Tag Archive for: employee health insurance

A medical captive is a type of insurance arrangement that allows businesses and employers to self-insure their health care costs. This means the company will assume financial responsibility for any medical expenses, rather than purchase coverage from a traditional insurer. It also means they can take advantage of potential cost savings by controlling how their healthcare dollars are spent.

While a medical captive can be a great option for businesses that want more control over their healthcare costs, there are some drawbacks as well. In this blog post, we will explore the pros and cons of medical captives and help you decide if this type of health insurance is right for your business.

What is a Medical Captive?

A medical captive is a type of insurance company that provides coverage exclusively to its parent or affiliated healthcare organizations. The purpose of setting up a medical captive is to insure the risks inherent in providing healthcare, such as rising malpractice costs, increased patient care costs and unpredictable losses from litigation. Medical captives are usually established by large hospitals, health systems, universities and physician groups, who use them to protect themselves against specific risks associated with the delivery of healthcare services.

How Captives Operate

Medical captives are typically funded by reinsurance companies or other insurance carriers and structured as either a single-parent captive or a group captive. Single-parent captives are owned by one parent organization and provide coverage for just that entity’s risks. Group captives provide coverage for a group of organizations, allowing them to pool their risks and receive more favorable terms.

How Captives Are Regulated

Medical captives are regulated by state insurance commissioners. They must file annual financial statements with the appropriate state authority, comply with all applicable laws and regulations, maintain adequate capital and surplus levels and secure an independent audit each year.

Additionally. . . 

In addition to providing coverage for medical malpractice and other healthcare risks, medical captives can also provide self-insurance for operational and administrative expenses such as marketing costs, employee benefits and worker’s compensation. Captives can also offer additional services such as risk management consulting, claims administration and loss control services.

Medical captives are an increasingly popular option for healthcare organizations looking to manage their risk and save on insurance costs. They offer the potential to reduce overall costs while providing greater control over how they are managed and protected.  However, it is important to understand that medical captives are not a substitute for traditional health insurance – rather, they provide an additional layer of protection that can help mitigate certain risks.  As such, it is important to consult with an experienced insurance broker or captive manager to ensure a medical captive is the right choice for your organization.

Is a Medical Captive Bad? 

Medical captives are not inherently bad, as long as they are used responsibly. In some cases, a medical captive can be an efficient and cost-effective way to manage health care costs. However, it’s important for businesses to do their research and understand the risks associated with this type of arrangement before committing to it. There is a potential for loss if a medical captive is not managed properly. 

Additionally, it’s important to consider the pros and cons of this type of arrangement in comparison to traditional insurance coverage. Ultimately, the decision about whether or not a medical captive is right for your business should come down to careful consideration of all potential outcomes.

The Pros of a Medical Captive:

  • More control over medical costs – By creating their own plan, businesses can have more control over the medical costs they incur.
  • Reduced administrative costs – Since medical captives are self-funded, administration costs are typically much lower than with other types of health insurance plans.
  • Flexible coverage – Businesses can tailor medical captives to the specific needs of their employees. This gives businesses more flexibility when it comes to deciding what medical services and treatments are covered.

The Cons of a Medical Captive:

  • Riskier proposition – Since medical captives are self-funded, businesses may be taking on more risk than they would with a traditional health insurance plan.
  • Higher medical costs – While medical captives can help to control medical costs, they may still be higher than those of other health insurance plans.
  • Difficult to set up – Medical captives can be complex and difficult to set up, as businesses need to comply with regulations and laws in order to create a medical captive.

 

As you can see, medical captives have both advantages and disadvantages to consider. It’s important to do your research and understand the risks and benefits associated with medical captives before deciding if this type of health insurance plan is right for your business. With the right information, medical captives can be a great way to provide healthcare coverage to your employees while minimizing medical costs. 

Things to Consider

If you decide to pursue a medical captive, it’s important to understand all the details involved. You should:

  • Select a structure that is appropriate for your business
  • Consider the financial implications of entering into a captive arrangement
  • Fully research potential service providers before committing
  • Set up an internal team responsible for managing the captive and handling any claims that may arise 

Doing your research and understanding the risks involved can help ensure that a medical captive is the right choice for your business and will allow you to take advantage of its potential benefits.

The Bottom Line

Overall, a medical captive can be a great way to manage healthcare costs if used responsibly. It’s important to understand all the details before committing to this type of arrangement and to make sure it is the right choice for your business. By doing your research, you can make an informed decision about whether or not a medical captive is the right choice for you.

If you still have questions regarding medical captives, reach out to us

Or to learn more, read about the differences between standard market insurance and captive insurance programs.

What is Open Enrollment?

