Hi, Happy Thursday!
My girl, Nancy Giacolone does two minute Tuesdays,
but I'm going to do a three minute Thursday!
And talk to y'all about something that I've
had a couple people ask me about which is
captives.
And really, all a captive is is a funding
arrangement for benefits.
It's kind of a way for an employer who let's
say is let's call it 50 employees to a couple
hundred a way for them to pool together with
a couple employers in order to have a law
of large numbers.
Captives are cool.
They've been gaining a lot of popularity.
People who go from fully insured and can't
weather the trend increases year over year
are looking to kind of have a different path
but don't necessarily want to self fund.
For them, captives are the perfect arrangement.
And so I was just on a Vistage chat room and
somebody asked the question what are the pros
and cons of a captive.
And I figured there are probably a lot more
poeple who have that quesiton.
So wanted to give you a couple basic pros
and cons of what a captive arrangement would
be for a small to mid sized employer.
One of the pros is that you definitely have
a lot more control of the plan.
You get your claims information.
You see where your healthcare cost drivers
are coming from and you can take action items
on them from there.
It gives you more predictability and it's
less volatile than just going straight self
funding since you are aggregating with a bunch
of other employers.
And it gives you a much greater potential
to possibly save money in good claims years.
The cons would be that it's not a one year
strategy.
I know most employers are conditioned to believe
that benefits should be a reactive one year
(every 12 month) pain in their sides.
But this should really be a 3 to 5 year strategy.
Captives are not a short term fix, they are
a long term solution.
Another con could be that they only accept
"good risks," so if you aren't already in
a good situation they may not accept you.
So sometimes you have to get yourself into
better shape before you are allowed in the
captive.
Another con may be that your stop loss is
more expensive than if you were to get it
on your own if you were to do self funding.
The reason for that is that a lot of the stop
loss policies for captives are much more favorable
There are some that have no new laser policies,
there are some that have rate caps.
If you are interested in a captive, shoot
me a message and I'm more than happy to tell
you pretty much everything that I know about
captives and happy to share my knowledge.
Have a good day.
Bye!
