November 17, 2025

Is a Captive Right for You?

Captive Education
  • Why Employers Are Exploring Captives

As healthcare costs continue to rise, and employer-sponsored health plans become more unpredictable every year, many organizations are looking for new ways to take control of their healthcare spending instead of reacting to it. One approach that’s gaining attention is the medical stop-loss captive, a self-funded model that can provide employers with more stability, transparency, and potential savings.

But a captive isn’t right for everyone. Here’s what you should know before deciding if this structure could work for your organization, using the medTRANS model as an example.

What Is a Captive?

A captive insurance company is a licensed entity created by a business or group of businesses to insure its own risks instead of purchasing coverage through a traditional carrier. The National Association of Insurance Commissioners (NAIC), says a captive is “a wholly owned subsidiary created to provide insurance to its non-insurance parent company or companies.”

In healthcare, a medical stop-loss captive allows self-funded employers to join together to spread risk and potentially share in the financial rewards of good performance. Essentially, it combines the control and transparency of self-funding with the stability and scale of a shared risk pool.

As medTRANS explains, “A captive is a licensed and regulated insurance company that provides insurance to its insured. The primary purpose is to insure the risk of the participating business and allow the owner or insured business to benefit from the captive’s underwriting profit.”

Why Employers Are Exploring Captives

1. Controlling Rising Healthcare Costs

For most employers, healthcare is one of the largest and least predictable expenses. A captive helps participants gain stability by spreading large claim risk across multiple members, creating more predictable renewals.

2. Greater Transparency and Flexibility

Fully insured plans often limit visibility into claims data, vendor costs, driving the cost of premiums. In a captive, employers get access to detailed reporting and have a say in how the program is managed, leading to more informed decisions. (RIMS Risk Management Magazine)

3. Sharing in the Financial Upside

When claims perform well, the savings don’t go back to an insurance carrier, they stay with the employers who participate. In a well-structured captive, members can share in underwriting profits and investment income, turning good performance into real financial rewards (Self-Insurance Institute of America).

4. Collaboration and Shared Strength

Group captives allow smaller and midsize employers to join together. By sharing risk with like-minded organizations, each member gains access to more purchasing power and greater stability (National Law Review).

The medTRANS Model

The medTRANS captive program is built for employers who want to take a proactive approach to managing healthcare costs. The program combines the advantages of self-funding with the strength of a group captive, creating more balance between cost, control, and long-term value.

Key program features include:

  • Designed for financially stable employers, generally with 100 or more employees, though smaller groups may qualify (medTRANS FAQs)
  • 100 percent owned and governed by participating members
  • Flexibility to select various deductible levels and risk retention
  • Emphasis on proactive risk management and transparency
  • Recently achieved a 25 percent reduction in expense load for 2025 through operational efficiency (medTRANS News)

Is a Captive Right for You?

Every organization has a unique financial profile and risk tolerance. If you’re considering a captive, start by asking these questions:

  • Does your organization have the financial stability to handle some level of healthcare risk directly?
  • Do you want more visibility into how healthcare dollars are spent?
  • Are you willing to engage in proactive risk management through wellness programs and claims data review?
  • Does your organization have at least 75–100 employees or similar financial strength?
  • Are you ready to move from simply purchasing insurance to owning your risk?

If you answered yes to most of these, exploring a captive may be worth your time.

Considerations and Commitment

A captive offers long-term value but requires engagement. Members must stay active in governance, fund their share of retained risk, and plan for multiple years to see the best results. As Captive.com notes, the most successful captives are built on participation, trust, and shared accountability among members.

Conclusion

A medical stop-loss captive can help employers manage healthcare costs strategically. It offers more control, transparency, and the potential to share in financial success, but it also requires commitment and collaboration.

At medTRANS, our mission is to help employers evaluate whether a captive aligns with their goals, risk profile, and financial readiness. If you’re ready to take a closer look, learn more about the medTRANS model or connect with our team for a feasibility discussion.

And don’t forget, the medTRANS Annual Membership Meeting is coming up March 15–18, 2026, in Amelia Island, Florida. It’s our yearly opportunity to learn, connect, and share insights with captive members, consultants, and industry experts. Check event details here.

/ / / / / /

Works cited