10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 000-51954

DCP Holding Company

(Exact name of Registrant as specified in its Charter)

Ohio	20-1291244
(State or Other Jurisdiction of	(IRS Employer Identification No.)
Incorporation or Organization)

100 Crowne Point Place	45241
Sharonville, Ohio	(Zip Code)
(Address of Principal Executive Office)

Registrant’s telephone number, including area code: (513) 554-1100

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☒     No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ☒     No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting Company ☐
Emerging growth company ☐
	(Do not check if smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

As of June 30, 2018, there were 500, 8,653 and 3,771 of the Registrant’s Class A, Class B and Class C Redeemable Common Shares outstanding, respectively.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
		PAGE
Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
	Signatures	23

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DCP HOLDING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		December 31,
	2018		2017
ASSETS
INVESTMENTS:
Fixed maturities, available for sale at fair value, amortized cost of $8,837,000 and $8,790,000 at June 30, 2018 and December 31, 2017, respectively	$	8,608,684	$	8,810,056
Short-term investments, available for sale at fair value, cost of $843,000 and $781,000 at June 30, 2018 and December 31, 2017, respectively		843,664		781,951
Total investments		9,452,348		9,592,007
CASH AND CASH EQUIVALENTS		13,652,167		13,177,193
ACCRUED INVESTMENT INCOME		83,226		80,904
ACCOUNTS RECEIVABLE, including billed premiums of $1,449,805 and $1,118,996, net of allowance of $37,962 and $45,809 at June 30, 2018 and December 31, 2017, respectively		46,804,456		36,400,634
DEFERRED ACQUISITION COSTS		3,383,514		2,636,858
PROPERTY AND EQUIPMENT, net of depreciation and amortization of $3,917,503 and $3,684,537 at June 30, 2018 and December 31, 2017, respectively		3,781,477		3,661,598
OTHER ASSETS		5,319,254		4,780,001
TOTAL ASSETS	$	82,476,442	$	70,329,195
LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY
CLAIMS PAYABLE	$	4,142,250	$	3,576,185
UNEARNED PREMIUM REVENUE		47,398,955		36,818,123
OTHER PAYABLES AND ACCRUALS		7,423,097		7,175,048
MORTGAGE LOAN PAYABLE		1,067,600		1,095,200
CAPITAL LEASE OBLIGATIONS		962,908		1,200,925
DEFERRED COMPENSATION		4,964,377		4,821,982
TOTAL LIABILITIES		65,959,187		54,687,463
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED AND COMMON SHARES:
Class A, Redeemable Common Shares, no par value—authorized, 7,500 shares; issued and outstanding, 500 shares at June 30, 2018 and December 31, 2017		639,015		605,143
Class B Redeemable Common Shares, no par value—authorized, 120,000 shares; issued and outstanding, 8,653 shares at June 30, 2018 and December 31, 2017		11,058,790		10,472,602
Class C Redeemable Common Shares, no par value—authorized, 80,000 shares; issued and outstanding, 3,771 shares at June 30, 2018 and December 31, 2017		4,819,450		4,563,987
Total redeemable preferred and common shares		16,517,255		15,641,732
SHAREHOLDERS’ EQUITY—Preferred Shares; no par value—authorized, 92,700 shares; none outstanding
TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY	$	82,476,442	$	70,329,195

See notes to unaudited condensed consolidated financial statements.

1

DCP HOLDING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
REVENUES
Premium revenue	$	27,890,853		$	26,789,418		$	56,116,234		$	53,887,072
Investment income		72,581			58,289			150,638			123,614
Realized (losses) gains on investments, net		(16,378	)		62,835			(3,329	)		132,422
Total revenues		27,947,056			26,910,542			56,263,543			54,143,108
EXPENSES
Healthcare services expense		21,054,292			20,382,516			42,553,095			41,807,191
Insurance expense:
Salaries and benefits expense		2,357,581			2,276,259			4,730,719			4,588,319
Commission expenses and other acquisition costs		1,567,447			1,418,244			2,787,681			2,701,224
Other insurance expense		2,378,964			2,047,348			4,805,024			4,020,953
Total insurance expense		6,303,992			5,741,851			12,323,424			11,310,496
Total expenses		27,358,284			26,124,367			54,876,519			53,117,687
INCOME BEFORE INCOME TAX		588,772			786,175			1,387,024			1,025,421
INCOME TAX EXPENSE		164,251			279,949			386,946			365,348
NET INCOME		424,521			506,226			1,000,078			660,073
OTHER COMPREHENSIVE (LOSS) INCOME
Change in the fair value of interest rate swap, net of income (benefit) tax of $1,324, ($1,428), $4,929 and $465, respectively		4,983			(2,776	)		18,543			902
Change in the fair value of investments, net of income (benefit) tax ($12,206), $21,285, ($52,716) and $35,126, respectively		(45,915	)		41,317			(198,312	)		68,186
Reclassification adjustment for realized (loss) gains included in net income, net of income tax (benefit) of $964, ($2,552), $669 and ($12,485), respectively		3,628			(4,955	)		2,517			(24,237	)
Total other comprehensive (loss) income		(37,304	)		33,586			(177,252	)		44,851
TOTAL COMPREHENSIVE INCOME	$	387,217		$	539,812		$	822,826		$	704,924

See notes to unaudited condensed consolidated financial statements.

2

DCP HOLDING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,000,078		$	660,073
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		245,258			241,570
Realized loss (gain) on investments, net		3,329			(132,422	)
Deferred compensation		142,395			453,139
Effects of changes in operating assets and liabilities:
Accrued investment income		(2,322	)		2,690
Accounts receivable		(10,351,125	)		(7,309,423	)
Deferred acquisition costs		(746,656	)		(508,601	)
Other assets		(468,368	)		(298,358	)
Claims payable		566,065			66,129
Unearned premium revenue		10,580,832			8,101,177
Other payables and accruals		271,749			(1,065,508	)
Net cash provided by operating activities		1,241,235			210,466
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments		(1,732,714	)		(2,723,131	)
Sales of investments		1,208,615			2,346,789
Maturities of investments		400,000			350,000
Acquisition of property and equipment		(376,545	)		(745,541	)
Net cash used in investing activities		(500,644	)		(771,883	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loan repayments		(27,600	)		(26,400	)
Payments on capital lease		(238,017	)		(115,949	)
Repurchase of redeemable common shares					(123,917	)
Dividends paid					(547,443	)
Net cash used in financing activities		(265,617	)		(813,709	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		474,974			(1,375,126	)
CASH AND CASH EQUIVALENTS—Beginning of period		13,177,193			11,221,951
CASH AND CASH EQUIVALENTS—End of period	$	13,652,167		$	9,846,825
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	41,000		$	31,000
Cash paid for income taxes		1,058,000			830,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Redeemed common shares (in other payables and accruals)	$	11,871		$	38,426

See notes to unaudited condensed consolidated financial statements.

