Presented by:

Mark Gaunya, Dean Bushey & Lisa Byzcko

Meeting Objectives

• Introductions

• Managing the Risk

• Program Highlights

• Program Partners

• Feasibility Analysis

• Action Steps and Timeline

2

Where it all began…

✓ Borislow Insurance Founded in 1982

✓ Headquartered in Boston, MA

✓ 65 employees, UBA member firm (142 firms)

✓ Strategic Advisor to:

✓ 100+ independent schools

✓ Program Manager for Captivated Health

Market Dynamics & Client Collaboration

3

Corporate Structure

Design-to-build

Strategic Benefits Advisor

Exclusive

Community

Serving a wide range of education

and commercial clients

Serving the education and engineering

sectors

4

Captivated Health Education Since 2014

5

Business OfficeEngaged Model

Business OfficeTraditional Model

Exclusive

community of

schools building

holistic cultures of

health & wellbeing

Cost & Complexity

2nd largest budget

item, grows faster &

more complex

6

MemberTraditional Model

MemberEngaged Model

When healthcare

happens, the

member is in

control of choices

& gets reliable

help

Transparency of Price & Quality

When healthcare

happens, the

member isn’t in

control of choices

& gets little help

Concierge

Service

7

Managing The RiskWhy, how, and what it means

8

When you are fully insured

you don’t know what you don’t know.

So, you are unable to make

intelligent and informed decisions.

Risk Management Challenge

9

Carriers have modest, but

consistent net profit margins

Manage to margin, no real desire or need to manage costs

10

81.8¢

6.3¢11

What would you do if

you could build

your own insurance company?

THE question

12

Guiding Principles

1

2

3

4

Members First

Consumerism

Health & Wellbeing

Governance

13

Members First

14

Consumerism: Tools,

Resources and Support

15

Member Tools, Resources

& Support

Just TAP the APP

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Health & Wellbeing

Physical

Financial

Workplace

Community

Mind-Spirit

Culture of

Health

& Wellbeing

17

Governance

Chairperson

Engagement committee

Finance committee

Governance Committee

Membership Committee

Vice Chairperson

18

Change your financing to

change your future

19

THE INSURANCE

COMPANY

RISK Transfer

PREMIUM Pay (includes tax and

insurance company

profits)

DATA Little or none

TREND Higher

CONTROL None

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THE INSURANCE

COMPANY

YOUR INSURANCE

COMPANY

(Partially Self-funded)

RISK Transfer Assume, Share, Transfer

PREMIUM Pay (includes tax and

insurance company

profits)

Pay claims, administrative

costs

and premium (keep any excess)

DATA Little or none Full access

TREND Higher Lower

CONTROL None Full

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Self-insurance among small to mid-sized

employers is increasing (+20%) in recent years

Employers with fewer than 100 employees:

Self-insurance up from 11.9% to 14.2%

between 2011-2015

Employers with 100-499 employees:

Self-insurance up from 25.3% to 30.1%

between 2011-2015

Employers with more than 500 employees:

Self-insurance remains above 80%

Source: Employee Benefit Research Institute (EBRI)

Market

Trends

22

Opportunity

Captives Outperform Commercial Insurers

July 30, 2019: Rated U.S. captive insurers continue to outperform the broader

commercial insurance market, and as several business lines see hardening rates,

company boards are undoubtedly looking at captives as part of their risk

management strategy, ratings agency AM Best Co. Inc. said in a report issued

Monday.

This trend is particularly apparent in health care, “as companies look to

captives to help them improve overall health of their workers and reduce

medical costs”…..

“These strong results are testament to the segment’s (captives) close

alignment of interests with stakeholders and deeply ingrained risk

management culture”

Business Insurance, Claire Wilinson, posted July 30, 2019

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TRANSFERfixed costs(insurance)

RETAIN

self-funded retention

(claims below spec.)

