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The Rise of Medical Stop-Loss Captives

April, 2016

In a recent whitepaper by QBE North America, the global reinsurer reported a rise in medical stop-loss captives among companies that self-fund employee health insurance. According to the whitepaper, Medical Stop Loss Captives: Issues and Answers, these companies are deriving significant benefits from the ability to use reinsurance to provide stop-loss coverage.

Mandates in the Affordable Care Act (ACA), including the removal of lifetime limits, have resulted in a sharp spike in healthcare costs, and large companies have been hit especially hard. Many employers who previously opted out of purchasing medical stop-loss, are now finding that they need the protection. Other large companies are simply looking for a more cost-effective method of financing coverage.

Benefits Extend to Small and Medium-Sized Companies
Large companies are not alone, however. A growing number of small and medium-sized businesses are jumping on the self-funded bandwagon to deal with rising healthcare costs. In order to do this effectively, smaller employers need medical stop-loss coverage just as much as their larger counterparts. In response to this need, insurers are redesigning group captive structures.

How Can Captives Help?
Traditional medical stop-loss coverage excludes certain risks, such as individual employees with costly, long-term health conditions. A captive can absorb these risks, or at least some of them, resulting in less risk to the employer. The rise in medical stop-loss captives has been astounding. According to Phillip Giles, vice president of sales and marketing for QBE North America’s accident and health business, “We’ve seen interest for these types of plans double over the last few years.”

Partner with Primmer
Vermont’s first captive was formed in 1982 by Primmer’s founder, John Primmer. Today, the green mountain state is the country’s preeminent captive domicile. Representing more than 200 captives and alternative risk facilities, Primmer is the leading law firm representing captives in Vermont and across the globe. Contact Primmer today for more information.