Back in 2000 and 2003, Columbia Energy (Columbia) and Archers Daniels Midland (ADM), respectively, became true risk pioneers as they became the first companies to gain a prohibited transaction exemption (PTE) from the US Department of Labor (DOL) to write employee benefits into their captives. Since then, a number of companies have followed suit and created captive-funded employee benefits programs.
Companies that followed Columbia and ADM on a similar funding path had the luxury of utilizing an expedited process (EXPRO) to gain their PTEs. The Columbia and ADM cases were used by the DOL as model cases by which future companies could mirror and qualify for EXPRO.
In 2014-15, EXPRO was re-instated with approvals being granted to Coca-Cola and Intel Corp. These companies’ PTE’s are the genesis of the new age EXPRO process, reinforcing the pathway for writing employee benefits in a captive.
To date, more than 30 companies have successfully secured a PTE from the DOL. Our Spring research team recently set out to identify these companies and interview them to understand their experience and provide them a platform to share their story and experiences. We created a digital survey questionnaire that provided these pioneer companies a framework to collectively and objectively share their experiences and impressions of adding employee benefits to their captives. Our goal was to challenge the widely held assumption that adding employee benefits to captive is a good idea, by providing objective feedback from the pioneers as to what originally motivated them to consider heading down the path? Did they achieve the intended objectives? What has worked well…and not so well? What suggestions/advice could they offer to companies considering embarking on this path? And what does the future hold for adding new benefits to their captive? This report is a brief extrapolation of their responses.
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