Why is scale important in a benefits captive model?

Ask any CFO where scale matters, and they’ll tell you: everywhere.

Employers use it to buy better, plan smarter, and reduce risk. It’s how modern employers run their business across procurement, logistics, finance, and beyond. 

But when it comes to employee health benefits, often a company’s second or third largest expense, most midsize employers are still managing millions in spend without any of the advantages of scale. 

ParetoHealth changes that. We give midsize employers access to the structure, community, and the scale they need to manage healthcare like every other major area of spend, with control, leverage, and a multiyear strategy. 

Key takeaways: 

Most midsize employers manage millions in healthcare spend with no scale, no leverage, and no protection. 

ParetoHealth pioneered the employee benefits captive model to give midsize employers access to scale and a like-minded community committed to reducing healthcare spend.

That scale provides: 

• • Risk protection  

  • Negotiation leverage  

• • Visibility and planning tools to support a multiyear strategy 

Imagine you’re a CFO at a manufacturing company 

When a manufacturer sources raw materials like steel, resin, and paper, they don’t buy in small batches and hope for the best.  

They consolidate volume, negotiate pricing, and structure contracts to protect themselves from price volatility. 

That’s not just procurement; it’s strategic cost management. And employers use scale to do it. 

When it comes to employee health benefits, employers are funding a major cost center with real financial exposure. And just like sourcing, scale still matters. 

Scale gives employers negotiation leverage with vendors and carriers. Additionally, scale helps protect employers from volatility, especially large, unexpected claims, and enables smarter long-term planning, instead of chasing 12-month renewals. 

ParetoHealth makes scale possible for midsize employers 

ParetoHealth is the largest and fastest growing benefits community of its kind.

Covering more than one million lives gives ParetoHealth Members the best negotiating power, a stable risk pool, and access to cost-saving and benefit-enhancing solutions.  

This scale delivers risk protection and negotiation leverage that midsize employers can’t get on their own.  

The scale of ParetoHealth’s community powers our ability to:  

1. • Absorb large claims to reduce volatility  

   • Lower healthcare costs with the negotiation power of a Fortune 5 company

How does the ParetoHealth benefits captive reduce volatility? 

The ParetoHealth Risk Shield protects employers from the volatility of large, unexpected claims for more predictable year-over-year costs.  

With the strongest stop-loss contract on the market, only ParetoHealth caps stop-loss rate increases and guarantees no new lasers for the lifetime of Membership, so Members can confidently plan for the future. 

What is the ParetoHealth Risk Shield?  

The ParetoHealth Risk Shield is our multi-layered approach to eliminating volatility for midsize employers. It’s not just stop-loss insurance—it’s the strategic integration of two powerful components:  

1. 1. 1. Aligned captive structure: Predictable year-over-year costs and upside for employer-owners  

      2. Strongest stop-loss contract: Protection from large claims 

How does ParetoHealth’s layered protection structure work?  

The ParetoHealth Risk Shield has three layers of protection designed to shield employers from healthcare volatility: 

1. 1. Employer layer: Each employer is responsible for smaller claims, typically up to $50,000 to $250,000 per individual. This is known as the specific deductible, or the maximum amount the employer will pay for any one person’s claims in a year. Employers choose the level of specific deductible that works for them and their business.

   2. ParetoHealth captive layer: Claims above the employer’s specific deductible are covered by the ParetoHealth captive. Think of the captive as a shock absorber. It softens the impact of large, unexpected claims. Instead of one employer taking the full hit, those costs are shared across a large, stable group. By spreading the volatility, the captive layer helps protect each employer financially and makes costs more predictable year to year.

   3. Stop-loss layer: For claims exceeding $1 million, ParetoHealth’s stop-loss insurance provides catastrophic protection. We completely reinsure very large claims, protecting the captive as a whole. 

What is a specific deductible?  

A specific deductible (or spec) is the maximum amount the employer will pay for any one person’s claims in a given plan year. Think: “Per person protection.” 

How does ParetoHealth reduce healthcare costs?  

With ParetoHealth’s Risk Shield, employers no longer need to be reactive to volatile healthcare cost increases and can instead focus on building a multiyear strategy to drive down the cost of healthcare.  

That multiyear strategy starts with the ParetoHealth Savings Engine. When an employer joins a ParetoHealth captive, they unlock access to a curated ecosystem designed to help employers address the root causes of high-cost claims.

What is the ParetoHealth Savings Engine?

The ParetoHealth Savings Engine delivers benefit enhancements and long-term strategies to lower costs including cost containment programs, care navigation, ParetoInterventions for large claims, and data and insights reporting.

• • • All Members have access to a vetted ecosystem of solutions to address high-cost areas such as cancer, imaging, GLP-1s, chronic kidney disease, mental health, primary care, and more.

    • Care navigation to help employees find high-quality, cost-effective care is available for every Member—at no additional cost (starting 7/1/2026).

    • Pareto Rx Consortium (PRxC) is powered by an in-house team, including pharmacists, delivering transparent, 100% pass-through contracts with the best rates, clinical oversight of prior authorizations and formulary management, audited large pharmacy claim review, and performance guarantees.

    • Layers of insight with personalized data reporting and recommendations for actions to drive down healthcare spend.

What do employers gain from the ParetoHealth model?

By joining the ParetoHealth benefits captive, you are joining a community of thousands of like-minded organizations that are committed to better managing their healthcare spend on the right side of the fight. 

• • Predictable costs 

• • Proven savings  

• • Turnkey implementation 

• • A community of like-minded employers to learn and grow with

Download the ParetoHealth overview to learn more. 

Written by: The ParetoHealth team