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.
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.
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?
Am I putting my company at financial risk by joining a group captive?
What are the disadvantages of captive insurance?
What is captive reinsurance?
Can you Help Me Understand “Lasers”?
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?
“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