In the United States, over 155 million people received medical and health-related benefits through some form of employer-sponsored program in 2021, according to the Kaiser Family Foundation. As healthcare costs continue to increase year over year, it should not come as a surprise to learn that after compensation-related expenses, healthcare costs are usually the second highest expense for most employers.


Employers are beginning to ask important questions about the future of their health care offerings and turning over every stone in an effort to control these ever-increasing costs. For employers that are currently leveraging fully insured plans, a prime opportunity to lower the total cost of healthcare exists through self-funding. By transitioning to a self-funded program, employers can achieve savings of anywhere from 5% to 15% depending on their program design and cost structure.


Self-insurance has become the most prevalent way to fund for healthcare benefits. Of those employers offering employer-sponsored programs, 67% choose to do so through a self-funded program. [1]

What is Self-Insurance?


Self-insurance, also known as self-funding, is a strategy used by employers to gain control over healthcare costs. In addition to control, the significant savings achieved through self-insuring is exactly why so many are considering a transition, as a viable alternative to manage and lower costs.


Self-insurance is the process of unbundling a fully insured plan, where employers use a third-party administrator to operate the plan from a benefits and claims processing perspective. This ensures that employees are not impacted by the change. The most significant difference pertains to how the program is funded; instead of paying a fixed premium amount, employers take a portion of the financial risk associated with the claims of the program, in exchange for lower overall costs.


The incentive for incurring this additional risk directly relates to the hefty charge carriers typically add on to their fully insured premiums. By taking on this extra risk, employers strip away these insurance carrier profits and are able to reduce their healthcare spending. To protect against the catastrophic losses that may occur due to higher-than-expected claims frequency or severity, employers typically take advantage of medical stop-loss coverage.


Groups looking to move to self-insurance should focus on understanding the financial and qualitative impact of this move. For this reason, we usually recommend groups that are larger (over 100 enrolled lives) to contemplate this strategy. The reason for this threshold is that most states regulations allow companies with over 100 enrolled employees (50 enrolled employees in some states) can request the insurance carriers for their historic claims information. This can then be reviewed by actuaries to help understand and outline the financial implications of potentially taking on some of the risk associated with moving to self-insurance.

Managing Risk – Stop Loss Insurance


The largest concern when considering a self-funded program relates to the risk of the program being impacted by unexpectedly high claims – be it due to the volume of claims or due to the exposure to a handful of large loss claims. One very sick individual or a series of unanticipated smaller claims could lead to a higher-than-expected claims level in a self-insured plan. Stop-loss insurance minimizes or eliminates this risk as well as dramatic fluctuations in claim costs over time, creating a level of predictability.


Aggregate Stop-Loss

Provides employer protection for the risk of catastrophic loss by providing insurance coverage for total group claims over a certain dollar amount. Stop-loss carriers issue policies that pay when the aggregate claims amount exceed a pre-determined percentage of expected claims levels. Aggregate stop loss is usually expressed as percentage of expected claims like 125%.


Specific Stop-Loss

Provides employer protection for individual catastrophic claims. Similar to aggregate stop-loss, financial protection is provided when the claim exceeds the pre-determined deductible or attachment point. Specific stop loss is usually expressed as a deductible amount like $25,000 per individual. For both specific and aggregate stop-loss, all claims exceeding the attachment point are covered by the stop-loss carrier and not the responsibility of the employer.

Benefits


Additional benefits to self-funding include design flexibility, cost transparency, and increased savings. Further, increased insight into the actual cost of care, administrative costs, and any loaded fees or additional expenses to the plan allow for more informed decision making.


Full Transparency & Increased Access to Data


Many fully insured employers don’t understand the true cost of their program or areas of claims concentration, or using a broker or advisor, as commissions are often loaded into premium rates. Additionally, obtaining claim information in a fully insured environment is challenging. Increased transparency and data with self-funding allows employers to analyze cost drivers and implement targeted programs to lower utilization costs, while increasing employee health and satisfaction. In a self-insured plan this information is easily available on a timely basis, thereby allowing employers to better understand their programs and make changes to cater to their unique demographic of employees before their next renewal.