3

DCp HOLDING COMPANY And subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

DCP Holding Company (the “Company”) is the parent holding company of three wholly-owned operating subsidiaries which include Dental Care Plus, Inc., an Ohio corporation; Insurance Associates Plus, Inc., an Ohio corporation; and Adenta, Inc., a Kentucky corporation. Providers who participate in one or more of the Dental Care Plus networks own a majority of the Company’s Redeemable Common Shares. The Company’s Redeemable Common Shares are also owned by retired providers, Company board members, non-provider individuals and employees. The Company primarily offers to employer groups of all sizes and individuals health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity plans for dental care services and vision benefit plans. The condensed consolidated interim financial statements included in this report have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation are reflected in the interim financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited 2017 financial statements and notes thereto as included in the DCP Holding Company annual report on Form 10-K for the year ended December 31, 2017 filed with the Commission on March 30, 2018. These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain financial information that is required in the annual financial statements may not be required for interim financial reporting purposes and has been condensed or omitted. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

The accounting policies of the Company conform to GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accompanying consolidated financial statements include estimates. Actual results could differ from those estimates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the notes to the Company’s consolidated financial statements for the year ended December 31, 2017. While management believes that the procedures followed in preparation of interim financial information are reasonable, the accompanying condensed consolidated financial statements include estimates for items such as changes in claims payable, income tax accounts, deferred acquisition costs, deferred share-based compensation and accrued expenses and various other liability accounts. Any adjustments related to such estimates during the reporting period were of a normal recurring nature.

Premium Revenue—

Fully-Insured—Membership contracts are written on an annual or multi-year basis and are subject to cancellation by the employer group upon thirty days written notice. The Company’s unearned premium revenue was approximately $47,399,000 and $36,818,000 at June 30, 2018 and December 31, 2017, respectively, and primarily relates to the estimated premium revenue associated with the remaining contract periods. Related unbilled amounts recorded in accounts receivable were approximately $45,355,000 and $35,281,000 at June 30, 2018 and December 31, 2017, respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts not received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Premiums received in advance were approximately $2,044,000 and $1,537,000 at June 30, 2018 and December 31, 2017, respectively. Management has determined that as of June 30, 2018 and December 31, 2017, respectively, no premium deficiency reserve is required. The Company’s premium deficiency reserve analysis includes an allocation of investment income.

4

Self-Insured—The Company provides administrative and claims processing services, benefit plan design, and access to the Company-managed provider networks for an administrative fee to self-insured groups. The Company has no underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records self-insured premiums on a gross basis because it controls the services as evidenced by: (i) the Company is primarily responsible for fulfilling the service and (ii) the Company establishes the pricing for the services provided. The self-insured services constitute a series of distinct services accounted for as a single performance obligation.

Administration fee revenue (“ASO fees”) is recognized monthly when earned and is normally based on annual or multi-year contracts with the self-insured groups. ASO fees are charged to self-insured employer groups monthly on a per subscriber per month basis and included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any unearned ASO fee revenue received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Self-insured ASO fee receivable and revenue received in advance were immaterial at June 30, 2018.

Self-insured premium revenue is recognized upon the adjudication of claims for self-insured members in accordance with agreements with self-insured employers and is included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any self-insured premium amounts not received by the end of a reporting period are recorded as accounts receivable by the Company. The Company’s account receivable was approximately $423,000 at June 30, 2018. Collection of the self-insured premium revenue occurs within the first month after the reporting period. In addition, the Company also holds deposits from self-insured groups which were approximately $127,000 at June 30, 2018. Self-insured deposits are recorded as other payables and accruals in the accompanying condensed consolidated balance sheet.

Healthcare Services Expense—Healthcare services expense is recognized on a monthly basis. In the case of the fully-insured dental HMO and indemnity and dental PPO segments, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in the claims payable liability determined using actuarial estimates. For the self-insured dental segment, the healthcare services expense is based solely on the adjudicated claims for the self-insured membership.

Investments—The Company invests in certificates of deposit, corporate bonds and money market funds. The Company classifies all investments as available-for-sale. The Company engages a fixed income portfolio manager to manage the Company’s investment grade and non-investment grade corporate bonds, under the Company’s direction, in order to maximize investment returns. Such investments are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive income. The Company recognizes gains and losses when these securities have other than temporary impairment, mature or are sold using the specific identification method.

Deferred Acquisition Costs—Deferred acquisition costs are those incremental direct costs related to the successful acquisition of new and renewal business. These incremental direct costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. Such incremental direct costs include commissions, costs of contract issuance and underwriting, state premium taxes and other costs the Company incurs to successfully acquire new business or renew existing business. The Company defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately $635,000 and $647,000 and amortized approximately $1,350,000 and $1,239,000 of these capitalized costs for the three months ended June 30, 2018 and 2017, respectively. The Company capitalized deferred acquisition costs of approximately $3,443,000 and $2,976,000 and amortized approximately $2,696,000 and $2,467,000 of these capitalized costs for the six months ended June 30, 2018 and 2017, respectively. The amortization of these costs is recorded in commission expense and other acquisition costs included in the condensed consolidated statements of comprehensive income.     

Claims Payable—The Company estimates liabilities for both incurred but not reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries.  These estimates meet actuarial standards of practice and are also recorded in accordance with generally accepted accounting principles.  Management’s estimates of dental services provided are based on the Company’s historical experience and current trends, with assistance from the Company’s consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims data, dental utilization statistics and other pertinent information. However, final claim payments may differ from the established reserves. Any resulting adjustments are reflected in current operations in the condensed consolidated statements of comprehensive income.     

