Managing Health Care Costs: A Breakthrough Solution
CareBond Advanced Funding has developed a proprietary model that quantifies healthcare costs incurred by employers. Future health care costs are converted into a more manageable “budgetable” item that may yield significant savings. The actuarial software module of the Advanced Funding Model, brings to market a non-traditional method of stabilizing the volatile cost by bringing together all of the disciplines necessary to implement the Model. The Advanced Funding Model, which is AAA rated by Moody’s (the highest rating), is a turnkey solution joining actuarial sciences, health care benefits specialization, corporate, legal, accounting and asset management.
The CareBond Advanced Funding Model
The CareBond Advanced Funding Model uses its proprietary software to design and help eliminate uncertainty by projecting and implementing a fixed health care cost for a plan sponsor for the next three years, while alleviating under-funded liabilities and compliance issues.
In either a self-funded or fully insured environment, the volatility of health care costs is eliminated, since the money used to pay either claims or premiums for the next three years becomes available at funding.
Formerly unknown and unpredictable costs are converted into a current fixed-cost obligation, with future health care costs becoming a defined “budgetable” line item for the next 36 months .
More than 20 years of development
Complex and proprietary mathematical, statistical & actuarial Software model program
Populated with database of 22 million lives dating back to the 1950’s
Updated monthly (various demographics)
Compiled by state, county & region
Legal & business structure of financing transaction integrated into the CareBond Advanced Funding Model
Client signs NDA (Non-Disclosure Agreement)
Client Supplies all relevant data, i.e. census, claims, Rx data, etc. For the past three years
Structure Elements and Providers
Organized under IRC§501 (c) (9)
Trustee – Alta Trust, Lone Tree, CO
Asset Manager – Principal Financial Group, Des Moines, IA
Private Placement Agent – The Frazer Lanier Company, Montgomery, AL
Structure Developer and Implementation – CareBond Advanced Funding, Oak Brook, IL
Actuary & Stress Assessment authority - Apex AF, Oak Brook, IL
Legal Counsel – Schulte, Roth & Zabel, New York, NY
Based on the quantified liability, a financing transaction is completed. For self-funded pools, a Special Purpose Entity (SPE) is formed to fund the net present value of the liability. The SPE is the obligor of this debt (not your organization) and the organization’s employees are the beneficiaries of the trust. If the organization is fully insured, the financing transaction is used to raise the money to advance fund the insurance premiums that are discounted consistent with the liability exposure as quantified by the stress assessment.
For self-funded organizations, the SPE will pay the total health care costs for the next three years and service the principal and interest on the note or loan. It is important to emphasize that Apex Advanced Funding Model does not change the process of how the plan sponsor pays its health care claims. If your organization is fully insured, the total premium for the three-year term is paid in advance and the health care claims are processed through the insurance carrier in the same manner as before.