Program & Design Flexibility


Every state has a unique list of mandated coverages that can add significant costs for both employers and their employees. Because self-insured plans are governed by ERISA and generally pre-empt state law, employers avoid these additional costs by allowing them to design plans that meet both employer and employee needs, increasing satisfaction for all stakeholders.

Financial Control


Better-than-expected claims in one year can offset next year’s expenses or reduce program contribution levels. In addition, employers may choose to purchase medical stop-loss insurance or a level funding arrangement to provide additional security and create consistency from a cash flow perspective.


Cost Savings


Typically, premiums paid in fully insured programs include loaded fees and industry loss trends. In a self-funded program, employers not only minimize or avoid paying these additional charges, but their costs are directly correlated to their specific experience, and not that of their peers. Tools such as consumer-directed health care, price transparency tools, specialty networks, value-based plan designs, and wellness programs all can be built seamlessly into a self-funded plan and help drive down utilization costs and the total cost of healthcare.

Want to learn more?


Self-insurance remains a powerful tool in an HR team’s arsenal to control and potentially reduce the burgeoning healthcare costs, as well as provide benefits that are targeted to their population. Employers who make the change can reap immediate advantages and avoid, or at least slow down, inevitable cost increases. Our client, edHEALTH, is a prime example of self-insurance done right, where their members were able to gain savings, offer enhanced coverage, and take a more targeted approach to employee benefits. Our Consulting Team is made up of highly trained risk funding professionals with years of experience. We help employers navigate the self-funding waters and to develop the best funding strategy to meet their individual needs.

1. 2021 Employer Health Benefits Survey. kff.org. https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/.

Change is the only constant in life.

Heraclitus (Greek philosopher)

If what Heraclitus said is true, and I believe it is, then why is it so hard for us – both people and organizations – to accept change and realign goals and objectives? We could cite deep routed tradition at universities and colleges, pillars of success permeated from board chairs at non-profits, family values passed from prior generations at partnerships, or implanted views from shareholders.  But whatever it is, the things that once got us climbing toward the top may also be what is holding us back from reaching the next summit.

As I refine my lens as a thought leader in employee health and welfare programs, I believe traditional change philosophies may be outdated.  As organizations continue to evolve and grow, those corporate flaws that once reflected in the mirror as fine lines are becoming deeper.  Workers and customers are redefining their definition of perfection and demanding more action, transparency, and change.  Alas, our approach to organizational change requires a facelift, or maybe just a makeover. 

I think Martha Freymann Miser, PhD summarized things well in a piece called Three Myths of Change.  In that piece she highlights 3 myths of change, which reflect some outdated philosophies of change management:

  1. Change Starts at the Top
  2. Prediction is Possible
  3. Control Equals Efficiency
organizational change makeover

Myth Makeovers

Although it is poetic to think that change starts at the top, I think it’s more accurate to say that change starts with leaders. Those leaders may or may not be at the top. In addition, I think there is a healthy skepticism that exists in many corporate cultures making it necessary to find change agents within all areas of your organization, so colleagues can take inspiration from their peers as well as senior leaders.

The myth of prediction is possible resonates with me because that is how I live my personal life…plan, plan, plan, execute. My goal is to methodically plot things out and make calculations to predict the future and remove the unknown. However, planning does not remove risk, it just mitigates it – or at least that is what I tell myself. Martha says it best with, “We like to believe we can plan change and roll it out much like a new system in a factory.” Unfortunately, that is rarely the whole story, and organizations need to accept and embrace some modicum of the unplanned.

