Medical Group Captives
How It Works
How It Works
EmCap is a financial vehicle that allows small to midsize employers to break down their health care costs into layers. Medical claims can be grouped together according to size and frequency. The vast majority of claims are small, routine claims which are predictable from year to year. Larger, more costly claims happen less frequently and are difficult to predict. EmCap works by dividing up these claims into layers to achieve maximum economic efficiency. From smallest to largest, the three layers are:
Employers retain this layer and pay for the small, routine medical claims themselves.
Employers share the larger, but still predictable, claims with the EmCap Group Captive.
The largest and most unpredictable claims are transferred over to Berkley Life and Health Insurance Company, ensuring that the captive and all members are protected by an A+ rated carrier.
This strategy helps employers maximize the economic efficiencies of their health plan. Small risks are kept and paid for by the employer without added administrative costs. Larger risks are shared with the Group Captive and become more predictable over the long term, due to the captive’s greater size and scale. Berkley Life and Health assumes the most catastrophic risks, thereby lowering the volatility to the captive.
Step 1: Self-fund
EmCap begins with a self-funded plan — the same strategy used by large employers to provide health benefits to more than 60% of U.S. workers.1 With support from EmCap and direct guidance from their broker, employers create a self-funded health plan.
Step 2: Purchase a Stop Loss policy
Employers purchase an A+ rated Employer Stop Loss policy from Berkley Accident and Health2 with deductibles that are right for their specific risk profile.
Step 3: Join a Captive
Finally, employers join an existing Berkley captive program or form their own. Employers post collateral funds to the captive, which is needed if the captive’s losses are higher than expected. The captive assumes a layer of the Specific and Aggregate risk from the Berkley Stop Loss policies of its participating members. Unused funds in the captive are typically returned to the employers on a pro-rata basis.
EmCap gives us far more control of our health insurance costs than can be done in the fully insured market.
1 2018 Employer Health Benefits Survey, Kaiser Family Foundation/HRET, www.kff.org.
2 Berkley Life and Health Insurance Company is rated A+ (Superior) by A.M. Best.
EmCap is not a guarantee of lower future employee benefit costs. Insurance coverage is underwritten by Berkley Life and Health Insurance Company and/or StarNet Insurance Company, both member companies of W. R. Berkley Corporation and both rated A+ (Superior) by A.M. Best. Not all products and services may be available in all jurisdictions, and the coverage provided is subject to the actual terms and conditions of the policies issued. Payment of claims under any insurance policy issued will only be made in full compliance with all United States economic or trade and sanction laws or regulation, including, but not limited to, sanctions, laws and regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).