EMPLOYEE BENEFIT CAPTIVES:
A Smarter Approach to Healthcare Funding
Why Healthcare Funding Strategies Are Evolving
Healthcare costs continue to create new challenges for employers, making it harder to predict future spend with confidence. Traditional funding models can provide stability, but they may not always deliver the visibility and flexibility employers need, which is why more organizations are looking beyond annual renewals to evaluate alternative approaches. Key considerations include:
- Cost driver visibility: Understanding what’s actually fueling claims, from specialty medications to high-cost cases
- Funding flexibility: Evaluating approaches that can adapt as market conditions and workforce needs change
- Long-term alignment: Ensuring funding strategy supports broader financial and benefits goals, not just the next renewal cycle
- Proactive planning: Moving beyond reactive, renewal-driven decisions toward a more forward-looking strategy
Why Employers Are Rethinking Healthcare Funding
Traditional funding models weren’t built for today’s cost pressures.
Rising Costs
Medical and specialty drug costs continue to outpace employer budgets.
High-Cost Claims
One catastrophic claim can move a renewal by double digits.
Limited Visibility
Traditional models show what was spent, not what drove it.
Market Volatility
Carriers price uncertainty into every renewal. Employers absorb it.
Traditional funding transfers risk to a carrier, but it also transfers away visibility and control.
How Captive Risk is Layered
A captive doesn’t eliminate risk. It organizes it.
Case Study One
Mid-Sized Employer
Facing rising stop-loss costs, an aging workforce, and increasing large-claim volatility, this employer partnered with Henderson Brothers to evaluate a more stable, cost-effective approach, without reducing benefits or disrupting the employee experience.
- Experienced a 6.34% average annual stop-loss premium trend over five years
- Faced a 9.9% increase on its traditional stop-loss renewal
- Achieved $197,303 in first-year fixed-cost savings
- Projected a five-year cost advantage of more than $560,000, excluding potential dividends
- Retained its existing plan design, provider network, TPA, and pharmacy benefit manager
- Gained greater renewal stability through a “no new laser” structure, along with access to potential captive surplus and dividends
Through a comprehensive market and captive feasibility analysis, Henderson Brothers helped the employer transition to a healthcare captive solution that reduced fixed costs and renewal volatility while preserving its benefits strategy and creating meaningful long-term financial opportunity.
Case Study Two
Mid-Sized Employer
Facing healthcare cost increases well above market trend and growing specialty pharmacy costs, this employer partnered with Henderson Brothers to identify the drivers of its escalating claims and develop a more sustainable funding approach, without compromising its self-funded health plan.
- Experienced healthcare cost increases in the high 20% to low 30% range, well above the typical 11%–14% healthcare trend
- Identified specialty pharmacy medications as a primary driver of escalating healthcare costs
- Leveraged Henderson Brothers’ data analytics to evaluate claims and identify key cost drivers
- Implemented a targeted pharmacy carve-out program to address specialty medication costs
- Achieved more than $412,000 in first-year savings while reducing both claims and fixed costs
- Created a more stable foundation for a healthcare captive by addressing the primary driver of its escalating healthcare trend
Through a comprehensive claims analysis and targeted pharmacy strategy, Henderson Brothers helped the employer address the specialty medication costs driving its healthcare trend. By reducing both claims and fixed costs, the strategy delivered more than $412,000 in first-year savings while creating a more stable foundation for a healthcare captive solution.
What Is An Employee Benefit Captive?
What changes is the funding structure, not the plan itself.
What Changes
- Employers join a pooled, shared-risk group
- Claims performance directly impacts financial outcomes
- Favorable claim results return a dividend to companies
What Doesn’t
- Full control over plan design remains
- Existing carrier relationships stay in place
- The employee experience is unchanged
Our Approach To Captive Evaluation
Helping organizations make informed captive decisions with confidence.
Independent, objective guidance
Structured analysis of financial and risk factors
Transparent evaluation of captive structures
Alignment with long-term business goals
Ongoing advisory and strategic support
Evaluate Your Funding Strategy
Schedule a complimentary consultation to explore whether a captive fits.
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