How Can Employers Benefit from a Benefit Group Captive

By on March 5, 2013

A Benefit Captive plan isn’t the perfect fit for every employer. However those that are able to utilize one often find it to be one of the best employee benefits solutions available on the market.

A Benefit Captive plan is designed to reduce cost, increase flexibility, and reduce volatility. At Power Group we are so crazy about this benefits solution- that we are a part of one.

Do I qualify for a Benefit Captive?

Below are some of the commonly asked questions we get about Benefit Captive plans.

What characteristics make a company a good fit for a Benefit Captive Plan?

Companies who focus on wellness, who promote healthy lifestyles for their employees, and desire more control over their cost.

A Benefit Captive is for progressive business leaders who are tired of being held hostage by their renewal month and want solid benefits without the usual madness.

What size does a company need to be to participate in a group captive?

To participate, a company needs to have between 50-500 fully insured employees.

How does a Benefit Captive work?

-Each employer creates a unique self-funded benefit plan
-Each employer selects its own TPA and network
-All policies are re-insured to the captive
-Each employer purchases a stop loss policy from a single carrier

Claims coverage:
-Small predictable claims are covered by the employer
-Medium-sized claims are covered by the group captive
-Catastrophic claims are covered by the insurance carrier

What is the Intent of a Group Captive?

A group captive allows employers to reap the advantages of self-funding as well as use the group structure as a shock absorber to reduce volatility.

Benefit captives are extremely transparent and contain more reporting opportunities for employers.

Where do the Savings come from?

-Reduction of carrier profits
-Better risk selection
-Reduced expenses (taxes, administration)
-Elimination or reduction of some state mandates
-Employee incentives
-Wellness best practices- claims prevention

On average, businesses who enroll in a group captive see an initial savings of 5-10%. Within 5 years, it is not unreasonable to reach 50% savings.

Are premiums paid deductible for US Income Tax?

Yes. Like any other business expense, premiums are deductible.