Captive Health Insurance Trust Plans

HR best practices for small business

The Truth about Captive Health Insurance Trusts


The marketing around health insurance captive trusts can make them sound too good too be true. It’s often said that things that seem to good to be true probably are. A captive trust is, unfortunately, one of those things. Health insurance plans can be complex and time-consuming so the temptation to trust a company that offers captive trusts.


The Main Points For You to Consider


There are several points that captive trusts base their claims on. These things may seem to be positive but there are important counterpoints to consider.


It’s often promoted that your company will have more control over costs associated with healthcare plans. However, cost predictability is distinct from getting a fair rate. Engaging with a single carrier means you lose out on negotiating power and leverage.


Captive trusts also claim that your business will receive returns on underwriting profits. This may be true, but you’ll have to trust them as they’re unlikely to share claims performance data with you.


It’s claimed that your team will be better protected than on a self-funded plan, but this really isn’t the case. Self-funding can be much better in some cases but claims data is required to assess when it makes the most sense.


The most glaring concern is the conflict of interest that these types of companies operate with. If they run their own pool, they act as both your adviser and underwriter which is a confusing position to be in. To simplify things, it’s the same as a real estate agent working on both sides of the transaction — it simply wouldn’t be possible for them to get the best deal for everybody.


A Better Option than Captive Trusts


Here at Benely, we understand the importance of getting the right health insurance plan for your team. Captive trusts are often a bad choice for any business. By partnering with our benefits experts, you can find that the key to controlling your insurance costs is claims performance data. While working with a captive trust you’ll have no visibility, but when you partner with our team, you can make data-driven decisions with your best interests at heart.