Captive medical insurance, often called captive health insurance, is an innovative funding mechanism that puts control back into the hands of employers. Rather than paying health insurance premiums to traditional group health plans and hoping for a return, employers join together to form a group captive insurance company. This creates a shared pool of resources—funds that go directly toward medical claims and better health outcomes, not toward administrative fees or carrier profits.

In simple terms, a captive medical insurance plan is owned and governed by its members. Each participating employer contributes to three distinct risk layers:

• Retained Layer: Covers small, predictable claims.
• Captive Layer: A shared pool for medium-sized claims (e.g., $25,000–$250,000).
• Stop-Loss Layer: Catastrophic claims (e.g., $250,000+) are transferred to a stop-loss insurer.

By sharing risk among like-minded employers, a captive model delivers captive insurance advantages over traditional group health insurance, such as lower overall costs, greater transparency, and direct access to claims data. Unlike fully insured or level-funded plans, group captives eliminate hidden carrier profit margins and allow employers to tailor plan design, networks, and vendors to their unique needs.