Why Joining a Captive Isn't as Hard as You Think

Employers of all sizes are beginning to move away from the ‘set it and forget it’ mentality of fully insured plans, taking a more active role in their employees’ health benefits. You’ve heard about captives, but you're hesitant. There are some common objections that might be holding you back. Let's address these concerns head-on.

• "It's too much work."

You’re worried that managing a captive insurance plan will add significant administrative burden to your already busy schedule.

While joining a captive does require some initial setup, the ongoing management is often much simpler than anticipated. Captives are designed to streamline processes, providing access to industry experts who guide you every step of the way. With their support, the workload becomes manageable, and the benefits far outweigh the initial investment of time.

Your role is mainly to participate in strategic decisions and periodic meetings, much like with traditional insurance.

• "How much is it going to cost upfront?"

Upfront costs can be a deterrent, especially if you're uncertain about the long-term savings and benefits.

While there is an initial capital requirement to join a captive, this is often lower than perceived. The capital contribution is typically pooled among all members, reducing the individual burden. Furthermore, this capital is often treated as an asset, not an expense, and can be returned to you upon leaving the captive.

Evaluate the total cost of ownership, including potential savings from reduced premiums, lower claims costs, and dividends returned to captive members. Run a cost-benefit analysis with the help of your broker to see the full financial picture.

The upfront expenses should be viewed as a strategic investment in your company's future.

• "Our company is too small."

You might think that only large corporations are eligible to join captives.

That’s just not the case any longer.

Many captives are designed specifically for small to mid-sized businesses. These captives pool together multiple smaller employers, spreading the risk and providing similar benefits to what large corporations enjoy.

Look for captives that cater to your size and industry. These captives are structured to provide scale and bargaining power that individual small businesses cannot achieve alone. Joining a captive can level the playing field, giving you access to better rates and more customized plans.

Reaping the Benefits

Cost Control: With a captive you gain greater control over your healthcare spend with more predictable costs.

Plan Customization: Tailoring your health plan to meet the specific needs of your workforce helps you avoid overpaying for unnecessary risks.

Potential Savings: With a captive, you are eligible to receive returns on unused premiums and lower your overall costs.

Don't let misconceptions hold you back from exploring a captive. Partner with a knowledgeable health insurance broker to assess your options and guide you through the process.

Set your business on the path to more effective and efficient health benefits management.