Controlling Healthcare Costs: Medical Stop Loss and Captive Insurance

 
Employee Benefits in Captives | Mark Sims | Vice President of Business Development | Captive Alternatives, LLC 

 
Mark Sims of Captive Alternatives, LLC, advises that health insurance is one of an employer's biggest expenses. Many businesses are looking to use their captive insurance company to help control healthcare costs. With captive insurance, the employer can prefund, into their captive, premium to cover their claims responsibility within the "specific deductible." 

The benefits to the employer are as follows.

  • The employer pays the premium to the captive insurance company which may be tax-deductible.
  • The premium goes into the captive insurance company as reserves to pay claims.
  • If the employer has a better-than-expected claims year, the premium paid to the captive that was not used to pay claims may be retained as underwriting profit inside the captive insurance company.

If this is done over a number of years, a surplus of funds can be built inside the captive insurance company, leading to greater control over healthcare cost dollars.