Health insurance premiums are one of the top three expenses faced by employers. And, with premiums expected to rise between six and ten percent a year, there is no end in sight. In addition, as new, super drugs are developed to treat life-threatening diseases, such as cancer and heart disease, premiums will increase even more, since these drugs can cost as much as $10,000 to $20,000 per pill or treatment. As a result, if employers want to continue to provide quality medical care to their employees, they will have to find new and innovative ways to address the problem of rising health insurance premiums.
Reducing the quality of healthcare is not an option. Employers need to provide quality medical care to their employees in order to attract and retain top talent. But, employers will have to find ways to contain costs. Some employers have asked their employees to bear an increasing portion of the premium expense. In addition, some employers have limited the networks available to their employees. However, many employers are asking whether there is a way to contain their costs without shifting costs to their employees or lowering the quality of care.
For some employers, the answer may be a self-funded medical benefit plan with stop-loss insurance. In addition, it may make sense to combine a self-funded medical benefit plan with a captive insurance company. This article addresses the advantages of adding a captive insurance company to a self-funded medical benefit plan.
How does a self-funded medical benefit plan work? First, an employer agrees to pay for a portion of medical expenses and administrative costs from its general assets. This is the self-funded portion. Second, in order to protect itself from unexpected and catastrophic expenses and cap its exposure, it obtains stop-loss insurance to cover claims in excess of a pre-determined amount. In many cases, the sum of the employer’s self-funded portion and the stop-loss premiums will be less than the premiums it used to pay for health insurance. So, the employer experiences immediate savings. Furthermore, if the employer purchases stop-loss insurance from its own captive insurance company, it may realize other benefits, such as:
Large employers have used self-funded medical benefit plans for years to control costs and provide quality medical care to their employees. Many large employers also have established captives to share in the risk and the profits. These same concepts are now available to small employers, as well. There are a number of stop-loss carriers willing to write insurance on groups with as few as 15 employees. In addition, captives have become much more cost-effective for small employers.
How can RMC help you and your clients create self-funded medical benefit plans combined with a stop-loss captive insurance company? RMC is an international risk management company that provides you with:
Our access to worldwide markets enables us to deliver the most effective and competitive programs available. For more information, contact RMC Group at 888.599.5553 or email@example.com.