Employee benefits are among the largest recurring investments for businesses—especially here in Colorado, where rising health insurance premiums and fierce competition for talent are pressing business owners and leaders to reassess their approach. With employer health plan costs continuing to climb and more companies joining benefits captives, it’s no longer enough to think only in terms of “self-funded vs. fully insured.” Let’s explore how a group captive strategy could be your bridge between control and stability.
Why This Matters to Colorado Employers Right Now
- Premiums Are Climbing: Employer health insurance plan costs in Colorado are expected to increase by double digits in 2025, with some regions facing hikes of nearly 15%.
- Mid-Market Squeeze: Mid-sized employers are being hit hardest — too large to benefit from small-group protections, yet not large enough to negotiate like national corporations.
- Demand for Better Benefits: Colorado employees increasingly expect flexible employee benefits that support mental health, family-building, and work-life balance — all of which can be difficult to achieve with a fully insured “off-the-shelf” plan.
Fully Insured: Simple, But Costly
With a fully insured plan, your company pays a set monthly premium to an insurance carrier. The carrier assumes the risk of paying employee claims.
- Pros: Predictable costs, straightforward administration, and reduced exposure to unexpected claims.
- Cons: Annual renewals often reflect market volatility, limited visibility into claims data, and no benefit from good claims experience.
For some Colorado employers, particularly smaller groups with limited cash flow, this remains the most practical approach.
Self-Funded: More Control—Higher Responsibility
A self-funded plan means your business pays claims directly, often with the support of a third-party administrator (TPA). Stop-loss insurance is purchased to protect against catastrophic claims.
- Pros: Tailored benefits, transparency into spending and utilization, and potential savings when claims are under projections.
- Cons: Requires sufficient cash reserves, administrative infrastructure, and risk tolerance. Employers retain financial exposure, though stop-loss insurance helps moderate catastrophic risk.
Self-funding is increasingly appealing to mid-sized Colorado employers looking to better align benefit strategy with workforce needs.
Captives: Colorado Employers Are Taking Notice
A group captive enables a coalition of employers to band together, self-fund benefits, and share risk—creating a middle path between fully insured and fully self-funded.
What Makes Captives Attractive in 2025:
- Stabilized Premiums — Captives help blunt the volatility of market rate fluctuations and manage cost trajectory more predictably.
- Shared Gains — When claims are favorable, profits are retained within the group instead of going to traditional carriers.
- Smaller Employer Access — Employers with fewer than 100 employees are increasingly participating, especially through group captives, gaining leverage once limited to large organizations.
- Proven Savings — Many employers report double-digit savings after joining a captive compared to their fully insured renewal increases.
Evolving Options:
- Cell captives are lowering the entry barrier, offering captive benefits with less complexity—especially for mid-sized employers.
- Employers leveraging captives have reported anywhere from 10% to 30% savings compared to traditional commercial options, depending on claims experience and structure.
Colorado-Focused Comparison Table
Model |
Fully Insured |
Self-Funded |
Group Captive |
Best For… |
Small businesses seeking simplicity |
Mid-sized employers with financial stability |
Employers seeking control and cost-sharing |
Key Considerations for Colorado Employers |
Rising rates (~13–15%), limited customization |
Requires reserves, administrative capacity |
Promising savings, requires evaluation & advisor guidance |
Final Thoughts
In 2025, Colorado employers have more options than ever.
- Fully Insured is still the simplest model but comes with rising costs.
- Self-Funding offers transparency and flexibility, though it requires financial strength.
- Captives combine the best of both worlds—risk-sharing, cost control, and the potential for savings.
The key is not just choosing a funding model but finding the strategy that aligns with your company’s size, goals, and workforce expectations. And because each option carries different levels of risk, compliance, and financial commitment, working with a trusted benefits advisor is essential to ensure you select the structure that protects both your people and your bottom line.
Not sure if fully insured, self-funded, or a captive approach is right for your business? Let’s talk. Our team can help you evaluate your options and design an employee benefits strategy that makes sense for your people and your budget.