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Phase One Deliverables for Healthcare Financing

Preliminary Feasibility Study:

  • Authorization and directive to the plan payer for 100% data collection/interface

  • Minimum Data: previous three years of Health Care costs​​​

  • The average number of employees in each year

  • A Mutual Confidentiality Agreement

1. Three-year underwriting assumption of all cost and trend liabilities

2. Development of financial history

3. Development of financial modeling for advanced funding activity

4. Itemization of projected costs

Full Stress Assessment:

  • Review of 3 year historical, current and future benefit cost exposure​

  • Variable

  • Fixed

  • Reserve amount (IBNR & Excess Risk Funding Analysis)

  • Three year eligibility/enrollment history

Total Cost and Budget History

  • Review of utilization cost history

  • Medical/Surgical​​

  • Pharmacy

  • Mental Health

  • Dental

  • Ancillary (vision, etc.)

  • Reinsurance

  • Third Party Administration

  • Total Cost per year based on past data

5. 6-month budget development


  • Global recommendations for 36 month plan

  • Contribution Level​

  • Surplus Allocation

Note: Standard Proposal and Retainer Agreement, Retainer Fee and Mutual Confidentiality Agreement required prior to commencement of Phase I activities.

Engagement Timeline

Day 01

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

The Trust

  • Organized under IRC§501 (c) (9) 

  • Trustee – Alta Trust, Lone Tree, CO

  • Asset Manager – Principal Financial Group, Des Moines, IA

The Debt

  • Private Placement Agent – The Frazer Lanier Company, Montgomery, AL

Structuring Team

  • 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.

Introductory Consultation


Consultation with Advanced Funding principals:

Jeffrey Bemoras 


Chris Stepuszek


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