- 1. Matching a specific share with a specific need;
- 2. The exchange must use a members-to-member direct sharing process and not pool funds;
- 3. The exchange must not build reserves; and
- 4. The exchange must make obvious attempts to disclose to its members that the service is not insurance and does not imply a guarantee of benefits

FIG. 2 illustrates how a Virtual Share Exchange can leverage information and data captured in theTAGS profile10 of its members to transact the direct sharing of needs in a way that complies with Department of Insurance and state regulatory requirements.

FIG. 2 is an example of a VSE that processes the sharing of medical needs. In this example, thefourth section24 displays all the eligible needs that have been posted into the VSE. Each house household is listed by the member name26 that was supplied in theTAGS profile10. For example, theBeck household28 is listed and it currently states that they have a need of $1772.00.

Thefifth section30 represents the aggregate totals of needs and members in the exchange. In this section, the average share has been calculated by dividing the eligible needs by the weighted “share rating” of the exchange and the total number of members who participate in the exchange. The use and purpose of share ratings is discussed in detail later in this document. However, aggregating the total needs posted and then calculating an average or equal share to be submitted by all members, effectively complies with the Department of Insurance restriction of not building reserves. Calculated “equal shares” effectively brings the exchange to a zero balance once all shares are collected. Thesixth section32 provides the transactional function for submitting a share to meet a specific need. InFIG. 2, thesixth section32 is illustrating a need from theBeck household28 in more detail. For example, the household is listed along with share rating34, the need posted36, the co-pay38 and the Share collected40.

Thesixth section32 also lists the Share posting42 for the Messerli Household. This Share posting42 has been matched to theBeck Household28. The VSE, through the share posting, is requesting the Messerli household to contribute to the Becks' Household's need. The Messerlis are being requested to pay $163.91 towards the Beck's request, which was determined by the present invention to be their share of Beck's need of $1772.00. In actuality, they are shown to have entered an amount in this section of $180.00. To process the payment, the Messerlis would click on the submit button44. In this instance, the Messerli has decided to pay more than their allotted amount to the Beck's need. In the event that the Beck's have not paid amount, the submit button44 that allows the Becks to pay the Share request42. In the preferred embodiment, this Share request is being processed through the financial information given insecond section20 of theTAGS profile10.

The seventh section presents a summary view of the member'sTAG profile10 and the specific account information that will be used in share transactions. Information such as the breakdown of the household as well as the financial information is provided. The latter information being severely limited in order to protect the information from unintended recipients.

As members authenticate or login into the VSE, the present invention determines if the member has a Share Request resulting from a matched need posting is due or not. If he does, the member will be ushered to a screen view much likeFIG. 2. In the sixth section42 of this screen view, the member is being presented with a specific “need” that has been posted and a request to submit his equal share to meet that need. Matching a specific need with a specific share request is a critical requirement of regulatory agencies and is accomplished as the VSE works its way down the list of posted needs (see fourth section24).

The VSE finds the next available need and posts that need and its information in the sixth “Need Posting” section42. In a parallel process, the present invention inputs the calculated average share amount in the “Share Posting” section, as well as any other fees that the exchange chooses or needs to collect.

The sixth section42 also provides the member with a “share submit” function. By clicking on the share submit button44, the member is approving and initiating the debiting of his “Share Account” in an amount equal to or at least a portion of the share request and any additional fees to be collected. The VSE then credits the “Needs Account” of the member who has had his need posted into the exchange and the “Gifts Accounts” of any additional fees. Thus, the VSE has now complied with the Department of Insurance's member-to-member direct sharing restriction, by replacing what has traditionally been a mailbox-to-mailbox process with an account-to-account electronic process.

To further strengthen Department of Insurance compliance, members, who are to receive shares to meet their needs, will be notified by the VSE that shares have been collected. This notification, in the preferred embodiment, is done through e-mail but it is understood that the means of communication such as text messaging, a telephone call, facsimile, paging and the postal service are all within the scope of this invention. These members will then authenticate into the VSE to accept the shares. At this point, the member can choose to either have the VSE send their care provider an electronic check (written off the needs account) for services rendered or pay the doctor or service provider directly. A member'sTAGS profile10 can be used to give a member the choice to automate this function.

Prior to completing the “share submit” process, the member is prompted to accept any specific state disclosures to ensure that the VSE is comply with all regulatory disclosure requirements. The VSE uses the member's residence information captured by hisTAGS profile10 and provides disclosures specific to their situation such as the state of residence. The present invention keeps an updated database on all the legal disclosures required by the varying jurisdictions.

Mutual sharing associations are able to effectively compete against the guarantee of indemnity contracts, whose guarantee is only as good as the financial health of the carrier, by leveraging the collective moral will of values oriented individuals who feel a commitment towards their fellow man.

VSEs provide a means for MSAs to display the collective moral will of its members by displaying “Share Ratings.” A share rating is a calculated metric that measures a member's persistency and level of participation in the sharing of member needs. While share ratings formulas and calculations can be unique to each and every mutual sharing association, an example of a typical share rating is provided below.

EXAMPLE

Share Rating=Total ($) Share Requests÷Total ($) Shares Submitted

This is the formula that is used to calculate the share ratings found in thefourth section24 ofFIG. 2. So in the case of the Messerli household, this household has submitted 100% of the total share requests and has done so 100% percent of the time (seeFIG. 1). Share ratings can be used to manage the effectiveness of the VSE in a number of different ways or scenarios. The following are examples of a few ways that this can be accomplished.