5

New Accounting Guidance— In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). The new guidance requires that an entity recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Insurance contracts are not included in the scope of this new guidance and therefore our fully-insured dental HMO/IND and fully-insured dental PPO segments are not impacted. Our self-insured administrative fee revenue and self-insured premium revenue represents approximately 28% of our total premium revenue. We adopted the standard on January 1, 2018 using the modified retrospective approach. Upon adopting the guidance, the cumulative effect was presented as an adjustment to beginning retained earnings of approximately $53,000. There was no material change to the timing or pattern of revenue recognition due to the adoption of ASC 606. The net increase in premium revenue and healthcare service expense were approximately $27,000 for the six months ended June 30, 2018. The net increase in accounts receivable was approximately $776,000 and the net increase in other liabilities was approximately $703,000 at June 30, 2018. 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU 2016-01 is for interim and annual reporting periods beginning after December 15, 2017. The Company adopted the requirements of ASU 2016-01 on January 1, 2018. The adoption of these standards did not have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 introduces new guidance that requires a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. The new guidance will also require new qualitative and quantitative disclosures. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted by the Company. The Company’s implementation efforts are primarily focused on the review of its existing lease contracts as well as identification of other contracts that may fall under the scope of the new guidance. We do not expect the adoption to have a material impact on the Company’s consolidated financial position, cash flows and results of operations.     

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU 2017-08 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is not expected to have a significant impact.

3. INVESTMENTS

The Company owned certificates of deposit insured by the Federal Deposit Insurance Corporation (“FDIC”) with an amortized cost of $1,100,000 and $1,150,000 as of June 30, 2018 and December 31, 2017, respectively. The certificates of deposit included in short term and fixed maturities investments are classified as available-for-sale and are carried at fair value. The Company also invests in money market funds included in short term investments that are classified as available-for-sale, with a cost of approximately $243,000 and $181,000 as of June 30, 2018 and December 31, 2017, respectively. The Company invested in corporate bonds with an amortized cost of approximately $8,337,000 and $8,240,000 as of June 30, 2018 and December 31, 2017, respectively. These corporate bonds included in fixed maturity investments are classified as available-for-sale and are carried at fair value.

The Company owned corporate bonds at June 30, 2018, which consisted primarily of investment grade securities. At June 30, 2018, total bond fair value was approximately $8,109,000, which consisted of approximately $7,457,000 with a credit rating of BBB- or better. The remaining securities, totaling approximately $652,000 had a credit rating of BB+ or lower. The weighted average yield-to-cost of the Company’s corporate bonds was approximately 3.31% at June 30, 2018. The weighted average maturity of the Company’s corporate bonds was 5.05 years at June 30, 2018.

6

At June 30, 2018 and December 31, 2017, maturity dates for fixed maturities and short term investments (excluding the money market funds) were:

	Available-for-Sale
	Amortized		Fair		% of Total
June 30, 2018	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,796		6.5	%
Years 1-5		5,928,973		5,810,455		63.1	%
Years 5-10		2,758,920		2,654,829		28.8	%
Due after ten years		149,045		143,399		1.6	%
Total	$	9,436,938	$	9,209,479		100.0	%

	Available-for-Sale
	Amortized		Fair		% of Total
December 31, 2017	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,767		6.4	%
Years 1-5		5,326,884		5,320,683		56.5	%
Years 5-10		3,313,024		3,340,138		35.5	%
Due after ten years		150,374		149,236		1.6	%
Total	$	9,390,282	$	9,410,824		100.0	%

Investments classified at June 30, 2018 and December 31, 2017 as fixed maturities and short term investments were as follows:

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
June 30, 2018	Cost		Gain		Loss			Value
Money market fund	$	242,868						$	242,868
Certificates of deposit, short term		600,000	$	796					600,796
Certificates of deposit, fixed maturities		500,000							500,000
Corporate bonds, fixed maturities		8,336,939		11,562		(239,817	)		8,108,684
Total investments	$	9,679,807	$	12,358	$	(239,817	)	$	9,452,348

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gain		Loss			Value
Money market fund	$	181,183						$	181,183
Certificates of deposit, short term		600,000	$	782	$	(15	)		600,767
Certificates of deposit, fixed maturities		550,000		983					550,983
Corporate bonds, fixed maturities		8,240,282		73,769		(54,977	)		8,259,074
Total investments	$	9,571,465	$	75,534	$	(54,992	)	$	9,592,007

Unrealized losses on investments at June 30, 2018 and December 31, 2017 were generally due to higher current market yields relative to the yields of the investments at their amortized cost. Unrealized losses due to credit risk associated with the underlying collateral of the investments, if any, are not material. All investments with unrealized losses are reviewed quarterly to determine if any impairment is other than temporary, requiring a charge to earnings. The Company considers the severity of the loss on a security, duration of loss, duration of the investment, credit rating of the security, as well as payment performance and the Company’s intent or requirement to sell the investment before recovery when determining whether any impairment is other than temporary. The Company had no investments in a material unrealized loss position for greater than one year at June 30, 2018 or December 31, 2017.

7

4. DEFERRED COMPENSATION PLAN

In accordance with the 2006 Dental Care Plus Management Equity Incentive Plan and the Dental Care Plus, Inc. and DCP Holding Company Deferred Compensation Plan (the “Plans”), Company directors and certain key employees elected to defer portions of their director fees and employee compensation, as applicable. In 2018, key employees were granted cash retention awards. The retention awards may be subject to deferral elections upon vesting.

In 2017, the non-employee members of the Board were granted a total of 216 share-based awards and key employees were granted 99 share-based awards. Share-based awards may be subject to deferral elections upon vesting, in which case these accounts in the Deferred Compensation Plan will increase or decrease in value based upon the value of the Company’s Redeemable Common Shares.

The Company recorded deferred compensation expense of approximately $193,000 and $313,000 related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the three months ended June 30, 2018 and 2017, respectively. The Company recorded deferred compensation expense of approximately $13,400 and $13,000 related to deferred director fees and deferred employee compensation for the three months ended June 30, 2018 and 2017, respectively.

The Company recorded deferred compensation expense of approximately $137,000 and $421,000 related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the six months ended June 30, 2018 and 2017, respectively. The Company recorded deferred compensation expense of approximately $29,700 and $32,000 related to deferred director fees and deferred employee compensation for the six months ended June 30, 2018 and 2017, respectively.

 In February 2017, the Board declared a per share cash dividend for all Redeemable Common Shares in the amounts of $42.50 per share, respectively. With the dividend, the holders of restricted share units and phantom shares received an equivalent share based dividend that resulted in an increase in the deferred compensation liability of approximately $115,000 in February 2017. 

At June 30, 2018 and December 31, 2017, the deferred compensation liability was approximately $4,964,000 and $4,822,000, respectively.

