LIPTZ AND ASSOCIATES
and collateral for such programmes and having your stop loss provider on hand to pick up the back end,” said Liptz.
Whether PPACA becomes enshrined in law remains to be seen, but what seems inevitable is that health care costs will continue to rise, obliging employers to “seek ways to reduce their medical costs”. Insuring health care through a captive will make good sense for many firms. Rather than pay insurers to cover their health care risks, a captive approach will enable firms to “take those dollars and put them towards employee benefits or feed them back into the company to develop other products”.
Onshore versus offshore Turning to the onshore-offshore dynamic, Liptz said, in the case of US captives they were increasingly opting for onshore domiciles. He explained that the current US administration is taking an increasingly “anti-foreign stance” and that in order to “avoid any stigma, firms are nowadays forming their captives onshore and also redomiciling to the US”. Further encouraging firms to opt for US jurisdictions has been the increased number of domiciles with good captive legislation. “Whereas 15 years ago your choice was Vermont, Hawaii or South Carolina, today there are some 30 domiciles to choose from.” Offered such a diversity of choice, many US firms are choosing to locate their captives closer to home.
Nevertheless, reasons remain to establish a captive outside the US. “If you’re a large non-profit hospital or university there are still good reasons to go offshore,” Liptz said. Bermuda and Cayman both have captive legislation that is tailored to the needs of the not-for-profit sector and the depth of expertise and experience needed to manage and regulate such entities. He added that Bermuda and Cayman’s edge in the not-for-profit sector is aided by the pool of US for-profit firms able to satisfy the expectations of the onshore domiciles. What does seem clear overall, however, is that with an expanded menu of domiciles, the captive industry is only likely to benefit. l
David Liptz is a partner at Liptz and Associates. He can be contacted at:
dliptz@liptzcpa.com
CICA | Forty years of captive leadership 73
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