1. A weighted Share Rating that calculates the aggregate participation of all exchange members can be used to display the strength and commitment of the association (see Exchange Share Rating in the fifth section39 ofFIG. 2). For example, a VSE with more than 15,000 households and a share rating over a10 year period of 97% would indicate a relatively high commitment of the overall group.
2. A weighted Share Rating for the entire exchange (Exchange Share Rating) can be used to calculate the Net Eligible Needs. Net Eligible Needs that have been factored by a weighted Exchange Share Rating automatically take in account the attrition and delinquency of exchange members to ensure a likely zero balance at the end of each month (see Exchange Share Rating in thefifth section30 ofFIG. 2). While a zero balance is not guaranteed, it would be transparently clear to the Department of Insurance that the VSE is not trying to build reserves. Should the VSE have an excess in shares in a given period, then the excess could be applied to next month's posted needs to effectively increase the VSE's share rating.
3. Individual Share Ratings can be used as an incentive for members to keep their persistency and participation high, by prioritizing the sharing of posted needs from members with the highest Share Rating (see thefourth section24 inFIG. 2)
4. Individual Share Ratings can be used as an incentive for members to submit shares above their share requests, by prioritizing the sharing of posted needs from members with the highest Share Rating (see the fourth section inFIG. 2). Excess funds are always used against next months needs or to assist other ministries and charities.

Benefit ratings provide members of differing income levels the opportunity to equally participate in the sharing and benefits of an exchange. Mutual Sharing Associations can configure multiple benefit levels into the VSE that allow a member to participate in the exchange to the means of his income.

An example of the benefit rating can be seen inFIG. 2. In this figure, the Deshepper household has elected a 50% benefit level (see fourth section24). The members of the exchange, therefore, will share in 50% of the Deshepper's posted needs. However, share requests presented to the Deshepper household will be 50% less than those who have selected a 100% benefit level. Having a lower benefit level allows a family to maintain high share ratings while at the same time managing the level of participation within their budget.

This selection of benefit levels are made in theTAGS profile10 and can be changed at anytime based on changes in the member's income. In the preferred embodiment, the association would institute time constraints as to when the new benefit level becomes effective.

As illustrated inFIG. 2, this particular VSE uses a Health Rating or a Lifestyle Rating to manage the financial burdens (risks) of the exchange. Mutual Sharing Associations, whose share amounts are impacted by the collective lifestyle choices of its membership, will want to consider using Lifestyle Ratings to encourage specific behaviors and choices.

Lifestyle ratings impact the net benefit level of posted needs. In the preferred embodiment, the association uses a health rating to encourage its members to make healthy choices that reduce the medical needs of the association. Take the Hendrick family, the net benefit and sharing that they can expect to receive is 60%, because they have made poor lifestyle choices that have placed them in an unhealthy condition.

Lifestyle Ratings protect members, who are making right choices from members who are making wrong choices. Lifestyle Ratings reinforce communities of like values and commitment. Ultimately, the reduction of need postings corresponds with reductions in share requests, thus improving the viability and persistency of the VSE.

Note that the preferred embodiment, in the present application, has been described predominantly in terms of health care coverage. However, the invention is applicable to other forms of resource pooling such as but not limited to investments, life insurance, automobile insurance, home insurance and other similar resource pooling activities.

FIG. 3 is a schematic of the overall invention according to the preferred embodiment. The preferred embodiment includes a number of components that enable it to process the overriding concept. The VSE structure48 includes acentral repository50, where all the TAGS profiles10 are maintained for each and every member.

Linked to thecentral repository50 are theneeds52 submitted by each member for benefits. Referring back toFIG. 2, thefifth section30 details the need posted by the Beck household for the amount of $1,772.00.

The present invention, upon receiving the need and through the needs assignor54, assigns theneed52 to another member of the group. Again referring back toFIG. 2, the Messerli household is assigned a portion of the Beck's needs posting and presented to them through the Share posting56. Upon acceptance of their portion of the need posting, a Share posting processing58 is activated. This action moves the resources allocated from the requestee to the requestor. InFIG. 2, the Messerli household has moved $180.00 from their bank account to the Beck's deposit account. In the present invention, before processing the Share posting, the member is provided with all the applicable disclosures as required by the legal jurisdictions applicable to that member. These disclosure are updated as need as provided through thedisclosure device60.

The present invention also includes a rating device62 that can determine any applicable rating that the VSE wishes to determine. This would be a user defined function that can be edited, altered or newly enacted at any time. In the preferred embodiment, the rating device62 determine the Share Rating, benefit rating and health rating for each member of the group.

Additionally, the present invention provides the members with an exchange summary64. This can be seen is fourth section ofFIG. 2. The exchange summary64 lists each member with their need posting as well as their copay and various ratings.

The VSE is linked to acomputer network66 through thecommunication port68. The computer network can be the Internet, a local area network, a wide area network or any other configuration that permits a member to gain access to the VSE from a remote location.FIG. 3 also details three

members

70,72,74 of the VSE gaining access to the VSE from a remote location such as their home, office or other remote location to conduct activities such as posting a need or processing an assigned share posting.

The many features and advantages of the invention are apparent from the detailed specification, and thus, it is intended by the appended claims to cover all such features and advantages of the invention which fall within the true spirit and scope of the invention. Further, since numerous modifications and variations will readily occur to those skilled in the art, it is not desired to limit the invention to the exact construction and operation illustrated and described, and accordingly, all suitable modifications and equivalents may be resorted to, falling within the scope of the invention.