Group Medical Insurance Financing
What is best for your company?
Fully insured, self-insured, partially self-insured, or medical group captive self-insured. Which is best for your company? Great question, but almost ALL Florida employers will only see a Fully insured plan from their brokers and will never get a true, honest answer since there is a FINANCIAL BIAS for a broker to sell you a fully insured plan.
Why? Because insurance “brokers” get paid the highest commission & bonuses with employers that buy fully insured plans. This is an ugly fact most employers are completely unaware.
Numbers don’t lie, but people and “brokers” surely do. So, let’s look at the numbers:
A self-funded medical plan has long proved to be the most efficient form of financing an employer medical plan. In 2000, about 48% of all employers were self-funding their employee healthcare coverage.
As of 2016, approximately 60% of all US workers, under age 65, are in self-insured medical plans.
As of 2016, 80% of all employers 500 employees or larger are self-insured.
Middle market, employers from 50-500, self-insured plans are exploding to approximately 30% of all employers in this segment
Fully insured medical plans, are the absolute worst method of financing an employer medical plan! The BUCHA’s (Blue Cross/United Healthcare/Cigna/Humana/Aetna) will only show middle size employers fully insured plans to maximize their profits. And boy have they done a wonderful job at maximizing profits for their shareholders. Simply google medical carrier stock prices since 2010 & you will wish you were a shareholder. WOW!
A relatively new option has evolved since the inception of the Affordable Care Act (ACA) in 2010.
The Group Medical Captive.
A medical captive program is a private insurance company of employers “banded” together to purchase stop loss medical insurance. Employers having much greater purchasing power when purchasing insurance based on 100,000 employees than 100. In addition, the insurance stop loss company becomes “Captive” to the employers. In addition, the risk associated with self-insuring directly with an insurance is significantly reduced to a minimum.
The employers call the shots in a medical captive program by:
Eliminating excessive medical carrier profits (BUCHA’s).
Medical rates generally will drop in the first 12-24 months up to as much as 40% compared to fully insured rates
Employers get full transparency in their claims. The BUCHA’s have a financial incentive for you NOT to see your claims dollars. YOU CAN’T CONTROL WHAT YOU CAN’T SEE!
Significantly lower catastrophic risk of large claims since these claims are offset by the entire captive program and the reinsurance carrier.
Insurance rate increases ONLY on the insurance portion of the monthly premium which is approximately 30% of the fully insured premium. Fully insured carriers charge increases on the full 100%!
Employers maintain control over their own medical plan, administration, and stop loss coverage.
Add cost containment programs to increase benefits & lower healthcare costs which are forecasted to continue to increase by 6% through 2019
This medical captive solution is ideal for to mid-size companies who want the advantages of self-funding but face challenges due to lack of size and scale. These barriers are easily reduced with a group medical captive, where employers can join together with other like-minded companies to create a larger pool of employees with greater scale and reduced claims volatility. “Self-insuring” with a shock absorber, so small to mid-employers can’t get burned by moving to a self-insurance program and get all of the advantages of large, national employers.