In an amazing scene of Dune, Timothée Chalamet’s Paul Atreides is asked to place his hand in the box by the ominously black-veiled Reverend Mother.

“The test is simple,” she says. “Remove your hand from the box, and you die. What’s in the box? Pain.”

The whole scene is kinda like what HR managers annually experience when they learn how high new health insurance premiums will be next year.

Sticking your hand into a searing box of pain with a poison dagger at your neck? Okay, perhaps that’s a bit of an exaggeration –  but when health insurance rates spiked 28.2% last year, it’s understandable if your blood pressure also rose proportionally.

What’s in the box? Pain. Rates are going to skyrocket, yet again. And there’s nothing you can do about it.

At least that’s what the insurance companies would want you to think.

Except for one way you can. By switching to self-funded insurance on Roundstone’s Group Medical Captive model, you avoid spiking premiums and intense, searing pain.

And you won’t feel that familiar guilt of passing rising insurance costs onto your employees – who are almost certain to resent you for it.

How nice. Actually, you’ll probably get a savings next year. With self-funded insurance, the average client saves 20% on their insurance costs over 5 years. In fact, two-thirds of Roundstone customers save enough in their first 4 years to pay the claims for their entire 5th year. And 100% are guaranteed to save money on a self-funded insurance plan.

Wouldn’t saving on health insurance be an awesome thing to tell your boss next year? Let me explain.

How Small Companies Can Now Afford the Option of Self-Funded Health Insurance

Founded in 2005, Roundstone’s Group Medical Captive was the first of its kind. It revolutionized the healthcare space by making self-funded insurance a viable option for small to midsize businesses.

There’s a reason 82% of workers in large firms are covered by self-funded health insurance plans. It’s cheaper because you only pay for what you need – the health insurance you deserve. Any spend your employees don’t use isn’t eaten up in profits like it is under a fully insured plan.

But until Roundstone, small to midsize companies couldn’t afford to offset the risk of self-funded insurance. If something catastrophic would happen to one or more members, they couldn’t afford the hit.

Roundstone’s Group Medical Captive solves this by pooling the resources of other small businesses like yours. You don’t have to have the same insurance, but together you do dilute the risk.

With over 700 companies and more than 120,000 lives in its two Group Medical Captives, Roundstone’s clients enjoy the risk leverage corporations have had for generations. It allows them to self insure with the same predictability as a company like General Motors – even if they only have 25 employees.

How the Group Medical Captive Works in Self-Funded Insurance

Under the group medical captive model, companies self-fund their health insurance up to a specified deductible, typically $10,000 to $25,000 per employee, with a specified maximum cap across the whole company. This is 65% of the total costs of your self-insurance plan.

Claims above the deductible are then paid by the stop loss insurer that is reinsured by the group medical captive up to $500,0000. Stop loss premium payments by the employer make up 25% of your total costs. The remaining 10% of your total costs covers your admin fees from your consultant, TPA and any other unbundled plan services like telehealth or care navigation tools.

By self-funding your health insurance, 85% of your costs are variable – which means you have control over them and can save money as a result. If it doesn’t get spent, those funds are refunded.

Anything not spent in Roundstone’s Group Medical Captive is paid back to you pro rata in the form of a check. In 2022, Roundstone distributed $24.4M unspent captive premium pro rata. The refund is based on how well the reinsurance pool of employers does, not necessarily your company specifically. You may be entitled to a refund even if you had a high stop loss claims year.

Every year, we send checks in the tens of thousands of dollars back to clients as annual refunds on their medical group captive. They can choose to spend it, bank it, or save it for next year’s self-funded insurance plan. One of Roundstone’s clients invested their refund into a company gym, which not only made their employees healthier but drove down claims in the following years.

And you get those funds back whether or not you choose to renew the following year. Fortunately for us, 95% of Roundstone’s clients renew. They tend to stick around because of the savings, the valuable data insight, and care quality. The fraction who do leave tend to be the results of buy-outs into bigger companies where the group medical captive model is no longer necessary.

And that’s fine. Unlike level-funded plans where you’ll be lucky to receive 50% of your funds back and only if you renew, our plans don’t have any handcuffs. You receive a refund regardless if you decide to continue with the plan the following year.

The Value of Data-Driven Insights in a Self-Funded Insurance Plan

Unlike a fully insured plan, self-insurance delivers meaningful and actionable data that can be used to drive down your plan’s costs and increase savings.

For example, you can see if one employee’s premium drug is driving up prescription costs and then get that employee into a pharmacy rebate program, saving you potentially tens of thousands of dollars. Or you can switch to an independent pharmacy benefits manager that has 100% pass-through savings to the group, a strategy that lowered one client’s prescription claims by 47%, resulting in a total cost savings of $28,000 from one employee.

Roundstone’s team continually analyzes your data on the hunt for savings. We then make cost-containment recommendations. Our experienced cost containment staff makes it easy for you to optimize your plan with simple action items that can result in thousands of dollars in annual savings. The choice is up to you.

Self Insurance Empowerment 101: Yes, It’s Good for Your Employees

The truth is the traditional insurance industry doesn’t care about you. They’re focused on their bottom line, not yours. That’s why renewal time often feels like a box of pain every year. It’s a frustrating experience where you don’t feel like you have much choice.

If you’re sick and tired of staggering price increases every year, why not do something about it?

The first step is to take back control. Download your copy of “What Your Fully Insured Carrier Doesn’t Want You to Know” today.