Given the recent COVID-19 landscape, organizations were forced to reconsider how they managed and regulated performance, which is a necessary lesson in the myth Control Equals Efficiency.  With all the standardization and best practices (which of course have a place), it’s possible we have removed the flexibility required to be pliable and see change as an opportunity rather than an obstacle.

More important than highlighting the myths, Martha summarizes three new approaches that hit the nail on the head after we have spent the last two years living in a world where change within our personal and professional lives was not just constant but imperative. 

These refined strategies require that we accept our organizational flaws since they are arguably what makes our organization special, human, and best in breed.  Instead of focusing on the laugh lines, focus on what got us to today…the laughter and experiences…and build from there. If we think like aging entrepreneurs going under the knife isn’t necessary, we can makeover our organizations (and ourselves) by shifting our mindset.  From there we can reap the benefits of a stronger organization with workers who know they are living their best lives because they are part of our workforce culture and mission, not in spite of it. Our client, edHEALTH, has a model based off of the need for change for its members, and is well versed in rolling with the punches it cannot control.

In this piece in the Boston Business Journal, our Vice President, Prabal Lakhanpal, sets the stage for the current healthcare landscape and alternative strategies employers can take in order to offset costs and other challenges.

Women Can Have It All, If We Support Them

An industry has been created to help respond to the age-old question: “Can women have it all?”

Almost ten years ago, in 2013, we first heard Sheryl Sandberg’s self-coined phrase ‘lean in’, encouraging women to lean in to opportunities that put them in a more equitable position in their careers – to not be afraid to ask for a raise or promotion, and generally know their worth, and demand what that entails. In 2016, Paradigm for Parity was founded to get more women into the c-suite by 2030. Since then, organizations like Chief, have been founded to give C-Suite women the place and space they need to build networks and grow as leaders of their own. 

As I reflect on this on International Women’s Day, I am eternally grateful for the efforts of these women – and those who came before them – who have provided guidance, made space, and advocated to help advance other women. Few efforts are more than helping to elevate other women. 

And, while I believe women can have it all –  I know that for so many, including myself, it has come at a cost. We are on double duty all the time. 

Since my mother’s generation, women have come a long way in terms of what is available to them at a professional level. Gone are the days that the only careers available to women are teacher, nurse or secretary. Today, women are CEOs and pioneers of companies at an increasing rate, and I could not be more excited for what that means for our future, but also for my own daughter. 

 With that said, that “cost of having it all” remains high.  Even women who make similar salaries as their male partners, or who are the breadwinners in their family, often still bear the brunt of household and/or childcare duties. A successful career might mean being less present in a child’s life, or being unable to care for an aging parent, or even lacking the time to find love and nurture a romantic relationship, or simply being prohibited from doing anything for yourself. 

I want to be clear that I believe women can have it all, I am just looking forward to the day society sets women up to not only have it all, but supports them in the process. 

The COVID-19 pandemic shined a bright light on the ways in which our society has failed to provide for or support women. Within the first three months of the pandemic, 3.5 million mothers left the workforce due to childcare or caregiving responsibilities as well as layoffs and furloughs. The loss inspired a movement, the Marshall Plan for Moms, to center mothers in the economic recovery of the country, providing financial support to mothers for the labor they provide at home. And while the workforce is recovering, and a million women returned in 2021 – we are not yet where we were pre-pandemic.

I keep coming back to the resilience of women. While countless individuals quit their jobs in November of 2021, Women used this momentum to their advantage – to not only rejoin the workforce, but to ‘lean in’ and ensure they were getting what they wanted. Unlike a year ago, or in March of 2020, there are many jobs available, and most companies have taken a fresh look at salaries and benefits to gain a competitive hiring edge. Women make up 66% of the insurance industry, for example, but there seems to be a dearth of women leadership roles. 

All I can say is: now is the time. 

Now is the time to ask for that promotion, to make a lateral move that may have greater dividends in the long-term, and to advocate for yourself and for all women to get ahead.  