5. LIABILITY FOR CLAIMS PAYABLE

Activity in the liability for claims payable for members is summarized as follows:

	Six months ended			Six months ended
	June 30, 2018			June 30, 2017
Balance—January 1	$	3,576,185		$	3,743,551
Net incurred claims related to:
Current year		29,133,575			29,248,270
Prior years		(102,430	)		(102,369	)
Net incurred claims		29,031,145			29,145,901
Net paid claims related to:
Current year		25,093,164			25,547,725
Prior years		3,371,916			3,532,047
Net paid claims		28,465,080			29,079,772
Balance—June 30	$	4,142,250		$	3,809,680

8

6. FEDERAL INCOME TAXES

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the three and six months ended June 30, 2018 was 27.9% with tax expense of approximately $164,000 and $387,000, respectively. The effective tax rate for the three and six months ended June 30, 2017 was 35.6% with tax expense of approximately $280,000 and $365,000, respectively. The decrease in federal income tax is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 34% to 21%. This reduction is offset by the non-deductible federal premium tax in 2018. Tax years subsequent to 2013 remain open to examination by the Internal Revenue Service (“IRS”), and 2012 remains open to state and local tax authorities.  The Company has recorded no uncertain tax positions in the tax years that are subject to examination.

On December 22, 2017, the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended June 30, 2018, the U.S. Treasury Department (the “Treasury”) and the Internal Revenue Service (the ”IRS”) have not issued further clarification or guidance on matters impacting the Company. We expect to complete our determination of the effects of the Tax Act on our deferred tax assets and liabilities in connection with the preparation of our annual income tax return.

7. ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income includes changes in unrealized gains and losses on available for sale and other invested assets as follows:

	Three months ended									Three months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized loss, net, on investments available for sale, beginning of period	$	(193,341	)	$	(40,470	)	$	(152,871	)	$	(1,881	)	$	(636	)	$	(1,245	)
Other comprehensive (loss) income before reclassification		(58,121	)		(12,206	)		(45,915	)		62,602			21,285			41,317
Reclassification adjustment for realized investment loss (gains), net, included in realized gains on investments, net		4,592			964			3,628			(7,507	)		(2,552	)		(4,955	)
Effect on other comprehensive (loss) income		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Accumulated unrealized (loss) gains, net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	24,170		$	5,986		$	18,184		$	(1,126	)	$	(384	)	$	(742	)
Other comprehensive income (loss) before reclassification		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive gains (loss)		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive loss, beginning of period	$	(169,171	)	$	(34,484	)	$	(134,687	)	$	(3,007	)	$	(1,020	)	$	(1,987	)
Change in unrealized (loss) gains, net, on investments available for sale		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Change in unrealized gains (loss), net, on interest rate swap		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive (loss) income		(47,222	)		(9,918	)		(37,304	)		50,891			17,305			33,586
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

9

	Six months ended									Six months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized gains (loss), net, on investments available for sale, beginning of period	$	972		$	335		$	637		$	(13,376	)	$	(4,544	)	$	(8,832	)
Other comprehensive (loss) income before reclassification		(251,028	)		(52,716	)		(198,312	)		103,312			35,126			68,186
Reclassification adjustment for realized investment gains (loss), net, included in realized gains on investments, net		3,186			669			2,517			(36,722	)		(12,485	)		(24,237	)
Effect on other comprehensive (loss) income		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Accumulated unrealized (loss) gains net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	7,005		$	2,381		$	4,624		$	(6,697	)	$	(2,277	)	$	(4,420	)
Other comprehensive income before reclassification		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive income		23,472			4,929			18,543			1,367			465			902
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive gain (loss), beginning of period	$	7,977		$	2,716		$	5,261		$	(20,073	)	$	(6,821	)	$	(13,252	)
Change in unrealized (loss) gains, net, on investments available for sale		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Change in unrealized gains, net, on interest rate swap		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive (loss) income		(224,370	)		(47,118	)		(177,252	)		67,957			23,106			44,851
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

8. SEGMENT INFORMATION

The Company manages its business with four segments: fully-insured dental HMO and indemnity, fully-insured dental PPO, self-insured dental and corporate, all other. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other consists of revenue associated with the Company’s dental indemnity and vision products underwritten by third-party insurance carriers and certain other corporate activities. These segments are consistent with information used by the Chief Executive Officer (the chief operating decision maker) in managing the business.

The results of the fully-insured dental HMO and indemnity, fully-insured dental PPO and self-insured dental segments are measured by gross profit. The Company does not allocate insurance expense, investment and other income, assets or liabilities to these segments because the Company does not use these measures to analyze the segments. These items are assigned to the remainder of the Company’s business, which it identifies as corporate, all other. The Company’s gross profit was approximately $6,836,000 and $6,407,000 for the three months ended June 30, 2018 and 2017, respectively. The Company’s gross profit was approximately $13,562,000 and $12,080,000 for the six months ended June 30, 2018 and 2017, respectively.

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Listed below is financial information required for each reportable segment for the three and six months ended June 30, 2018 and 2017 (amounts in thousands):

	Three Months Ended							Three Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	12,723	$	9,655	$	3,068		$	12,896	$	9,745	$	3,151
Fully-insured dental PPO		7,137		4,667		2,470			6,572		4,511		2,061
Self-insured dental		7,821		6,732		1,089			7,129		6,126		1,003
Corporate, all other		209				209			192				192
Total	$	27,890	$	21,054		6,836		$	26,789	$	20,382		6,407
Investment income						73							58
Realized (losses) gains on investments, net						(16	)						63
Insurance expense						6,304							5,742
Income before income tax					$	589						$	786
Total assets-corporate					$	82,476

	Six Months Ended							Six Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	25,332	$	19,471	$	5,861		$	25,778	$	20,023	$	5,755
Fully-insured dental PPO		14,546		9,561		4,985			13,030		9,123		3,907
Self-insured dental		15,706		13,522		2,184			14,681		12,661		2,020
Corporate, all other		532				532			398				398
Total	$	56,116	$	42,554		13,562		$	53,887	$	41,807		12,080
Investment income						151							124
Realized (losses) gains on investments, net						(3	)						132
Insurance expense						12,323							11,311
Income before income tax					$	1,387						$	1,025
Total assets-corporate					$	82,476

Inter-segment revenues were not significant for the three and six months ended June 30, 2018 and 2017.