SE

VE

RI

TY

Traditional Partial Self-Funding

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TRANSFERfixed costs - Insurance

Individual Claims above $260,000

SHAREgroup retention - captive layer

Individual Claims Paid up to $260,000

RETAIN

(claims below spec.)$35,000 Deductible (Per Member up to Max Claims)

SE

VE

RI

TY

Captive Financing

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Plan Sponsor Tools

• Deerwalk Claims Analytics• Uses claims data on an individual or aggregate

level

• Provides insight into where and how money is

being spent

• That insight yields actionable intelligence to

create disease-specific programs, employee

education initiatives and more.

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• Integrated DPC care that gives every

member an on-demand primary care doctor

for day-to-day illnesses and injuries

• Creates a medical home for members

• 350 Terms and Conditions

• Fees Paid by PBM

• Pharmacy Spend - $7,829,211 Past 12 Mos.

• Anticipated Savings of 15% over 3 years

• Governance Oversight

Plan Sponsor Tools

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Members tools

• AmWell• Telemedicine on-demand via smartphone app

• Small co-pay – big convenience

• $69 Office Visits

• $65 Nutrition

• $85 - $99 Behavioral Health

• Amino• Help employees find the best and most cost-

effective primary, specialty, hospital and urgent care

• Web-based, on-demand, 24/7/365

• Captivated H• Members call one number for any pre or post-claim

questions and for help with all of their tools

• Smartphone app• Connect with plan information, all tools, or call the

Concierge to ask questions and get connected

Resources at your

fingertips

when healthcare

happens to you

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Program Performance,

Key Partners and

Coming Attractions

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95% $1.2MRetention over

5 year

life of program

(70% norm)

Saved by

special Rx and

outpatient

programs

Control and Financial Stewardship

17% $4.4MBetter stop loss

performance than

traditional stand-

alone plans

Projected 3-yr

savings on

prescription

drugs with PBM

carveout

WE

MEASURE.

WE

IMPROVE.

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Networks & TPA Partners

• Aetna

• Cigna

• United Healthcare/Harvard Pilgrim (NE)

• CIGNA Healthcare

• Aetna

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Pharmacy Benefits Manager

MaxorPlus – PBM Carve Out

Retail Pharmacy Locations

• Over 67,000 pharmacies nationwide

Retail 90 Locations

• 56,935 pharmacies nationwide

Major Chains

• All major chains are included

Geo Access Report

• All members have access to the provided standards (radius of 5 miles urban, 10 miles suburban, 15 miles rural)

Current Pharmacy Utilization

• All pharmacies are currently included in the network

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Stop-Loss Partner

• A+ (Superior) rated by A. M. Best (second-highest rating out of fifteen)

• Ward’s 50 top-performing insurer for safety and consistency

• Strength to pay even the largest claims

• Flexibility to create the best risk solutions

33

Coming Attractions

Flight to quality

Predictive

Dx & Rx

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Feasibility Analysis

35

Risk Assessment - Verikai

Claims 0.81This is the risk score the carrier's health

manual will assign to your group (total

claims).

LowThis group falls within the 25th BEST

percentile of total national groups.

Spec

$50,000 0.54This is how Verikai thinks your group

will perform relative to this specific

deductible.

LowThis group falls within the 25th BEST

percentile of total national groups.

Claims+ LowThis group falls within the 25th

BEST percentile of total national

groups.

0.72

This is the Verikai risk score after

CAPTURE accounts for health,

financial, and behavioral data.

36

Fully-Insured Renewal$465K (100%) Fixed

• MCA 2020 estimated fully-insured renewal is $465K, based on 62 total

enrolled employees

• Assuming annual increases of 10% per year for the next five years, MCA

expense will be $2.8m

What can you do today and over the next 5 years to

significantly reduce that $2.8m financial exposure?

