Thinking Outside the Box

By Steve Sullivan, Regional Practice Leader

The leaves are changing, there’s a slight chill in the air, the sound of tailgates and smell of brats fill the air. It’s Fall and time for football. It’s also time for businesses around the country to once again choose a medical benefits plan for their employees.

Each year a few unranked teams surprise the college football analysts by upsetting ranked opponents. At some point, the coaches of these teams decided to make a change and try something different. They recognized that if they continue to follow the herd, run the same offense and defense, they’d get the same results. These are the leaders that made the decision to think outside the box, do the unexpected, and try something different.

This is the mindset of more and more advisors and mid-sized employers. They are frustrated with the medical benefits system as spelled out by the BUCAs (Blues, United, Cigna, Aetna). A system that requires them to choose an employer health plan based on very little information and in many cases, double-digit rate increases. Unfortunately, those hurt the most are the small to mid-sized businesses that are fully insured. They will continue to deal with hefty increases in premiums year after year and the potential for more government regulations. And with healthcare now a second or third line item expense for these small businesses, this will eventually force them to choose between paying the higher premiums or reducing benefits for their employees. For some, it may eventually mean having to shut down their business.

Most small to mid-sized business owners don’t realize there is an alternative to traditional fixed-cost health insurance. A medical group captive, which allows these businesses to self-fund and enjoy the advantages that large corporations have enjoyed for years. Transparency of spend, flexibility in plan design and cost containment.

A stop loss group captive better manages the ups and downs of an employer’s claims. It helps address the biggest concerns of employers when going self-funded, volatility and risk. By bringing together a pool of like-minded employers, they can share in the risk and reward. When employers are fully insured, they have 100% fixed cost. Under our captive solution, employers will see fixed costs of only 15 – 20% and variable costs of 80-85%. In other words, they have the opportunity to retain up to 85 cents of every dollar.

By thinking outside the box, these advisors and employers find they now have transparency in their medical spend which allows them to make better decisions. They have flexibility in plan design and control over spend through cost containment strategies. They now think like a CFO. They take a 3-5 year strategy, focused more on costs rather than annual rates. They have an opportunity to receive an annual distribution from underwriting profits and excess monies at the end of the year, if funds exceed claims.