Roundstone Insurance based on Cleveland, Ohio started in 2003 they were the first to bring group medical captives to the market. Group medical captives are a type of self-funded health insurance that allow small and medium size businesses take advantage of the same benefits of self-funding that large corporations have been reaping for many years. Over 60% of employer sponsored health plans in the United States are self-funded and through the use of group medical captives Roundstone is increasing that percentage.
What is special about what Roundstone Insurance offers?
In answering this question, it is important to first review traditional self-funding. There are two main elements, stop loss insurance and then the claims funding below the employer's deductible. This works excellent for businesses with more than 1,000 employees because they have enough employees to spread the risk sufficiently but this model is unsafe for small and medium size employers. Under this model a small employer could go broke if they had a catastrophic claim come in.
How Roundstone is different, is that they add a third element between the stop loss insurance and the claims under the employers deductible and that is the captive. The captive acts as a buffer for these large claims and allows like-minded employers to share in the risk of claims. Each employer in addition to purchasing stop loss insurance also pays into the group captive. At the end of the year any extra funds that are in the captive are returned to the employers pro-rata based on their contribution.
Roundstone reports that on average they return 8-16% of the captive premiums back to employer participants each year. These are funds that weren't needed to pay claims throughout the year.
As a form of self-funding, employers still receive their claim's data allowing them to continually optimize and improve their health insurance. Unlike fully insured plans where claims information is mainly hidden, employers with Roundstone get complete transparency.
For each group Roundstone is able to match the exact benefit levels that an employer has on their plan (deductible, max out of pocket and copays) the only change to the plan would be the network. The networks they use are:
You might be wondering who pays the claims? Roundstone can work with any third party administrator but they also has an inhouse TPA called ByWater.
Roundstone works with groups in any of the 50 states that are between 20-1,000 enrolled employees.