Two group medical stop-loss captives can come back with similar quotes and deliver very different results over the next 3 years.
Premium and stop-loss terms matter. So does everything that happens after the effective date.
Before choosing a captive, we’d ask these 6 questions.
1. What risk management is included?
Find out what the program actually provides once the plan year starts.
Which clinical, pharmacy and cost-management resources are included? Which cost extra? Are they available to every employer in the captive?
That matters in a shared-risk model. When participating employers have access to the same resources for managing high-cost claims, the entire pool has a better chance to perform well.
2. How does surplus work?
“Surplus participation” sounds straightforward until you get into the details.
Ask how surplus is calculated, how it is allocated among employers and when it can be distributed. Find out what happens to an employer’s share if the company leaves the captive.
Those terms affect the economics of the program, especially when you look beyond a single plan year.
3. Which vendors can you keep?
Understand how much flexibility you’ll have with your existing benefits partners.
Can you keep your TPA, PBM and benefits consultant? If the captive requires certain partners, what is required and why?
Changing a vendor may make sense in some cases. It shouldn’t come as a surprise after the decision has already been made.
4. What claims visibility do you receive during the year?
Ask what reporting you’ll receive, how often you’ll receive it and what happens when the data shows a problem.
A claims report sitting in an inbox has limited value.
The useful part is knowing that a high-cost trend is developing early enough for someone to determine whether there is an appropriate action to take.
If the first meaningful conversation about claims happens at renewal, most of the plan year is already behind you.
5. What happens between renewals?
Some of the largest claims develop over months.
Cancer treatment, chronic kidney disease and specialty medications are good examples. The earlier the right people understand what is happening, the more opportunity there may be to support the member and manage the cost appropriately.
Ask who is watching for those risks. Then ask what happens when one is identified.
Who follows up? What clinical support is available? How are the employer and broker kept informed?
Renewal reflects what happened during the prior year. The work during those other 11 months matters.
6. What collateral is required?
Collateral is part of the employer’s financial commitment to a captive.
Ask how much is required, what form it takes, when it must be funded and when it can be released.
You should also understand the employer’s maximum exposure and whether additional funding could ever be required.
Evaluate collateral alongside premium, expected claims and potential surplus so you can see the full financial picture.
Blackwell's approach
Blackwell’s captive model combines self-funding, a shared captive layer and stop-loss protection with B.Well Blueprint built into the program. B.Well Blueprint includes resources focused on major healthcare cost drivers such as kidney disease, cancer, pharmacy and care navigation, along with analytics to help identify risk earlier.
Employers share a defined layer of risk through the captive, while catastrophic claims above that layer are protected by stop-loss coverage. Collateral defines the employer’s exposure within the captive, and favorable captive performance can create an opportunity for surplus participation.
We also put a lot of emphasis on what happens during the plan year.
Claims data should lead somewhere. A developing kidney claim may call for one response. A complex cancer diagnosis may call for another. A pharmacy issue may require a completely different set of resources.
That is the role of active program management: identify what is changing, get the right people involved and keep the broker and employer informed.
Bigger picture: look beyond the stop-loss quote
Rate caps, premium and stop-loss terms belong in every captive comparison. So do the operating details.
How does the program manage risk? What can the employer see during the year? What resources are already included? How does surplus work? What financial commitment is required?
Those answers can look very different across programs that initially appear similar on a spreadsheet.
Before comparing rates, understand the programs behind them.
Evaluating a group medical stop-loss captive for a client or your organization? Talk with Blackwell today.