Healthcare is the second largest expense for Bunnell-Lammons Engineering (BLE), prompting quarterly reviews of claims and trends with our consultant, Mack Ward of Assured Partners. Historically, South Carolina’s fully insured market offered modest rate increases, but post-COVID trends shifted dramatically. BLE faced a 19.5% increase in 2023, with a projected 24% hike for 2024.
With guidance from our broker, BLE began exploring alternatives, including a self-insured captive model. Though initially appearing more expensive, the captive model offered superior risk management, particularly in mitigating the financial impact of high-cost claims through stop-loss protection. This shift enabled BLE to avoid dramatic premium hikes and gain greater predictability.
BLE had considered self-insuring in the past but was advised against it due to the risks. The captive option, however, provided significant contractual protections. Unlike traditional fully insured plans—where even one high-cost claimant can drive up rates for the entire group—the captive model offered BLE the best protection available.
This protection comes from stop-loss coverage, which BLE purchases to cover high-cost claims. Typically, stop-loss accounts for about 25% of total health plan costs, and BLE’s plan includes a 30% rate cap for worst-case scenarios. This contract provision, combined with no new liabilities, offers one of the strongest protections in the country. BLE also analyzed its claims data and found that 5% of employees were responsible for 67% of costs—making the captive model an ideal solution.
Simultaneously, BLE tackled pharmacy spending, which had surged 57% in one year. We implemented cost-saving strategies such as manufacturer assistance programs, copay coupons, and cost-plus billing. These efforts yielded the most significant improvements, even before factoring in additional savings from eliminating spread pricing and reclaiming rebates that previously went to the insurance company.
In addition to pharmacy savings, BLE partnered with a proactive third-party administrator to guide employees to the lowest-cost providers for routine diagnostics and to direct-contracted providers for major procedures like joint replacements and cardiac surgeries.
These changes resulted in over $300,000 in savings in 2024, with projected savings of $450,000 in 2025. The captive model has empowered BLE to stabilize risk and capture significant savings, particularly in pharmacy spending. This decision positions us for long-term financial protection and cost control in an unpredictable healthcare environment—while continuing to provide top-tier benefits to our valued associates and their families.
A Message from the BLE CEO
"At BLE, our people are our greatest asset. Ensuring they have access to high-quality, affordable healthcare is not just a financial decision — it’s a commitment to their well-being. The move to a captive healthcare model reflects our dedication to innovation, fiscal responsibility, and most importantly, to our team. We’re proud of the results and excited about the future." — Tom Lammons, President, CEO
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