Employee Benefit Captives: Client Impact Examples

A health captive enables a group of companies to join together and form their own insurance company. That means members share risk, and in doing so they create greater purchasing power, cost consistency, and long-term risk management. So, instead of paying premiums to an insurance company (which in turn becomes profit for said insurance company), the group contributes to a shared dividend pool. That money is then rewarded back to members when there’s good performance.

That sounds great, but does it actually work?  Results of clients participating in captives suggest it does work. Postioned correctly, captives can bring a host of benefits including access to greater programs & services; enhanced & more robust wellness; peer group support & sharing; more engaged & healthier workforce; single digit stop loss increases, profit distributions and more.

The three client case studies outlined below show the positive impact joining a captive program has had on these organizations…

Member Case study #1

Fully Insured vs. Captive

An Iowa-based equipment supplier with 200 enrolled employees at multiple locations throughout the U.S. realized a CUMULATIVE SAVINGS of $939,338. The following outlines their results:

2013

2014 2015

2016

FULLY INSURED PREMIUM $1,690,721 $1,893,548 $2,340,272 $2,480,723
EXPECTED CAPTIVE COST $1,850,387 $1,995,285 $2,067,700 $2,135,077
ACTUAL CAPTIVE COSTS $1,771,443 $1,881,223 $1,924,434 $1,888,826
ACTUAL SAVINGS COMPARED TO FULLY INSURED ($80,722) $12,325 $415,838 $591,897


Member Case study #2

Fully Insured vs. Captive

A South Dakota-based mechanical company with 175 enrolled employees realized a  THREE-YEAR SAVINGS OF $396,976 over the organization’s fully insured spend. The following outlines their results:

  2015 2016 2017 TOTAL
AVERAGE ENROLLMENT 174 176 176 526
FULLY INSURED PREMIUM $1,271,850 $1,510,179 $1,545,026 $4,327,055
EXPECTED CAPTIVE SPEND $1,233,088 $1,423,721 $1,322,839 $3,979,648
ACTUAL CAPTIVE SPEND $1,436,729 $1,180,390 $1,313,060 $3,930,179
ACTUAL SAVINGS COMPARED TO FULLY INSURED $164,879 ($329,789) ($231,966) ($396,876)


Member Case study #3

Self-Funded Prior to Joining EB Captive

The following example is from a captive member who joined the captive in 2013. This company, an Oregon-based manufacturer with 90 enrolled employees, saw a 6% DECREASE IN PER MEMBER CLAIM COSTS and SINGLE DIGIT STOP LOSS RENEWALS.  The following outlines their results:

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