Open enrollment is the one period of the year where employees can sign up for health insurance or change a health insurance plan provided by the employer. Remember that this period also allows employees to disenroll in health insurance if they no longer wish to have coverage. 

 

The only exception to enrolling, changing a health insurance service, or disenrolling is through a qualifying event. Qualifying events can vary depending on the state the employee resides in.

Qualifying events include:

  • Marriage
  • Divorce
  • Having or adopting a child
  • Loss of insurance due to employment change or termination of employment 
  • Death of someone covered on the plan 
  • A dependent no longer qualifies as a dependent
  • Moving to a new state 
  • Becoming a U.S. citizen

When is Open Enrollment for Health Insurance? 

Open enrollment periods range depending on the healthcare provider and the state the employee lives in. Nationally, open enrollment periods begin on November 1st 2022 through January 15th 2023. In order for coverage to begin January 1st 2023, enrollees must enroll by December 15th.

 

Check here for Affordable Care Act (ACA) open enrollment dates by state. 

Is There Health Insurance That Doesn’t Use Open Enrollment?

Yes, a few health insurance policies do not have the same open enrollment restrictions that others do. This means that there aren’t restricted time periods when employers can sign up for insurance. It is available to them year-round.

 

Different types of health insurances that don’t follow open enrollment rules include:

  • U.S. government’s Children’s Health Insurance Program (CHIP)
  • Medicaid 
  • Short-term health insurance 
  • Travel insurance 
  • Supplemental insurance programs 
  • Medigap 

How Can Offering Voluntary Benefits Save Your Business Money? 

Voluntary benefits are offered by employers to their employees at no additional cost to the employer. They are often referred to as employee-paid benefits or supplemental insurance. The employer makes the benefits available to the employee, but the employee pays the full cost of the plan. It is not split between the two. 

 

This form of insurance is rising in popularity because it allows employees the flexibility to choose the type of insurance or health coverage that best fits their lifestyle instead of paying for coverage the employee does not want or need. 

 

Employer benefits of offering voluntary benefits include:

  • Reducing out-of-pocket health care costs
  • Access to group rates 
  • 100% of the insurance cost is paid by the employee 
  • Gives your employees choice in healthcare plans 
  • It is available to part-time and full time employees 
  • Helps your company attract and retain top talent (77% of workers say that benefits packages are an important part of deciding on accepting or rejecting a job offer)
  • Saves you billing time through automatic payroll deductions

 

At Innovative HIA, we provide comprehensive coverage plans for employers to provide affordable benefits to employees. Here, our voluntary benefit plans encompass:

  • Health
  • Dental
  • Vision 
  • Wellness/Lifestyle 
  • Financial 
  • Security 
  • Personal and miscellaneous 

Why is Employee Insurance Enrollment Important? 

Employee health insurance is important for businesses, especially Applicable Large Employees (ALE). Under the Affordable Care Act (ACA), ALEs who do not provide health insurance are penalized for every employee who is not offered health insurance.

 

This year, fines can range from $2,700 to $4,000 per employee not offered coverage. In comparison, offering our ACA compliant Minimum Essential Coverage (MEC) is an affordable way for ALEs to maintain coverage compliance. Look below for a cost comparison of how providing MEC benefits to employees saves your business money.

 

Besides avoiding hefty fines, employee health insurance provides the support employees need if they ever fall ill, and keeps employees healthy. One of the main benefits of coverage is that covered preventative care visits monitor any health concerns that may arise an employee cannot physically see or feel yet. 

 

Healthy employees are more present and productive at work. Employees who are supported through covered care gain access to resources that combat preventable illness, and are more likely to be positive, engaged and determined to do their best during work.

 

Another benefit of maintaining a healthy workforce is that it reduces the costs you as an employer must front when an employee takes sick leave or if you have to find someone to cover a shift.

Actionable Ways to Increase Benefit Enrollment 

Actively encourage employees to sign up and renew health insurance during open enrollment, and especially before, so employees have time to prepare and choose a plan best suited for them.  

 

Employers can encourage employees to sign up for health insurance during open enrollment 2022 through:

  • PDF one-pagers: One-pagers have information about health benefits that are easily distributed around the office.
  • Pamphlets: Similar to a one-pager, pamphlets have information, graphics, and contact information for the employee.
  • Offer a point of contact: A knowledgeable employee within your business can answer FAQs and help employees find the right plan.
  • Text or email campaigns: Sometimes the most effective method of communication is through technology.
  • Pay stubs: Add information about enrollment to paystubs because employees receive them regularly.

Curious about how else your business can increase health insurance enrollment this year? Read our article here on how opt-in vs opt-out insurance policies make a bigger difference than you’d think.