Short answer: A group captive is an insurance company owned by the employers it insures. For health benefits, mid-size employers join a captive to share stop-loss risk, gain pricing stability and claims data, and potentially share in surplus, while limiting any single member’s exposure.
A captive is a licensed insurance company owned by its insureds. In a group medical captive, a number of mid-size self-funded employers pool a layer of their stop-loss risk together. Each employer keeps its own plan and a specific stop-loss deductible, but the captive collectively absorbs claims in a middle layer, with traditional reinsurance above that.
The draws are stability and transparency: members smooth out the volatility that makes self-funding scary for a mid-size group, gain access to claims data and cost-containment programs, and may receive a surplus distribution in good years. The trade-offs are capital commitment, shared risk with other members, and more complexity than a fully insured plan.