At Spring, we are proud to have incredible female leaders. As Managing Partner and co-founder, I faced a fair amount of adversity to get to where I am in the insurance/financial sector. Thus, I wanted to create a culture of diversity, equity and inclusion when I ventured out to start my own consultancy. 

For one, I have always fought for pay equity at Spring and fair hiring and advancement practices. Karen English, Spring’s Senior Vice President, has joined me on that journey. Karen brings in some of our biggest pieces of business and is a well-known thought leader in the leave and absence management space. She even plays an HR role within Spring, and does it all while raising two teenage kids, for whom she prioritizes basketball games and science fairs. 

Then we have Teri Weber, Senior Vice President, who is a true queen of all trades – from internal IT help, to driving our health and welfare accounts, to being a rockstar speaker, an amazing baker, and an attentive mother of two teenage girls. 

Anne Baldwin heads up our finance department and has revolutionized the way we keep our books. Christine Culgin leads our marketing. Within our broader Alera Group family, we are lucky to have many women executives, including our COO, our VP of Compliance, our Employee Benefits Practice Leader, our CHRO, and others. We even have a women’s mentorship program.

We are fortunate to be living in a time where there is so much support and advocacy for women to have it all, and I am proud to lead a company that helps to advance that effort. But so much more is needed. 

More support and networking opportunities must exist for women early on in their careers and women who cannot afford expensive membership dues. More organizations need to pledge pay parity. More organizations need to prioritize training and mentorship, with the goal of fostering honest dialogues and creating an atmosphere where employees feel supported and safe in speaking up and advocating for themselves. We need a sharper focus on communications, and employee engagement – for women and men.

As I look forward to International Women’s Days to come, I am committed to working toward a society that doesn’t just allow women to have it all, but supports them in getting there. 

Until then, let’s keep fighting the good fight! 

As seen in the New England Benefits Council (NEEBC) blog.

We are one year into eligible Massachusetts employees being able to apply for paid leave benefits under the Massachusetts Paid Family and Medical Leave (PFML) program. Although stats for the MA PFML Rookie Year have not been released yet, the first six months were telling:

While we await data for season of 2021, let’s dissect the highs and lows and see if MA PFML has a shot at Rookie of the Year!


Let’s start with the highs:


The plan appears to be running at a sustainable level with sufficient funding, indicated by a reduction in contribution rates, which is good for residents of the Commonwealth.


Employers were able to successfully create private plans without significant hurdles in the process, allowing MA firms to continue their history of rich benefit designs without negatively impacting corporate plans.


Massachusetts has been a strong example of early and broad education of the program. Individuals in the state were told about benefits that may be available to them in plenty of time before the program went live, giving them the opportunity to ask questions and better understand what their experience might be in the case they need leave. The state hosted various webinars to different audiences, providing real time information and continuous updates on the status of the program’s launch. The website houses a multitude of helpful information and is continually updated. For questions not answered in these channels, individuals may also call the DFML for benefit questions or the Department of Revenue (DOR) for questions concerning private plans or contributions, and the state is typically always able to answer even in-depth questions.

While the state has had multiple home runs implementing a PFML program, just like evaluating Rookies of the Year like Jonathan India and Kyle Lewis, we need to think of the swing-and-a-miss situations as well. The most significant strike for the MA PFML was their system:

Just like anyone’s first year in the pros, our first year with MA PFML threw us curveballs we did not expect, and as a result, we have learned some important lessons. The ever-evolving landscape of PFML laws has put pressure on employers with employees across the country, as they try to meet employee needs while balancing corporate responsibilities and equity. As we all become more seasoned players in this complex game of leave, Spring has outlined some best practices for employers handling PFML:

The replay we are watching the most, however, is that COVID-19 significantly increased the complexity of such a program. The need for leave has been exacerbated. Difficulty hiring employees has affected employers who must keep up productivity while more employees are away from their jobs, and the state had to administer a new leave program under less-than-ideal conditions. In addition, the tremendous growth of remote work has made it difficult for employers to determine where an employee may be eligible for leave.


