An anonymous R2I client case. Ready-2-Insure reported these results for this employer. Results vary by group.
Executive summary
A Southwest Ohio healthcare and senior living employer had 412 employees across six locations. Its health plan was already self-funded. It paid employee health claims and bought stop-loss insurance to help cover certain large claims. Leaders wanted better pricing, a way to compare costs with peers, and a plan that was easier to manage.
Working with R2I, the employer joined a captive, a member-owned insurer. Members share an agreed part of claims risk. Buying stop-loss coverage as a group, changing pharmacy terms, and cutting the cost of running the plan saved $487,000 a year. The employer kept control over its plan design within the captive's terms.
At a glance
- 412 employees across six Southwest Ohio locations.
- $487,000 in annual cost reductions.
- $231,000 of that total comes from pharmacy changes.
- $89,000 year-two dividend, shown separately from annual savings.
The challenge: self-funded insurance without a useful comparison
The plan had $6.2 million in annual claims and $340,000 in stop-loss premiums. It already had coverage for certain large claims. The employer wanted to review the cost and terms of that coverage. It also lacked a clear view of how its plan compared with peers.
The HR team served a workforce with frequent staff changes. Reports from separate sources made benefits harder to manage. The review looked at pharmacy terms, plan fees, and benefits as well as stop-loss pricing. It also covered the duties and costs of joining the captive.
The strategy: buy as a group and keep control of plan design
Share a defined layer of stop-loss risk
The employer joined a captive with 14 regional healthcare organizations. Its members own the insurer and share an agreed part of claims risk. They can buy coverage as a group. Each employer still has duties for its own plan. NAIC explains captive ownership and structure.
The plan used a $75,000 specific stop-loss threshold. This applies to eligible claims for one covered person. The contract sets which costs qualify, when payments are made, and what is excluded. Stop-loss protects the employer or plan against certain claims costs. Employees get their coverage through the health plan. U.S. Department of Labor: self-insured plans and stop-loss.
Review pharmacy terms and plan fees
The employer also joined a group that buys pharmacy benefits together. R2I reports full pass-through of manufacturer rebates under that contract. These are payments drugmakers return through the pharmacy program. The review checked drug prices, covered drugs, fees, and which rebates the contract includes. A pharmacy benefit manager is the company that runs prescription benefits. Passing rebates back is one part of the cost picture. Other fees still matter.
Changes to how the plan was run cut its costs. Data from more than 6,800 covered people gave leaders a broader basis for comparison. The plan also added fertility and surrogacy benefits and improved mental health benefits.
R2I also reports $2 million in extra catastrophic coverage at no added cost for this client. This coverage helps with very large claims. The $2 million is a coverage amount, not cash savings. It is not a standard benefit for every employer. The policy defines which claims it covers.
The result: three sources of annual savings
| Cost category | Annual reduction |
|---|---|
| Stop-loss premiums | $156,000 |
| Pharmacy | $231,000 |
| Administration | $100,000 |
| Combined annual reduction | $487,000 |
These three savings sources total $487,000. Pharmacy produced the largest share, followed by stop-loss and plan administration. The result shows the value of reviewing the whole program, beyond medical claims alone.
The employer also received an $89,000 dividend in year two. That payment stays separate from the annual savings above. Dividends depend on the captive's results, its rules, and the funds it needs for future claims. Employers should not count on that payment each year when setting a budget.
The takeaway for Ohio employers
A captive can change how an employer buys coverage and shares risk. It can also leave room to choose benefits that fit the workforce. Compare the full cost, the work needed to run the plan, and how it serves employees. Read more about employee benefits planning and the information used in a renewal review.
Frequently asked questions
Is a captive health plan the same as fully insured coverage?
No. This employer stayed self-funded. It paid plan claims and shared some risk through the captive. The contracts set each party's role.
How many employees does an Ohio employer need for a captive?
There is no single cutoff. Each program has rules on who can join. Claims history, funds available, and the employer's comfort with shared risk also matter.
Does joining a captive mean lower costs every year?
No. Claims and program results can change. Review fees, funds set aside for claims, and any duty to put in more money. Weigh those costs alongside expected savings.
Can an employer keep control of its benefits?
Often, yes, within the program's terms. The health plan, stop-loss policy, and captive agreement must work together. Review access to doctors and covered services as well.
Review the structure behind your renewal
Bring your current plan, renewal, claims summary, and stop-loss terms. Start with the decision your leadership team needs to make.
Request an employee benefits review
Source and basis: R2I supplied and confirmed the client facts and results. Annual savings add up the three reported cost categories. The year-two dividend is separate. Results vary by employer, claims, and contract terms.