9. FAIR VALUE MEASUREMENTS

The Company classifies the assets and liabilities that require measurement of fair value based on the priority of the observable and market-based sources of data into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows:

● Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

● Level 2 – Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

● Level 3 – Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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The following table presents each of the fair value levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017 (amounts in thousands):

	June 30, 2018						December 31, 2017
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	500	$	500			$	551	$	551
Investment grade corporate bonds				7,457		7,457				7,588		7,588
Non-investment grade corporate bonds				652		652				671		671
Short-term investments
Money market funds	$	243				243	$	181				181
Federally-Insured certificates of deposit				601		601				601		601
Deferred compensation investments (a)
Equity mutual fund investments		1,194				1,194		1,194				1,194
State guarantee fund deposits (b)
Government securities		1,765				1,765		1,763				1,763
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				30		30				7		7
Total	$	3,202	$	9,315	$	12,517	$	3,138	$	9,493	$	12,631

(a) Included as a trading security in other assets

(b) Included in other assets

The Company measures fair value using the following valuation methodologies. The Company uses quoted market prices to determine the fair value of the deferred compensation investments and certain state fund guarantee deposits; such items are classified as Level 1 of the fair value hierarchy. Examples include government securities and mutual fund equity securities. The Company primarily bases fair value for investments in fixed-maturity securities on quoted market prices or on prices from a pricing vendor, an outside resource that supplies independent securities pricing, dividend, corporate action and descriptive information to support fund pricing, securities operations, research and portfolio management. The Company obtains and reviews the pricing service’s valuation methodologies and validates these prices using various inputs including quotes from other independent regulatory sources. When deemed necessary, the Company validates prices by replicating a sample using a discounted cash flow model. Such items are classified as Level 2 of the fair value hierarchy. The Company obtains a price from an independent vendor to determine the fair value of the interest rate swap. The independent vendor uses a discounted cash flow method whereby the significant observable inputs include the replacement interest rates of similar swap instruments in the market and swap curves; such items are classified as Level 2 of the fair value hierarchy.

As of June 30, 2018 and December 31, 2017, there were no assets or liabilities that were required to be measured at fair value on a non-recurring basis. The Company did not have any transfers between fair value hierarchy levels during the three and six months ended June 30, 2018. As of June 30, 2018 and December 31, 2017, the Company did not have any assets or liabilities classified as Level 3 of the fair value hierarchy.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking statements 

Portions of this report, including this discussion and the information contained in the notes to the condensed consolidated financial statements, contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential,” “likely will result,” or the negative of such terms or similar expressions. These forward-looking statements reflect our current expectations and views about future events and speak only as of the date of this report. The forward-looking statements are subject to risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements, include, among others: claims costs exceeding our estimates, a downgrade in our financial strength rating, competitive pressures, changes in demand for dental benefits and other economic conditions, the loss of a significant customer or broker, the occurrence or non-occurrence of circumstances beyond our control and those items described in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date this report is filed.

Overview

Headquartered in Cincinnati, Ohio, the Dental Care Plus Group offers dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services to employer groups in Ohio, Kentucky, Indiana and Tennessee and dental HMO and dental PPO plans to individuals in Ohio, Kentucky and Indiana. The Company also offers dental PPO plans to individuals and small groups on the Ohio, Indiana, Pennsylvania, Georgia, Tennessee, Kentucky, Virginia, Illinois, Missouri, Michigan and Wisconsin exchanges (“the FFM exchanges”). As of June 30, 2018, we had approximately 408,400 members in our dental and vision benefit programs with approximately 2,900 providers participating in our Dental Care Plus dental HMO network, approximately 3,100 providers participating in our DentaSelect dental PPO network and approximately 2,300 in our Balanced Value dental PPO network. The Company has a network access agreement with a national dental network management company that has one of the largest PPO networks of providers under contract in the United States. With this network access agreement, our dental PPO members have access to approximately 46,000 additional providers throughout the United States. The Company also has a network access arrangement with a national dental administration company for the dental PPO plans that it offers on the FFM exchanges in 2018. With this network access arrangement, FFM exchange members have access to approximately 16,800 providers across eleven FFM exchange states.

We manage our business with four reportable segments: fully-insured dental HMO and indemnity (“dental HMO/IND”), fully-insured dental PPO, self-insured dental, and corporate, all other. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other primarily consists of revenue associated with our dental PPO and vision products underwritten by third-party insurance carriers and certain other corporate activities.

The results of our fully-insured dental HMO/IND, fully-insured dental PPO and self-insured dental segments are measured by gross profit. We do not measure the gross profit of our corporate, all other segment. We do not allocate investment and other income, interest expense, insurance expenses, assets or liabilities to our segments because these measures are not used to analyze the segments. Our segments do not share overhead costs or assets. We do, however, measure the contributions of each of our fully-insured and self-insured segments to costs retained in our corporate, all other segment.

As disclosed in our 2017 Annual Report on Form 10-K, the Board of Directors established a Special Committee to consider strategic alternatives available to the Company, including consideration of certain third party proposals made to the Company, conducting preliminary discussions with advisors and third parties regarding potential transactions and business relationships, and making recommendations to the Board of Directors regarding the Company’s growth strategy.  The Special Committee is not currently in discussions with a third party, but will continue to consider any third party proposals received by the Company and evaluate the Company’s business and growth strategy.

13

Profitability Strategy

Our strategy has focused on providing solutions to employers and individuals to manage the rising cost of dental care by leveraging our products that give employer groups and members options that meet their needs. We strive to provide excellent customer service to our employer groups, members, brokers and providers. Additionally, we have increased the diversification of our membership base, not only through our newer products, but also by entering new geographic territories.

Highlights 

– We had net income of approximately $425,000 for the three months ended June 30, 2018 (the “2018 quarter”) compared to net income of approximately $506,000 for the three months ended June 30, 2017 (the “2017 quarter”).

– We had net income of approximately $1,000,000 for the six months ended June 30, 2018 (the “2018 period”) compared to net income of approximately $660,000 for the six months ended June 30, 2017 (the “2017 period”). This increase in net income was primarily the result of an increase in gross profit (total premium revenue less healthcare services expense) of approximately $1,482,000. The increase in gross margin was offset by higher insurance expense of approximately $1,012,000, which is mostly the result of an increase in federal premium tax of approximately $400,000, salaries and benefits of $142,000 and various other expenses.

– Our dental and vision product membership increased by approximately 17,500 members to approximately 408,400 members at June 30, 2018. This membership increase from June 30, 2017 is predominantly due to an increase in fully-insured dental PPO, self-insured dental and corporate all other membership totaling approximately 21,000 members, offset by a decrease in fully-insured HMO/IND dental membership of approximately 3,500 members.