Overall, workforces are evolving and regulations at the local, state and federal level need to be continually monitored. As we see benefits become available under new programs, such as CT PFML, and other states pass bills to develop PFML programs, such as New Hampshire and Maine, employers will need to assess their strategies and evolve accordingly.

Spring was named a Top Employee Benefits Consultant for 2021 by Mployer Advisor – check out the details in this press release.

As seen in the Captive Review Group Captive Report, September 2021.

With the rapid spread of the Delta variant, the Covid-19 pandemic continues to leave employers with a series of unpredictable risks directly related to the pandemic. Among these risks is the potential higher cost of healthcare benefits offered to employees, a factor which must be built into any long-term risk management or cost-containment strategy. Covid-19’s impact on healthcare costs Based on tracking data across multiple employers, the future impact of Covid-19 on high cost claims will directly impact health insurance. Key factors include:

Direct costs related to Covid-19

Costs associated with testing, treatment and vaccines remain a primary source of plan costs. The most direct impact on captives is the high cost treatment tied to severe hospitalizations, particularly due to potent strains of Covid-19 like the Delta variant. There may also be ongoing health needs for members who recover from Covid-19 or are long-haulers.


Deferral of care

Plan members have chosen to defer elective treatments. While some of this care was eventually incurred over the course of the last year, many plan members continue to hold back on care, whether because of discomfort in a hospital setting or difficulty in finding care due to bandwidth issues. This influences future costs, particularly with unpredictable costly surgeries.

Missed preventative care

Client data across industries also showed a significant reduction in preventative care visits, and lower test numbers in areas such as labs, CT scans and MRIs. As a result, many employers are concerned because if certain health issues are not identified and treated early, the severity of the case and corresponding cost of care may be higher down the road.


Behavioral health

Covid-19 propelled behavioral health issues into crisis levels. While it may seem indirectly related to broader healthcare, consider this: the national Alliance on Mental Illness reports that cardiometabolic disease rates are twice as high in adults with serious mental illness, and that depression and anxiety disorders cost the global economy $1 trillion annually in lost productivity. We are sure to see the repercussions of this in claims costs to come.

Health insurer risk premium margins built into insurance pricing have been increasing in light of all this uncertainty, as well as broader trends such increased prevalence of high cost specialty drugs and increasing hospital costs. In fact, the most prevalent specialty medications are increasing in price at 10%-15% annually, further contributing to unpredictability of future claims.


Employer Considerations


During the pandemic, employers have needed to confront their organizational philosophy on the employee value proposition and balancing the investment in employee benefits with the impact on the company’s stakeholders. The impact of Covid-19 has made employers more acutely aware of the need for sufficient healthcare coverage for employees and their families.


In order to provide attractive benefits in an environment of rising costs and volatility, employers must rethink the programs they offer and how they are funded. Many organizations have also revisited benefit program governance structures, how decisions are made, and how programs are monitored.


Perhaps your remote workforce has different needs than they did in 2019, or the pandemic has triggered new problem areas that can be addressed through wellness solutions or advocacy tools.


No matter your path, employers seeking to ensure that they offer comprehensive healthcare benefits to employees at an affordable cost need to consider the financial management benefit of potential long-term cost savings and mitigation of volatility associated with captive structures.


Captive Arrangements for Employee Benefits


As employers look at the impact of the pandemic, organizational planning requires balancing the increasing cost of healthcare with the risk associated with solutions that reduce the total cost of the program. At its simplest form, health insurance can be expensive if a fully insured program is purchased, as organizations pay a risk margin, often 20% to 40%, for transfer of the risk to an insurer. Small to mid-sized organizations typically mitigate this cost by self-insuring a portion of their healthcare risk with medical stop-loss to cover higher cost claims. However, the higher risk premiums required by health insurance, including stop-loss insurance, lead to steep healthcare plan costs and/or, in some cases, being forced to take on higher-than-optimal risk.


