Employer health insurance costs are rising at the fastest rate in 15 years, with projected increases of 9.5% in the coming year alone. For credit union CEOs and CFOs, that trajectory is a direct threat to ROA and can undermine long-term strategic planning. Healthcare has become one of the largest expenses leadership teams are asked to manage, yet one of the least predictable.
In response, some credit unions are beginning to rethink the problem itself. Rather than treating healthcare as an annual negotiation exercise, they are examining the structure that drives cost escalation year after year. That shift has led a growing number of institutions to explore captives as a financial strategy, rather than a benefits trend.
These conversations are largely happening behind the scenes. But as peers compare outcomes and share data, captives are moving from a theoretical option to a practical consideration, especially for leaders questioning whether the traditional model still aligns with their financial objectives.
Captives, in Plain English
At its core, a captive is a member-owned insurance structure. Instead of paying premiums into a fully insured plan controlled by a carrier or broker, participating organizations pool risk together, fund their own claims up to defined thresholds, and retain any underwriting surplus that would otherwise flow to third parties.
The result is greater transparency into costs, clearer incentives, and a direct connection between performance and financial outcomes.
This differs sharply from the traditional broker-managed model most credit unions know well. In that environment, visibility into underlying drivers is limited and annual increases are largely treated as inevitable. Even strong negotiating rarely changes the trajectory.
Captives shift that dynamic. They are not about assuming more risk for its own sake, nor are they an experimental benefits play. Properly designed, they are a financial strategy that prioritizes predictability, ownership, and alignment. For credit unions looking to manage healthcare with the same discipline applied to other major expenses, that distinction reshapes both cost control and long-term planning.
COMPLIMENTARY DOWNLOAD:
Captive Strategy for Credit Unions: Cuts Costs, Boost ROA
Why Credit Union–Only Captives Perform Differently
Not all captives are created equal. In practice, performance depends less on the captive model itself and more on who participates in it. Risk pooling works best when participants resemble one another in meaningful ways, particularly when it comes to workforce characteristics, claims behavior, and organizational incentives.
Credit unions share important similarities. Their employee populations tend to be relatively stable, white-collar, and demographically consistent. Risk profiles are comparable across institutions, and incentives are aligned around long-term stewardship rather than short-term gain. That homogeneity reduces volatility and improves predictability, making outcomes significantly easier to manage over time.
Generic captives often lack those advantages. Many combine employers across unrelated industries, introducing higher-risk sectors whose claims experience bears little resemblance to that of a credit union. When losses occur in those industries, the financial impact spreads across the entire pool, creating variability and undermining the very predictability captives are meant to deliver.
The Credit Union Healthcare Coalition (CUHC) was built to avoid that outcome. It is the only captive designed exclusively for credit unions and is backed by more than five years of real-world performance data. On average, CUHC participants save 27% compared to traditional health plan costs. That translates into a savings of $270,000 per year for every $1 million in annual premium.
When Healthcare Strategy Becomes a Competitive Advantage
For leadership teams in the Credit Union Healthcare Coalition, healthcare has quietly moved into a different category. It is now one of the largest controllable expenses on the balance sheet, with direct implications for ROA, workforce stability, and long-term strategic planning. At the same time, benefits have become a primary lever in recruiting and retaining talent, particularly as competition intensifies and wage pressure remains high. Managing that intersection without predictability has become increasingly difficult.
Captives are gaining traction now among forward-thinking leaders who want to manage healthcare with the same strategic discipline applied to other core financial drivers and, in the process, replace annual uncertainty with multi-year visibility.
To see the data behind why more credit unions are joining captives,
download the white paper:
Captive Strategy for Credit Unions: Cuts Costs, Boost ROA
Or, for a more direct conversation, contact us to explore whether a credit union–only captive could make sense for your institution.