BUSINESS OPERATIONS WHAT IS A GROUP CAPTIVE? A GROUP CAPTIVE INSURANCE ARRANGEMENT IS A TYPE OF SELF-INSURANCE IN WHICH A GROUP OF EMPLOYERS POOL THEIR RESOURCES TO BETTER ABSORB UNFORESEEN EMPLOYEE HEALTHCARE COSTS (I.E., LARGE CLAIMS). Advantages: How to Stabilize cost over time Group of likeminded employers Potential for Group Distribution Employers have historically been underwritten in some capacity regarding rates, which were generally based on the demographics of a group. Initially, the fully insured market assessed where members were living at the time and rated costs based on that community. Eventually, the fully insured market took insurance and healthcare delivery and merged it into one monthly sum—prepaid healthcare— which removed the transparency on premium rates. Partially self-funded plans divvy the cost up into three different spending “buckets”: approximately 10% for administrative costs (broker, pharmacy benefit manager, etc.), about 20% for premium costs, and the remainder for claims. Some believe the partially self-funded model is better, in part because it is more transparent, and it affords the plan sponsor more control over the company’s healthcare spend. Under a partially self-funded plan, every month there are two fixed expenses: administrative costs and claims. If any of that money is unused, it rolls over to the expenses for the following month (which is capped annually). For example, if $1 million was allocated for claims and the claims spend is only $800,000, the remaining money stays in the claims account and can be used for future claims. Annual caps for individuals (specific deductible) and for the group as a whole (aggregate deductible), are put in place to minimize the employer’s risk. HOW TO TRANSITION Transitioning to a partially self-funded plan starts when an interested employer submits a request for proposal. After an assessment of the current plan’s carrier and risk exposure, a proposal review will be completed. Upon delivering the proposal, ARPM leadership, together with the First Resource team and Captive Solutions & Options, developed a healthcare captive, CAPTIV8, which offers access to unique programs including centers of excellence, pharmacy cost containment, and more. Participants see cost savings through better controls and access to data, allowing members to make more educated health insurance decisions and create long-term strategies. 18 / INSIDE RUBBER / 2025 Issue 1
RkJQdWJsaXNoZXIy Nzc3ODM=