their own andshould, by large I mean somewhere around the 500 life size…give or take alittle. Smaller groups don’t have thecredibility, size, stability, and other characteristics you would look for in aself-funded candidate. The captiveoption I am discussing here costs a little more up-front because of the extrastability. But over time, if operatingwell, it will cost the groups much less than the community-rated market.
The mechanics are simple. Upon meeting the eligibility rules for the captive each employer isunderwritten and obtains their own stop-loss contracts. Let’s assume that the spec is always at$25,000 and the cooperative layer is $25,001 to $250,000. For all claims below the $25k the employer isresponsible. But let’s assume 10 employergroups and employer A had a claim of $35,000. $25,000 is taken from the spec account and the other $10,000 from thecooperative layer. That means that eachof the 10 employers paid $1,000.
A captive is sponsored by someone; a broker, provider entity, etc. They are the ones who areresponsible for the operation of the program. If you think about it, it is just like operating a health plan. So the broker set’s it up to operate withcost controls in place; biometric screening, smoking cessation programs, valueplan designs, and other tools and incentives to control costs and increasequality of care. Over time you can beginto drive down the costs. And don’tforget, you pick and choose who gets into the plan…aka cherry picking. The sponsor has now created something that isunique and can provide a better alternative to the groups (who qualify and arecompliant) and has control over their income/commissions.
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We do not use lasering. The cooperative layer adds enough protection. Networks are as easy as renting, or as you progress developing your own, if you want.
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- Thread starter
- #9
Don't know who you work for, but I am building one right now. It will tell the broker immediatly whether the risk is good, bad or indifferent. If it's ok, it then gets sent on for a quote. We are using it for captives and level-premium self-funding groups.