37

TRANSFERfixed costs - Insurance

Individual Claims above $260,000

SHAREgroup retention - captive layer

Individual Claims Paid up to $260,000

RETAIN

(claims below spec.)$35,000 Deductible (Per Member up to Max Claims)

SE

VE

RI

TY

Captive Financing

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Fully Insured Vs Captivated Health

$35,000 Deductible

Current Expected Mid-Point Max

Fully Insured $434,636 $465,061 $465,061 $465,061

Captivated Health $412,007 $430,758 $449,509

$380,000

$390,000

$400,000

$410,000

$420,000

$430,000

$440,000

$450,000

$460,000

$470,000

Fully Insured Vs Captivated Health - $35,000

Fully Insured Captivated Health

Note: maximum does not include Non-Premium Funding (reserve)

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Change Your Financing$56,447 (12%) Fixed

• Become the plan sponsor of a partially self-funded employee benefit plan

• Choose your plan design (or multiple plans)

• Determine school specific premium contribution strategy

• Option to provide additional wellness programs

• Access to tools that assist your members get the best clinical care at the

lowest possible price

• MCA pays Third Party Administrator (TPA) to: adjudicate & pay claims, issue ID

cards, access PPO networks, enrollment, claims and member inquiries

• The cost of the TPA and your Advisor is $75.41 PEPM or $56,105

• Fee will cover the cost of all risk management tools

• Self-funded plans are required to pay certain taxes, est. at $342 for 2020

• No requirement to change benefits in year one, minimizing disruption

Please note the fixed cost of $44,982 does not include any potential banking fees or non reimbursable fees

(PCORI)

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• Purchase specific & aggregate stop loss insurance ($74,514), paid monthly

• Specific stop loss protects against large claims from a single individual,

quoted at $35,000 (and $50,000)

• If an individual accumulates (through one claim or many) more than $35,000

during the policy, MCA is responsible for the first $35,000 of those claims

$-

$10,000

$20,000

$30,000

$40,000

$50,000

Claimant A Claimant B Claimant C Claimant D Claimant E Claimant F

Specific Stop Loss

Claims Per Individual Specific Stop Loss

Purchase Stop Loss Insurance

$74,514 (16%) Fixed

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Purchase Stop Loss Insurance

• Aggregate stop loss insurance protects against a

large number of smaller claims

• The aggregate stop loss insurance attachment point

is 120% of projected claims, or $225,008

Aggregate Stop Loss

Claims Aggregate Attachment

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• Each school is underwritten on its own risk

• Captive pays for claims above specific stop loss deductible

• Captive deductible is $225,000 and shared risk above the school

specific deductible

• Captive works as a “shock absorber” to smooth out volatility

• Allows both large & small schools to be equitable in risk sharing

• MCA contribution to the captive is $93,540, pooled with schools

• MCA reserve (non-premium funding) contribution is $18,708 *

• As a variable expense, favorable Captive performance in the

aggregate will result in a surplus returned back to schools

• As a variable expense, unfavorable Captive performance in the

aggregate will result in a draw down of reserves to fund losses

• If aggregate reserves exhausted, stop loss insurance applies

* 1st year non-premium funding varies based on enrollment and stop loss coverage

Participate in the Captive

$112,248 (24%) Variable

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Pay Your Members’ Claims

$225,008 (48%) Variable

• MCA pays members’ claims below the $35,000 specific stop loss deductible• Claims not prefunded, paid in 30 – 60 days, retain savings from favorable performance

• Expect MCA to incur claims of $187,507 in 1st year, $225,008 maximum• Aggregate stop loss caps MCA financial exposure

Specific Stop Loss

Employer Paid ClaimsAggregate Stop

Loss

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Projected Year 1 Results

Total Fixed cost $130,961

Captive $ 93,540*

Expected Claims $187,507

Maximum Claims $225,008

CH Expected Claims $412,007

CH Maximum Exposure $449,509*

Fully Insured renewal $465,061

Projected Savings: $53,054 – $15,552 (at max)

Key Assumptions:

• Does not include Rx rebates

• Does not include member behavior change

* $18,708 Non-Premium Funding not included in maximum exposure

TRANSFER

SHARE

RETAIN

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The Captivated Health

Value Proposition

• Control

• Actionable Data

• Scale & Stability

• Deeper Engagement

• Lower Costs

O P P O R T U N I T Y21st Century Healthcare Experience

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Action Steps & Timeline

Financial Feasibility Decision/Approval Support

Final Decision Implementation Go Live

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