– Our ratio of healthcare services expense to premium revenue (“loss ratio”) decreased from 77.6% in the 2017 period to 75.8% in the 2018 period. The decrease in the loss ratio is primarily the result of a decrease in the level of incurred claims for our fully-insured dental HMO/IND business segment and a decrease in utilization for our fully-insured dental PPO business segment.

Comparison of Results of Operations

The following is a discussion of our results of operations for the 2018 quarter and the 2017 quarter, the 2018 period and the 2017 period.

The table below presents membership and financial data for our four reportable segments (dollar amounts in thousands):

	As of		As of
	June 30, 2018		June 30, 2017		Change
Membership:
Fully-insured dental HMO/IND		157,800		161,300		(2.2	%)
Fully-insured dental PPO		105,100		94,000		11.8	%
Self-insured dental		102,500		96,800		5.9	%
Corporate, all other		43,000		38,800		10.8	%
Total membership		408,400		390,900		4.5	%

14

	Three months ended			Three months ended
	June 30, 2018			June 30, 2017		Change
Premium revenue:
Fully-insured dental HMO/IND	$	12,723		$	12,896		(1.3	%)
Fully-insured dental PPO		7,137			6,572		8.6	%
Self-insured dental		7,821			7,129		9.7	%
Corporate, all other		209			192		8.9	%
Total premium revenue		27,890			26,789		4.1	%
Investment income		73			58		25.9	%
Realized (losses) gains on investments, net		(16	)		63		(125.4	%)
Total revenue		27,947			26,910		3.9	%
Healthcare services expense:
Fully-insured dental HMO/IND		9,655			9,745		(0.9	%)
Fully-insured dental PPO		4,667			4,511		3.5	%
Self-insured dental		6,732			6,126		9.9	%
Total healthcare service expense		21,054			20,382		3.3	%
Insurance expense		6,304			5,742		9.8	%
Income tax expense		164			280		(41.4	%)
Net income	$	425		$	506		(16.0	%)

	Six months ended			Six months ended
	June 30, 2018			June 30, 2017		Change
Premium revenue:
Fully-insured dental HMO/IND	$	25,332		$	25,778		(1.7	%)
Fully-insured dental PPO		14,546			13,030		11.6	%
Self-insured dental		15,706			14,681		7.0	%
Corporate, all other		532			398		33.7	%
Total premium revenue		56,116			53,887		4.1	%
Investment income		151			124		21.8	%
Realized (losses) gains on investments, net		(3	)		132		(102.3	%)
Total revenue		56,264			54,143		3.9	%
Healthcare services expense:
Fully-insured dental HMO/IND		19,471			20,023		(2.8	%)
Fully-insured dental PPO		9,561			9,123		4.8	%
Self-insured dental		13,522			12,661		6.8	%
Total healthcare service expense		42,554			41,807		1.8	%
Insurance expense		12,323			11,311		8.9	%
Income tax expense		387			365		6.0	%
Net income	$	1,000		$	660		51.5	%

Membership

Our fully-insured dental HMO/IND membership decreased by approximately 3,500 members from the 2017 period to the 2018 period. This membership decrease is the result of employer groups that did not renew with the Company or reduced employee counts of retained employer groups of approximately 16,100 members. Some of our fully-insured dental HMO/IND membership losses were the result of corporate consolidations and employer groups moving to medical or other ancillary carriers to take advantage of medical/dental packaged savings. These decreases were offset by an increase of 10,500 members from new sales with employer groups and 2,100 members from new sales of individual HMO products.

Our fully-insured dental PPO membership increased by approximately 11,100 members from the 2017 period to the 2018 period. This membership increase is due to new sales with employer groups of approximately 10,600 members during 2018, offset by the loss of approximately 10,200 members with employer groups that did not renew with the Company or reduced employee counts of retained employer groups. The remaining increase of approximately 10,700 members is due to new sales of individual and on exchange dental PPO products in 2018.

15

Our self-insured dental membership increased by approximately 5,700 members from the 2017 period to the 2018 period. This increase is the result of new sales of approximately 2,200 members with employer groups and an increase of 3,500 members as a result of existing employer groups that increased membership from the 2017 period to the 2018 period.

Our corporate, all other membership increased 4,200 members as a result of increased membership in our vision plan.

Revenue

Fully-insured dental HMO/IND premium revenue for the 2018 quarter decreased by approximately $173,000 compared to the 2017 quarter. A decrease in fully-insured dental HMO/IND group and individual membership resulted in a decrease in fully-insured dental HMO/IND premium revenue of approximately $305,000 that was offset by an increase in fully-insured dental HMO/IND group and individual revenue of approximately $132,000 due to higher overall premium rates on a PMPM basis.

Fully-insured dental HMO/IND premium revenue for the 2018 period decreased by approximately $446,000 compared to the 2017 period. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND premium revenue of approximately $582,000 that was offset by an increase in fully-insured dental HMO/IND revenue of approximately $136,000 due to higher overall premium rates on a PMPM basis.

Fully-insured dental PPO premium revenue for the 2018 quarter increased by approximately $565,000 compared to the 2017 quarter. Fully-insured dental PPO revenue increased by approximately $748,000 due to an increase in fully-insured PPO group and individual membership in the 2018 quarter, offset by a decrease in fully-insured dental PPO revenue of approximately $183,000 due to lower overall premium rates on a PMPM basis.

Fully-insured dental PPO premium revenue for the 2018 period increased by approximately $1,516,000 compared to the 2017 period. Fully-insured dental PPO revenue increased by approximately $1,848,000 due to an increase in fully-insured PPO group and individual membership in the 2018 period, offset by a decrease in fully-insured dental PPO revenue of approximately $332,000 due to lower overall premium rates on a PMPM basis.

Total self-insured dental revenue for the 2018 quarter increased approximately $692,000 compared to the 2017 quarter. Total self-insured dental revenue for the 2018 period increased approximately $1,025,000 compared to the 2017 period.

The self-insured dental segment revenue has two components:

Self-Insured Claim Revenue – Self-insured claim revenue increased approximately $669,000 to approximately $7,438,000 in the 2018 quarter from approximately $6,769,000 in the 2017 quarter. The self-insured claim revenue increased by approximately $380,000 due to an increase in membership of the self-insured product as well as an increase of approximately $289,000 as a result of an increase in self-insured claim revenue on a PMPM basis in the 2018 quarter.

Self-Insured Claim Revenue – Self-insured claim revenue increased approximately $971,000 to approximately $14,939,000 in the 2018 period from approximately $13,968,000 in the 2017 period. The self-insured claim revenue increased by approximately $749,000 due to an increase in membership of the self-insured product as well as an increase of approximately $222,000 as a result of an increase in self-insured claim revenue on a PMPM basis in the 2018 period.

