Employer healthcare costs are expected to increase by 5% in 2022. For companies across the U.S., this is an unfortunate (and all too familiar) narrative—one that’s even more challenging amid the Great Resignation. Simply put, high-quality benefits have never been more critical to recruiting and retaining talent, yet those benefits are coming at an exceedingly high dollar figure.

For years, businesses had two choices: Either accept the price hikes or switch providers. But as the insurance landscape evolves, innovative tools are putting the power back into the hands of employers. One strategy gaining traction is the group health captive.

What is a medical captive, and is your company a good fit for this modern, small-business friendly take on the self-funded plan? Keep reading for your quick guide on the health insurance captives landscape as we enter 2022.

What is a medical captive?

Large organizations have long used self-funded insurance to reduce costs, gain flexibility and increase their access to employee healthcare data. Yet self-funded plans have largely been out of reach for small and medium-sized businesses that can’t afford to shoulder costly medical services. In the Kaiser Family Foundation’s 2020 Employer Health Benefits survey, for example, 84% of large-firm employees were in a self-funded plan, compared with just 23% of workers at small companies. With the rise of group captives, many perks associated with self-funded plans are becoming accessible to small- and medium-sized employers.

An alternative to fully insured health plans, a captive is an independent insurance company created specifically to provide insurance to the parent company or companies. (At least one of those owners must be a non-insurance company.) As the National Association Of Insurance Commissioners puts it, “Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured.”

Group medical captives are similar. However, instead of having a single owner, the captive is owned by multiple companies. By banding together, those businesses can share expenses and risk—potentially minimizing healthcare market volatility for every member in the group.

How do group medical captives work?

Medical captive programs typically include three components:

• Self-funded claims: Instead of paying a fixed premium to an insurance carrier, each employee will self-insure a designated amount of claims per member, per policy period. As an employer, you only pay the amount your employees spend.
• Shared risk: Each employer contributes a premium to the captive pool, which covers claims between the employer deductible and a certain upper-limit amount that’s typically around $500,000. Each employer’s demographics and risk profile help determine the premium. At the end of each year, unused premium funds are returned to the employers.
• Transferred risk: For any claims above the plan’s retained claims, a stop-loss policy goes into effect. In the event of a catastrophe, risk is spread across all group members, preventing participants from unpredictable and sizable losses.

If you’re interested in exploring group medical captive insurance, contact our advisors. We can help you determine if this tool is a good fit for your business—and help you navigate the entire process.

What are the benefits of health insurance captives?

Companies typically create group health captives to control their costs and minimize the risk involved with traditional self-funded plans. This tool isn’t a fit for every business. However, with the right strategy, group health captives can deliver measurable value.

• Costs: For a single employee, premium costs have increased 55% since the early 2000s. Salaries only increased 26% in that same period. With a group captive strategy, there are no “surprise” costs in an employer’s health insurance budget. Employers also retain funds year over year. When claims are lower than anticipated, a significant portion of the benefit cost savings goes back into your business—enhancing your cash flow and your bottom line.
• Transparency: The best health and wellness strategies are driven by data. With full visibility into your workforce’s healthcare data, you can determine the true drives of your healthcare costs—and implement strategies that bring out the best in your organization.
• Control: You determine what your plan covers and can tailor coverage to your workforce’s unique health needs and demographics. With a group health captive, you also choose the networks, pharmacy options, claims management and other critical aspects of your plan.
• Shared Risk: Unlike self-funded plans, group captives allow small and medium-sized businesses to share risk with like-minded companies.

Are group captives right for your business?

Like any employee benefits strategy, a group captive plan requires a customized approach—and what’s right for one business might not be for another. Let our experts clear the confusion and help you make a well-informed decision.

If your company has at least 40 employees and would like to explore this innovative strategy, contact Evans National’s experts. We’re here to help you navigate group captives and other insurance tools that prepare your workforce for tomorrow, today.

Before COVID-19, almost 70% of organizations with 50+ employees offered telemedicine benefits. Yet only 11% of consumers had ever met a physician virtually. Then came the pandemic. Seemingly overnight, telemedicine visits jumped 154% as stay-at-home orders compelled consumers to embrace remote care services. Today, nearly two years since COVID-19 reached America’s shores, telemedicine is proving its staying power in every possible way.

Telemedicine visits are 38X higher than they were pre-pandemic, according to a recent McKinsey analysis. Surveys show that patients who have used telemedicine services since Covid-19 are generally satisfied with their experience. And not surprisingly, investments in the space are booming. What does that mean for employers? If you want to establish (or expand) telemedicine benefits for your employees, now could be the ideal time.

Here’s what your company needs to know about telemedicine from an employee benefits perspective.

What is telemedicine?

Telemedicine is the use of technology to communicate with healthcare providers. Rather than visit a doctor’s office in-person, telemedicine allows patients to receive care through video calls, emails, online portals and other virtual tools.

You’ve likely also heard the term “telehealth.” The American Academy of Family Physicians defines telehealth more broadly than telemedicine. Whereas telemedicine is remote clinical services, telehealth also includes a wide range of non-clinical services.

How does telemedicine work?

Every provider approaches telemedicine services differently. However, virtual visits typically take place over the phone, via video call or through an app. During the visit, the provider will ask the same questions you’d be asked at an in-person visit, and you may receive treatment recommendations based on their findings.

Telemedicine is currently used for non-life-threatening conditions such as general doctor’s visits or consultations; mental health consultations and therapy sessions; some physical therapy sessions; and follow-up appointments. For some specialty practitioners—physical therapists, for example—telemedicine can enhance care by providing a glimpse into the patient in their home environment.

Although telemedicine is quickly evolving, it’s still not suitable for life-threatening or emergency situations. It’s also not advised for medical conditions that involve diagnostic care such as blood work and imaging, or for severe illnesses. For patients with complex conditions, medical professionals typically still require in-person visits to fully assess treatment options.

Emerging telemedicine benefit trends

In the National Business Group on Health’s 2021 Large Employers’ Health Care Strategy and Plan Design Survey, 53% of employers planned to expand their virtual care solutions. As telemedicine adoption continues to grow, numerous studies have pointed to its potential cost savings for employers. (Think: Better chronic illness management and fewer “after hours” visits.) By one estimate from the American Hospital Association, telemedicine could save U.S. employers as much as $6 billion per year—and that was before Covid-19.

Increased adoption and new advancements will continue fueling telemedicine’s rise into 2022, with the virtual-first plan emerging as a major trend to watch. These plans typically provide lower premiums but require patients to see their primary care provider virtually. As this still-emerging space becomes more developed, expect to see more virtual-first options for your employee healthcare benefits. (The number of virtual health plans has increased from one to eight since 2019, according to Employee Benefit News.)

Telemedicine is also expanding into another post-pandemic focus area: the importance of mental health. As more employers enhance their mental health benefits, expect to see a larger emphasis on virtual consultations and therapy sessions.

As virtual models continue to prove their cost-saving prowess, employers are finding new ways to incentivize their workers to adopt a virtual-first healthcare mentality. By some estimates, as many as 70% of patient medical issues can be resolved without in-person visits. That presents employers with a clear opportunity: giving employees more efficient care while reducing overall healthcare costs.

Does your organization need help navigating telemedicine benefits and virtual health plans? Our team is ready to help. Contact us to get expert advice and a customized quote.