A captive arrangement is a strategic way for employers to benefit from self-insurance while creating a sustainable solution to partner with commercial markets. Captives provide substantial competitive advantages over traditional self-insurance, such as:


Reduced total cost of insurance

Insurance carriers develop premiums by heavily weighing on industry averages, state rates and, to some degree, on an employer’s individual loss experience. This may lead to pricing that may not accurately reflect an organization’s actual loss experience. Insurance carriers usually price to include substantial overheads, including risk and profit margins. A captive provides employers an opportunity to recapture premiums from the commercial market and build a sustainable long-term model for their insurance needs.


Insulation from market fluctuations

Conventional commercial insurance is vulnerable to market fluctuations. This has never been more evident than today, with hard insurance markets and premiums that are increasing substantially with almost no change in coverage level. As a member in a captive program, employers are less susceptible to unpredictable rising costs imposed by conventional insurers every renewal season, as a balanced funding approach can smooth the cyclical volatility of the commercial insurance markets.


Protection from cashflow volatility

Leveraging a captive to fund medical stop loss can lower the cashflow volatility often faced by self-insured programs on a monthly basis. Having a captive cover claims at a substantially lower stop-loss level allows employers to smooth out plan funding and mitigate cashflow risk to the company.

For employers that may not have their own captive or the resources to form one, there are a variety of group captive solutions in the medical stop-loss space. These solutions are turnkey in nature and simple to implement. Most well-structured group captive programs aim for a seamless transition for employers where there is almost no disruption. In other words, from an employee’s perspective, the claims process is entirely the same. With group captives in particular, all the mechanical aspects are handled by the group captive management team, with minimal effort required for an employer.


There are several group captive arrangements that employers can tap into. In selecting the most appropriate arrangement, you need to consider factors such as the upfront cost of the program, the extent to which customization will be available, the flexibility you will have for your organization within the group captive model, and how renewals will work.


Looking Beyond the Pandemic


As we look forward beyond the pandemic, employers should consider ongoing healthcare program effectiveness. Healthcare costs will continue to increase and become a larger portion of organizational budgets, but it is not too late to start leveraging innovative solutions to mitigate these costs. You can proactively adjust your tactics today and be better prepared for tomorrow, and with a captive you are truly in the driver’s seat.

In this Boston Business Journal Q&A, Spring SVP Teri Weber shares her thoughts on how employers can meaningfully tackle mental health issues at the workplace.

As seen in Captive International


As the dust begins to settle on the COVID-19 pandemic, forward-thinking organizations are focused on programs that provide competitive benefits as they look to lure new workers and retain existing employees. They recognize that employee benefits give them flexibility to deal with the changing employee landscape, from a demographic and geographic perspective, as well as improving employee wellness, maximizing their savings and increasing employee engagement in the modern era.

COVID-19 impacted insurance coverages and industries differently, but a picture is emerging of what the employee benefits landscape will look like post-pandemic

Prabal Lakhanpal of Spring Consulting

A holistic approach


Historically, employers were largely focused on ensuring they had adequate insurance coverage on a line-by-line basis, and these coverages often operated in silos. Today, more organizations are breaking down those silos and developing a view that is holistic, looking across the board to create an employee benefits program that emphasizes employee wellbeing and population health management.


Employee wellness is primarily the idea of not just providing employees with appropriate health, life and disability benefits, but also ensuring that employees have assistance regarding their overall wellbeing, including physical, financial, behavioral, social and intellectual health. Organizations increasingly understand how the individual components of their benefits programs are inter-related, and that evaluating and managing these relationships adds value to their employees.