Self-Insured ASO Fees - Self-insured ASO fees increased approximately $23,000 to approximately $383,000 in the 2018 quarter from approximately $360,000 in the 2017 quarter due to an increase in the self-insured membership for the 2018 quarter compared to the 2017 quarter.

Self-Insured ASO Fees - Self-insured ASO fees increased approximately $54,000 to approximately $767,000 in the 2018 period from approximately $713,000 in the 2017 period due to an increase in the self-insured membership for the 2018 period compared to the 2017 period.

Corporate, all other premium revenue is primarily derived from the dental indemnity product and the vision product that are underwritten by third-party insurance carriers. In aggregate, corporate, all other premium revenue increased by approximately $134,000 primarily due to an increase in vision membership in the 2018 period compared to the 2017 period.

16

Healthcare Services Expense

Fully-insured dental HMO/IND healthcare services expense decreased $90,000 in the 2018 quarter compared to the 2017 quarter. Fully-insured dental HMO/IND healthcare services expense on a PMPM basis increased by 1.5% from $20.12 PMPM in the 2017 quarter to $20.42 PMPM in the 2018 quarter. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND healthcare services expense of $230,000. In addition, higher healthcare services utilization resulted in an increase of approximately $140,000 in the 2018 quarter compared to the 2017 quarter.

Fully-insured dental HMO/IND healthcare services expense decreased $552,000 in the 2018 period compared to the 2017 period. Fully-insured dental HMO/IND healthcare services expense on a PMPM basis decreased by 0.5% from $20.69 PMPM in the 2017 period to $20.58 PMPM in the 2018 period. A decrease in fully-insured dental HMO/IND membership resulted in a decrease in fully-insured dental HMO/IND healthcare services expense of $452,000. In addition, lower healthcare services utilization resulted in a decrease of approximately $100,000 in the 2018 period compared to the 2017 period.

Fully-insured dental PPO healthcare services expense increased by $156,000 in the 2018 quarter compared to the 2017 quarter. An increase in fully-insured dental PPO membership resulted in an increase in fully-insured dental PPO healthcare services expense of $514,000. This increase was offset by lower healthcare services expense on a PMPM basis that resulted in a decrease of approximately $358,000 in the 2018 quarter compared to the 2017 quarter. Fully-insured dental PPO healthcare services expense on a PMPM basis decreased by 7.1% from $15.90 PMPM in the 2017 quarter to $14.77 PMPM in the 2018 quarter.

Fully-insured dental PPO healthcare services expense increased by $438,000 in the 2018 period compared to the 2017 period. An increase in fully-insured dental PPO membership resulted in an increase in fully-insured dental PPO healthcare services expense of $1,294,000. This increase was offset of lower healthcare services expense on a PMPM basis that resulted in a decrease of approximately $856,000 in the 2018 period compared to the 2017 period. Fully-insured dental PPO healthcare services expense on a PMPM basis decreased by 8.2% from $16.21 PMPM in the 2017 period to $14.88 PMPM in the 2018 period.

Self-insured healthcare services expense increased by $606,000 in the 2018 quarter compared to the 2017 quarter. An increase in self-insured healthcare services expense of $344,000 was due to an increase in membership volume in the 2018 quarter compared to the 2017 quarter as well as an increase of higher healthcare services expense on a PMPM basis that resulted in an increase in self-insured healthcare services expense of approximately $262,000 in the 2018 quarter compared to the 2017 quarter. Self-insured healthcare services expense on a PMPM basis increased by 4.0% from $21.03 PMPM in the 2017 quarter to $21.88 PMPM in the 2018 quarter.

Self-insured healthcare services expense increased by $861,000 in the 2018 period compared to the 2017 period. An increase in self-insured healthcare services expense of $679,000 was due to an increase in membership volume in the 2018 period compared to the 2017 period as well as an increase by higher healthcare services expense on a PMPM basis that resulted in an increase in self-insured healthcare services expense of approximately $182,000 in the 2018 period compared to the 2017 period. Self-insured healthcare services expense on a PMPM basis increased by 1.4% from $21.67 PMPM in the 2017 period to $21.97 PMPM in the 2018 period.

Corporate, all other healthcare services expense is not recognized by the Company due to the fact that our other dental indemnity and vision PPO products are underwritten by third-party insurance carriers.

Insurance Expense 

Consolidated insurance expense for the 2018 quarter increased approximately $562,000 compared to the 2017 quarter. Consolidated insurance expense for the 2018 period increased approximately $1,012,000 compared to the 2017 period. The higher consolidated insurance expense for the 2018 quarter and period was primarily due to the reinstatement of the federal premium tax as well as higher salaries and benefit and various other expenses in 2018. Insurance expense as a percentage of total premium revenue, or the insurance expense ratio, was approximately 22.0% and 21.0% for the 2018 and the 2017 period, respectively.

Income Taxes

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the three and six months ended June 30, 2018 was 27.9% with tax expense of approximately $164,000 and $387,000, respectively. The effective tax rate for the three and six months ended June 30, 2017 was 35.6% with tax expense of approximately $280,000 and $365,000, respectively. The decrease in federal income tax rate is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 34% to 21%. This reduction is offset by the non-deductible federal premium tax in 2018. Tax years subsequent to 2013 remain open to examination by the Internal Revenue Service (“IRS”), and 2013 remains open to state and local tax authorities.  The Company has recorded no uncertain tax positions in the tax years that are subject to examination.

17

On December 22, 2017, the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended June 30, 2018, the U.S. Treasury Department (the “Treasury”) and the Internal Revenue Service (the ”IRS”) have not issued further clarification or guidance on matters impacting the Company. We expect to complete our determination of the effects of the Tax Act on our deferred tax assets and liabilities in connection with the preparation of our annual income tax return.

