Fun Friday with the POD: Shared Responsibility = Shared Reward

After several years of experiencing year-over-year premium increases, Southern Industries

Home Improvement decided to join a “Captive Insurance Group” to help ease the pain of

growing healthcare costs to both the employee and the company. The key to success in a

captive insurance is good decision-making by employees when using benefits.

What is a “Captive Insurance Group?”

A captive insurance plan is when a company (or group of companies) creates its own

insurance program instead of only buying coverage from a traditional insurance carrier.

Think of it as the company “pooling” money to cover its employees’ health costs. Because

the company is taking on more direct responsibility for claims, it has more control over

costs, plan design, and wellness strategies. When claims are managed well and

employees use benefits wisely, cost savings are shared back to the company and can help

keep premiums lower in future years.

Captive insurance plans include various cost-containment strategies that employees are

asked to consider when using benefits. The success of the plan is dependent upon

employee decisions.

Why does an Employee’s Decision when using Benefits Matter?

When employees use their benefits thoughtfully, it directly impacts the overall cost of the

health plan:

• Smart choices = cost savings. Using urgent care instead of ER for non-

emergencies, utilizing KISx/Valenz for surgical and imaging procedures, selecting

generic medications over name brand medications, and utilizing preventative care

options helps reduce overall claims.

• High unnecessary costs = higher premiums. If employees refuse to utilize cost-

containment strategies resulting in excessive claims, future premiums for everyone

in the plan may increase.

• Shared responsibility. Since the company is the primary funding source for the

plan, every employee’s choices affect not just themselves, but the affordability of

benefits for their coworkers too.

Bottom Line:

A captive insurance program gives us more control and flexibility, but it also means we all

play a role in how successful (and affordable) our benefits remain. Making good, informed

decisions helps keep costs down and ensures the plan stays strong for everyone.