1. IN THE USE OF RRG’S AND CAPTIVES FOR EMPLOYEE BENEFIT PLANS
A.R.T. INNOVATIONS
IN THE USE OF RRG’S AND CAPTIVES
FOR EMPLOYEE BENEFIT PLANS
Presented by:
Mr. Stace C. Bondar, RHU
Managing Member
Exlman Re, LLC

2. Timing is Right KAISER – 2006 net income rose 30% to 1.3 billion.
HEALTH NET - reported a 2006 earnings increase of 39.7% .
CIGNA - reported that 2006 adjusted income rose 18% per share
HUMANA - raised 2007 EPS estimate to $4.00 to $4.20 – an increase of 40%.
AETNA net income rose 15% fueled by moderating medical costs.
COVENTRY HEALTH- posted a record 4th Qtr net earnings of $156.1 million.
WELLPOINT –reported 2006 net income rose 22% to $4.82 per share.
UNITEDHEALTH GROUP – Reported 2006 net earnings of $4.174 billion.
Warren Buffet (Berkshire Hathaway) just purchased one million shares.
This list clearly illustrates that there is enough money in the system
The Plan Participant is Not the Primary Customer of the Publicly Traded Insurer
The current financing mechanisms favor the shareholders over the plan participants
We need to change the financing mechanism so that it traps the most amount of money possible in order to pay for the care.

3. Putting the “Mutual Company” Back Into Employee Benefits Financing
How do you create a solution for both Single Parent Companies and Multiple Parent Groups that will:
Provide a Stabile Source of Reinsurance for Any Industry!
Reduce or Eliminate Premiums Paid to Re-Insurers!
Eliminates the Need for and Expense of a Fronting Carrier!
Reduce and Stabilize Total Costs for the Long Term!
Provide a Uniform Set of Quality Employee Benefits in all 50 States and the Flexibility to Change Them!
Unbundle The Service Providers!
Legally Avoid State Mandated Benefits!
Legally Avoid Paying State Assessments Imposed to Pay for the Uninsured!
Legally Avoid Being Classified as an Illegal fully insured carrier or (MEWA)!
Leverage Large Group Buying Power!
Integrate the Health Plan with the Workers Compensation Plan!
Pay Excess Underwriting Surpluses to the Health Plan Sponsors instead of unrelated investors!

4. LRRA ERISA Using LRRA and ERISA to Create a Health Plan Solution
A Pooling Solution for Either Single Company or Multi-Employer/Association Captives that will enjoy Federal Pre-Emption of State Laws at both the Reinsurer and Health Plan Levels!
LRRA
Single Cell or Segregated Cell Captive
(optional)
Commercial Reinsurer
RRG Splits or Cedes some of the $250,000 of Risk with the Captive
RRG Buys Excess of Loss of $750,000
RRG
Retains $250,000 of Risk
Cedes the Rest
RRG Issues Contractual Liability Policy with Specific and Aggregate Cover to the Employer
RRG Manager uses either Internal or Contracted Underwriter and Claims Managers
NO FRONTING CARRIER REQUIRED
Keeping a Separation Between the Self Funded Health Plan and the Source of
Reinsurance Prevents being seen as a MEWA or a Fully Ins. Carrier! Pool at the Reinsurance Level NOT The Health Plan Level!
ERISA
TPA
Sets Up Separate Self Funded
Health Plans for Each Employer
TPA Manages Plan Interface with, PPO, U.R., LCM, D, V, etc.
TPA Agreement
Employer
Self Funded Employee Benefit Plan
$1 million
Plan Max
Selects Spec.
Deductible
Employer has Contractual Obligation to Fund the ERISA Health Plan
Employee Dependents
ER -- EE Relationship
Plan Document/SPD’s
Assignment of Benefits
Medical Providers

5. RRG Advantages
Industry or Association Sponsored RRG’s Enjoy Federal Preemption of State Laws!
Are owned through stock ownership by their Insureds and Insures only their Owners!
Eliminates Fronting Carrier Costs - RRG’s can Issue Liability Policies!
Contract Liability Policies can contain Specific and Aggregate Claims Reimbursement Terms! (Covers Frequency and Severity)
May Make a Variety of Specific Deductibles Available dependent on the Size of Each Group!
May Medically Underwrite Individuals in Groups that may not have or are unable to get claims experience from the current carrier!
May Experience Rate Each Group!

6. RRG Advantages Continued
Legally Avoids State Assessments for Uncompensated Health Care Pools!
Allows RRG Sponsors to Un-Bundle Vendor Services!
Works in Tandem with Captive to Build Surplus Assets!
Organizations May Provide Initial Capitalization to Reduce Ownership Costs to Member Companies!
RRG Sponsors Control the Investment Decisions for the Surplus instead of an Insurance Company!
Buys less and less Commercial Reinsurance as Surplus Grows!
Gives each group control over their own health & WC plans and ownership of the reinsurer of those plans!

7. Self Funded ERISA Plan Advantages
Employer Sponsored ERISA Health Plans Enjoy Federal Preemption of State Laws!
Legally Avoids State Mandated Benefits!
Allows Employer to Pay Only Administrative Costs until Claims are Presented for Payment!
$ 0 Balance Claims Trust Checking Accounts Allows Employer to Hold Funds Up Until Claims Checks are Actually Presented for Payment by the Provider!
Eliminates the Need for and Expense of VEBA Trusts!
Can Provide a Wide Variety of Benefit Designs!
Can Provide More than One Plan Design!

8. Self Funded ERISA Plan Advantages Continued
Allows the Employer to Select the Appropriate Specific Deductible for It’s Group Size!
Allows Employer to Un-bundle Vendor Services, providing complete flexibility!
Regional and National Preferred Provider Networks can Provide Medical Claims Discounting in all 50 States!
Utilization Review and Large Case Management can provide complex targeting and early identification of potential large claims and move them to lower cost settings before they happen!
Can be Combined with Cafeteria, Flex, HRA, HSA Options!

9. Segregate for Compliance & Risk Management and Integrate for Loss Control & Economies of Scale
Many Risks Need to be Segregated in Order to Meet Compliance and Risk Management Requirements!
Segregated Cell Captives can accommodate more than one kind of risk! WC, HEALTH, P&C etc.
Self Funded Workers Compensation Plan Administrators may share information with Self Funded Health Plan Administrators to Completely Eliminate Duplication and Fraud in the WC and the Health Plan Claims!
Self Funded Workers Compensation Plans can share Pharmacy Benefit Managers (PBM’s) with Self Funded Health Plans to Completely Eliminate Duplication and Fraud!

10. Segregate and Integrate Continued
Integrated Disease Management, Behavior Modification and Lifestyle Modification Programs Provides Valuable Risk Assessment Data and Lowers Claims Costs for both the WC and the Health Plans!
Integrated Back-to-Work and Rehabilitation Programs Return Employees to Work Sooner and Lowers WC and Health Plan Costs!
Industry or Association Related Health Plans Will Pay Lower Vendor Costs than Entities that Contract Individually!
Integrated Reporting Provides Management Insights Not Previously Available!

11. Thank You! Mr. Stace C. Bondar, RHU Exlman Re, LLC 410-526-9434
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