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A Captive insurance company is a privately owned insurance company whose owners come together to pool risk and form their own licensed insurance company. In this case, members who are sole proprietors, independent contractors and/or single business owners who create self-funded plans for their own businesses. This group approach provides members with the scale to cover the medical risks of participant members and potentially provide cost savings compared to the ACA marketplace and other private individual plans.

A captive insurance company is a company that shares in the insured risk of its owners and is controlled by its participants, in this case, the owner/members. Participating members both technically own the majority of the company through B-shares (shares do not come with actual value attached to them) and reap the rewards of any annual profits (generally, future savings). Distribution of any annual profits is determined by a Captive Advisory Board. Typically, an Advisory Board decides to lower prices or keep prices stable by directing reserve funds to benefit the owner/members.

A captive harnesses the size and scale of its membership to create an innovative structure that locks in savings for its members and their families in good health. The first step is to screen for healthy applicants. About 5% of people drive 95% of healthcare costs. By allowing the remaining 95% of applicants to participate, the chance of larger claims is reduced. The second step is to ensure each captive member maintains its responsibility to other participants, including seeking friendly providers via PPO, Care Navigation or other means, reviewing claims reimbursements and provider bills, as well as working with claims advocates when needed.

Vault Health Captive is owned by participating member businesses. Each member participant has its own self-funded plan. Vault Health Holdings is the captive manager and Vault Admin Services is the plan Administrator. The captive secures a reinsurance contract to cover claims exceeding the target loss ratio (if the captive does exceed the loss ratio. Re-insurance provided by OdysseyRE does not have a “specific” or “aggregate” paid claim limit, meaning that there is no coverage limit, or reinsurance cap.

The captive is reinsured by OdysseyRE, an A rated reinsurer. If claims exceed expected levels, they are paid by the re-insurer and Vault. There is NO maximum coverage limit. In addition, the captive structure is filed with, and meets all requirements set forth by, the North Carolina Department of Insurance.

Participating companies sign the Joinder Agreement of the Captive to become an owner.

The documents executed at the time of plan establishment are the Joinder Agreement, your company’s self-funded Plan Document, the Medical Reimbursement Contract, and Attestations.

This document describes, among other things, how the captive will operate and communicate with members as well as to the Administrative Services and Managed Care Agreement.

The role of the Advisory Board is to be the voice of the owner/members and to represent their interests. The Advisory Board will review annual audits and have access into captive financials. The Advisory Board will also make decisions on how to manage annual profits of the captive, such as allowing them to build and grow in a reserve fund, or to apply them to reduce or stabilize monthly costs.

A reserve fund is money that accumulates from any profits realized. Funds grow when medical costs are lower than the amount taken in from members/owners. The monthly payments collected from each member should cover 100% of anticipated claims. Therefore, if claims are only 80% for the year, the captive would keep the remaining 20%  for a reserve fund, or other purposes, as decided by the Advisory Board.