JLTIM Papers: Deductible Buy-Back and Medical Stop-Loss Programs

Two recent papers from JLT Insurance Management (JLTIM) reveal how captive insurance can play a role in complex risk financing situations. The papers detail how captives can play a role in deductible buy-back programs and how captive insurance can have a positive impact on medical stop-loss programs.

One paper, "Deductible Buy-Back Programs," details how a captive insurance company can be a viable solution for financing retained deductibles in an overall risk transfer program.

"Medical Stop Loss" highlights how "A medical stop-loss program can improve risk management and reduce expenses in an area that has grown increasingly expensive in recent years," says the paper's author, Captive Practice Leader Anne Marie Towle.

In the medical stop-loss report, JLTIM invites both large and small employers to consider captive insurance as a tool for containing growing healthcare costs within their employee benefits programs. The report reveals that "captive insurance may provide an option to customize a risk transfer method that improves the financial management of many employer-sponsored health plans." Depending upon an organization's characteristics, a deductible buy-back program can be formulated for transactions through single-parent captives, group captives, and cell captives.

The deductible buy-back programs report reveals that, with a captive deductible buy-back program, an organization's existing deductible program or policy with a commercial insurer does not change. The primary difference is that "the insured's deductible liabilities would now be financed through a premium paid to a captive as opposed to being paid from the insured's operating income in a given year."