A captive is an effective mechanism for achieving an integrated program. In an integrated captive program it is easy to bring together all the lines and ensure that the appropriate resources are being used to plug any gaps in the benefits portfolio. Most of our clients using this approach have been able to leverage the savings from the captive program to provide the additional coverages at almost no or nominal cost.


In addition, the transparency and clear line of sight into claims activity and utilization rates help employers plan for program changes, make decisions and adjust to changing employee needs sooner than they would be able to without a captive. Organizations that already had benefits in their captive when COVID-19 hit fared much better than those without one, as they were able to adapt quickly to make changes to their benefits that accounted for the unusual circumstances.


For example, we helped a large global employer leverage its captive to provide extended benefits for employees it was forced to furlough when the pandemic struck. Its carrier would allow for continued benefits for only three to six months, but by using the captive to take on the risk, the organization was able to keep benefits for furloughed employees for 12 months at no additional cost. This move went a long way to improve employee retention and morale.

Medical stop-loss


If we think about the range of employee benefits in the US, medical stop-loss is perhaps the one that has changed the most and attracted the most interest in the last few years. It is typically not an Employee Retirement Income Security Act (ERISA) benefit so Department of Labor (DOL) processes don’t apply.


There are two driving forces behind this interest. First, healthcare costs continue to skyrocket, causing employers to look at alternative ways to bend the healthcare cost. Medical stop-loss in a captive is a smart, cost-conscious response to these market conditions.


The second factor is that for a long-time medical stop-loss has largely been considered a first-party risk. Over time, law firms and accounting firms have gradually started to categorize it as a potential third-party risk.


This transition to medical stop-loss being a third-party risk is gaining substantial traction and impacting the way programs may be structured to achieve insurance tax treatment. This concept needs to be individually assessed at the employer level, considering the circumstances of the organization. We highly recommend working with a captive attorney or tax advisor to ensure compliance.

Life and disability


Life and disability are other lines that have changed significantly in recent years. Typically, any coverage subject to ERISA needs to go through a DOL exemption process in order to be placed in a captive. Life and disability are usually subject to ERISA. Historically, the DOL had an expedited process, which allowed employers to submit an application for approval to add benefits to a captive.


In late 2018, the DOL paused this process in order to rethink and better understand how employers are using these benefit lines in a captive. They have since conducted an analysis and created a more streamlined exemption process for which we are already seeing applications flow through the DOL.


As we look to the future, I believe this will encourage more employers to think about life and disability as potential coverages for captives. These coverages not only help employers achieve best-in-class benefits provision, they also support captive insurance structure from a diversification point of view.


Another growing area of interest is the self-insuring of employer-paid disability coverages. This is an extremely useful solution for organizations and is quick to implement, but the feasibility of this needs to be evaluated on an individual employer basis.

Voluntary benefits


While not new, voluntary benefits continue to pick up steam in the market. This trend correlates in part to my first point about a holistic approach, as voluntary benefits can offer a range of different protections that are not part of a traditional benefits package. In this way, employers and employees can address a larger spectrum of health and wellbeing concerns such as vision, financial wellness, or accident insurance, thus creating a more comprehensive program.


Voluntary benefits are an important tool to have as employers fight against rising healthcare costs, as they are a low-to-no-cost mechanism to support employees in managing those increasing costs.


Last, as most voluntary benefits are underwritten at extremely low loss ratios, insurance carriers make a substantial profit from a voluntary benefit that is fully-insured. By utilizing a captive (self-insured structure) for voluntary benefits, the employer can further reduce benefits costs for its employees. It’s a classic win-win.


Conclusion


The “new normal”, whether it feels normal or not, is not on the horizon, but at your doorstep. Cutting-edge businesses are taking a modern approach to address the challenging market conditions while still providing competitive benefits, retaining and attracting talent, and being risk-smart and mindful of their bottom lines.
Thinking holistically and reframing your strategy around medical stop-loss, life and disability, and voluntary benefits are just a few of the ways you can use your captive to stay ahead.