Liquidity and Capital Resources and Changes in Financial Condition

Our primary sources of cash include receipts of premiums, ASO fees, investment and other income, proceeds from the sale or maturity of our investment securities, as well as from the sale of redeemable common and preferred shares and from borrowings. Our primary uses of cash include disbursements for claims payments, insurance expense, interest expense, taxes, purchases of investment securities, capital expenditures, dividends, redeemable common share redemptions and payments on borrowings. Cash increased approximately $475,000, or 3.6% during the 2018 period to approximately $13,652,000 at June 30, 2018 from approximately $13,177,000 at December 31, 2017. The change in cash for the 2018 and 2017 period is summarized as follows (in thousands):

	Six months ended			Six months ended
	June 30, 2018			June 30, 2017
Net cash provided by operating activities	$	1,241		$	211
Net cash used in investing activities		(500	)		(772	)
Net cash used in financing activities		(266	)		(814	)
Increase (decrease) in cash and cash equivalents	$	475		$	(1,375	)

Cash Flows from Operating Activities

In the 2018 period, we had net income of approximately $1,000,000. An increase in premiums received in advance resulted in a favorable increase of cash of approximately $508,000 in the 2018 period. Due to claims activity and the timing of our payments, our claims payable liability increased approximately $566,000. Our non-cash deferred compensation activity was approximately $142,000 primarily due to current year vesting activity in the 2018 period. Deferred policy acquisition costs increased by approximately $747,000 as a result of the increase in the fully-insured business renewed in January 2018. Other assets increased by approximately $468,000 primarily due to the increase in prepaid the federal premium tax recorded in January 2018. In future years, the federal premium tax increase will be based on a graduated year-over-year percentage increase of premium revenue earned as a result of the Affordable Care Act. There was no federal premium tax in 2017. Other payables and accrued expenses increased and resulted in a net increase in cash flow from operations of approximately $272,000. The remaining effects of changes in operating assets and liabilities that represent fluctuations are not significant and are consistent with the 2017 period.

Cash Flows from Investing Activities

During the 2018 period, we made purchases totaling approximately $1,733,000 of investment grade and non-investment grade corporate bonds and certificates of deposit in order to improve investment income. Also during the 2018 period, we had investment grade and non-investment grade corporate bond sales and certificate of deposit sales and maturities that aggregated approximately $1,608,000. The remaining net cash of approximately $376,000 used in investing activities during the 2018 period was for purchases of computer software, furniture and fixtures.

Cash Flows from Financing Activities

In the 2018 period, we made scheduled principal payments of approximately $28,000 related to our office building mortgage and scheduled payments of approximately $238,000 related to our capital leases.

Contractual Obligations, Other Commitments and Off-balance Sheet Arrangements

Refer to the Company’s 2017 Annual Report on Form 10-K filed with the SEC for a description of contractual obligations, other commitments and off-balance sheet arrangements. We have had no significant changes in these items in 2018.

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Financial Condition

Our consolidated cash and short term investments were approximately $14.5 million and $13.9 million as of June 30, 2018 and December 31, 2017, respectively. We expect to generate positive cash flow from operations during the balance of 2018. Based on total expenses for the six months ended June 30, 2018, we estimate that we had approximately 48 days of cash and short term investments on hand at June 30, 2018. In addition, the Company has access to approximately $8.6 million of fixed maturity investments that are classified as available-for-sale and two working capital lines of credit discussed below.

In 2012, the Company refinanced the mortgage of its office building and in connection therewith, the Company executed a mortgage note with a bank, secured by the land and the office building, in the amount of $1,340,000. Interest is payable based on the 30-day LIBOR rate plus 1.95%. The Company also entered into an interest rate swap agreement that effectively changed the interest rate related to the mortgage note with a commercial bank from a variable rate based on the 30-day LIBOR rate plus 1.95% to a fixed rate of 3.90% for the 10-year period through December 22, 2022.      

We have an annually renewable agreement with a commercial bank for a $500,000 working capital line of credit. Interest is payable at a variable rate of LIBOR plus 2.50%. We did not have any interest expense for the line of credit in the 2018 period or the 2017 period. As of June 30, 2018 and December 31, 2017, there was no amount outstanding on this line of credit. The $500,000 working capital line of credit expires in July 2019. We expect to renew this line of credit at its maturity.

We have an additional annually renewable working capital line of credit for $1,000,000. Interest is payable at a variable rate of LIBOR plus 2.50%. We did not have any interest expense for the line of credit in the 2018 period or the 2017 period. At June 30, 2018 and December 31, 2017, there was no amount outstanding on this line of credit. The $1,000,000 working capital line of credit expires in July 2019. We expect to renew this line of credit at its maturity.

Under the mortgage note and each of the renewable lines of credit, the Company is required to have a debt service ratio of at least 1:1 at the end of each quarter and a minimum tangible net worth equal to or greater than $3,500,000 at the end of each fiscal year. The Company was in compliance with these covenants at June 30, 2018 and December 31, 2017.

We believe our premium revenues, cash, investments and working capital lines of credit are sufficient to meet our short term and long term liquidity needs. In the short term, we are obligated to make payments related to our contractual requirements such as our healthcare services expense, building mortgage, and our capital and operating leases and other commitments, including payment of certain deferred compensation obligations. In the long term, we will continue to be obligated to make payments related to our other contractual requirements. We will also be obligated in certain circumstances to repurchase the Redeemable Common Shares and make future payments to employees and directors related to the Company’s deferred compensation obligations. Our Board of Directors establishes limitations on the amount of share redemptions each year. While we are not able to estimate future redemptions of our Redeemable Common Shares, we believe our cash balances, investment securities, operating cash flows, and borrowing capacity, taken together, provide adequate resources to fund ongoing operating and regulatory requirements and capital expenditures in the next twelve months.

Our largest subsidiary, Dental Care Plus Inc., (“DCP”), operates in states that regulate its payment of dividends and debt service on inter-company loans, as well as other inter-company cash transfers and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be paid by DCP, without prior approval by state regulatory authorities, is limited based on statutory income and statutory capital and surplus. Even if prior approval is not required, prior notification must be provided to state insurance departments before paying a dividend. During 2018, the total dividend that the DCP subsidiary may declare without prior regulatory approval is approximately $1,480,000. There were no dividends declared or paid by DCP in 2018 or 2017.

A.M. Best Company assigns a rating to companies based on their ability to meet their ongoing obligations to policyholders, but are financially vulnerable to adverse changes in underwriting and economic conditions. In July 2018, A.M. Best Company affirmed our financial strength rating at B+ (Good) with a positive outlook based on DCP’s operating performance and capitalization. Our A.M. Best rating is a measure of our financial strength relative to other insurance companies and is not a recommendation to buy, sell or hold securities. The rating assigned by A.M. Best Company is based, in part, on the ratio of our fully-insured premium revenue to our statutory capital and surplus.

We attempt to reduce overall risk by maintaining a well-diversified fixed-maturity portfolio of investments. We invest in certificates of deposits, investment grade corporate bonds, non-investment grade corporate bonds, and money market funds, targeting what we believe to be optimal risk-adjusted after-tax yields. