Captive Solutions

Those who are large enough self-insure, and for small and mid-size companies a captive makes self-insuring possible.

A unique approach to self-funding.

With transparency in mind, CGI Business Solutions has developed a unique approach to self-funding that includes purchasing reinsurance through the Pareto Captive. In addition, our Transparent Health solution focuses on specific segments of your healthcare spend and significantly reduces costs for our clients.

Take control of your healthcare costs through a captive.

Watch this brief video to learn more.

Pareto Captive

Self-Insurance without the Risk

Employers face the dilemma of containing increasing costs while offering great health insurance coverage to employees. While there are several options, not all will fit your business needs. There are downsides to the traditional models:

  • The Fully-Insured Model: Can Come with High Tax Loads & Limited Design Options
  • The Level-Funded Model: They Can Charge More / You Pay More. Heads You Tie, Tails You Lose.
  • The Self-Insured Model: Undeniable Benefits, but Insurmountable Risk.

Self-insurance saves money. The fear of “risk” often keeps people from self-insuring. Pareto’s captive programs remove the typical risk and volatility associated with large claims. The employer is left with their own smaller claims which they begin to control. The employer has the risk on their smaller claims even if they are fully-insured.

Captive FAQs

What is a health insurance captive?

An insurance captive is a wholly owned and controlled insurance company that is established to provide coverage for itself; reduce the costs of insurance, provide control over claims management, and enables the participants to share in profits.

Why form a captive insurance company?

The simple answer is for control, risk management and the potential for profits. Organizations that enter into a captive have their insurance premiums based on their claims history. They invest their own capital as a means to become an owner and therefore if they have a good year and their premium revenue exceeds claims, they directly benefit by making a profit for the company.

Are captive insurance premiums tax deductible?
Insurance premiums paid in the captive model are tax-deductible and thus do provide a benefit to the captive owner.
Am I putting my company at financial risk by joining a group captive?
The captive must pay claims and therefore you have to have the capital to cover the costs associated with those claims.
What are the disadvantages of captive insurance?
Like any form of insurance, there is always risk assumed for the population you are looking to cover. While there are many analytical resources used to help project risk, there can be unforeseen claims that can drive costs up.
What is captive reinsurance?
Reinsurance is an integral part of any self-funded health plan; it is also quite often the most volatile part. Purchasing reinsurance through a captive allows for smaller employers to enjoy the protection like that of a Fortune 500 company. At the same time, the smaller employer can customize their own plan designs as well as carve out pharmacy and care coordination ensuring maximum savings for that employer.
Can you Help Me Understand “Lasers”?
In self-funding your health plan, you as an employer cover a certain amount of liability for your employees, usually up to $50K per enrolled employee and their dependent(s). If you’re having a good year in claims then you’re paying way less being self-insured vs. being fully insured, but what if you’re having a bad year and you have many people utilizing high cost care? In a traditional self-funded plan, or in many broker-owned captive programs, these employees would be LASERED. This means the employer would be responsible for MUCH MORE than just $50K (some LASERS can go as high as $500K in some cases). This is why CGI continues to work with Pareto Captive – they have a NO NEW LASER provision that gives employers peace of mind knowing that if a large claim(s) arises they have the protection to ensure no additional claims cost for those high cost claimants. Consequently, this is why the Pareto Captive is one of the most secure healthcare captives in the country.
How is CGI’s Captive different than traditional or “broker owned” Captives?

In a word? Transparency. Many traditional and/or broker-owned captives can have contractual obligations or financial incentives with certain vendors within the captive. For example, we recently began working with a client who was part of a broker-owned captive and this captive only worked with a certain pharmacy benefit manager (PBM). It was discovered that there was an undisclosed financial incentive for the broker and, consequently, the client was not able to take advantage of over $350K of savings with a different PBM. CGI’s captive partner (Pareto) allows for full transparency and ability to partner with a PBM that works best for the client, not the broker.

CGI’s captive is also different in that there are NO NEW LASERS (in perpetuity) for groups that enroll with Pareto. This means employers in the Pareto Captive don’t have to worry about the volatility typically associated with broker-owned or traditional self-funded plans on a year to year basis. For example, CGI began working with a new client who was running extremely well (no large claims). The group moved to the Pareto Captive and, unfortunately, had 5 high cost claimants within 6 months. Because of Pareto’s NO NEW LASER clause, the group only saw their overall healthcare costs go up by 6% on an annual basis. Had they been in a captive program that had a LASER clause, each of those employees would’ve had $200K laser applied (this means the employer would’ve had to pay the first $200K on each of those employees). However, because they were in the Pareto Captive, their costs per employee remained at $50K and the captive help offset those additional claims costs for those employees.

Am I Too Small to Self-Fund my Health Plan?
If you have at least 50 enrolled employees on your health plan, then the answer is no – you’re not too small. We have several clients who are in the smaller “large group” category (50-100 enrolled) that have saved hundreds of thousands of dollars by moving to the Captive.

“Dan and his team at CGI have been tremendous!  Our company moved from fully insured to a partially self-funded captive plan and our company saved hundreds of thousands of dollars! Through detailed analyses, Dan showed us how easy it was to carve out our prescription drug plan saving us over $50K a year on one drug alone!  We have several other initiatives now planned including the addition of a robust wellness plan for our employees. We are so glad to be partnered with CGI.”

Joseph (CFO) – Technology