Understanding Captives and Consortiums
As health insurance costs continue to rise, many small and mid-size employers have looked for ways to alternatively fund their plans and potentially save costs. Self-funding can be daunting and unmanageable for many small to mid-size employers, but there are many self-funding options to consider. Captives and consortiums provide the ability to self-fund your plan while offsetting risk and having some cash flow efficiencies. They allow employers to band together with other employers, to get enhanced pricing, bundled services, and to offset risk in bad years.
Captives
A captive provides more direct risk sharing as the group is in a pool of other employers where they’ll have their own stop-loss, but also a captive layer that will kick in for high cost claimants.
Consortiums
A consortium provides the ability to band together with other groups for purchasing power, to purchase things such as stop-loss and administrative services.
Any group considering a captive or a consortium should consider the risks of aggregating with other groups and the risks of self-funding in general. Innovative works with many captives and consortiums. We’d be happy to explore any and all of them for you and your group of employees. Please contact us at info@ibpllc.com if you have any questions.
