The Rising Health Care Cost Challenge
According to the National Conference of State Legislatures in 2018, the average annual employer-based family coverage premium was $19,616, up 5% from 2017! Premiums have increased over 20% since 2012. Health insurance now consistently ranks as the second largest line item for a business, after payroll.
This rapid increase in cost resulted in less than 30% of businesses with fewer than 50 employees offering health insurance in 2017, according to NFIB. A 22% reduction in companies offering health insurance since 2010. In comparison companies between 50-99 employees and over 100 employees saw a decrease of only 3 percent in offering health insurance.
Therefore companies with over 50 employees are absorbing a disproportionate share of the increased premiums. Unable to compete in the ever-shrinking candidate pool and stem the tide of turnover without offering benefits, businesses over 50 employees are left to accept their yearly increase in rates. Businesses purchasing insurance are victims of the flawed healthcare industry.
Effective Response
The goal is to purchase insurance from a position of strength rather than as a victim. This is accomplished by becoming an owner, and designer of the health insurance plan, through joining a captive insurer.
A captive insurer is defined as an insurance company that is completely owned and controlled by the insured. The captive provides risk-mitigation services for members and enables a company to self-insured programs that would otherwise be insured by a third-party.
Captive Insurance is utilized by insureds that choose to:
- Put their own capital at risk
- Take control of the insurance buying process
- Pay for insurance based on their company performance, not the performance of others.
Other benefits of captive insurance include:
- Increased control over the program
- Broader coverage options
- Stability in pricing
- Improved cash flow
- Performance-based purchasing
The Result:
Premiums of companies in our program have remained flat in the last 5 years.
Businesses that joined our national program five years ago have seen premiums remain flat in that time, versus the national 5 percent increase in 2018 alone!
The implementation of cost-containment programs associated with this program offers powerful savings to the company, while improving the quality of care and support employees receive.
Moving from a victim of the insurance industry to a position of strength, purchasing on a performance basis does not happen by itself. A company must take the steps to explore alternative finance options and think outside the box.
Innovations by FBinsure:
- Through a strategic partnership with one of the nation’s largest captive insurance companies, we can offer our clients an opportunity to join a knowledgeable and experienced group with a track record of success.
- As a leading expert in the area, we can help present your business to our partner in the most complete and comprehensive way possible through our Top of Stack Submission Program.
- Our FB Advantage process allows us to determine if the captive approach is right for your business at this time. If it is not we will work with you to establish a plan to get the business to that point.
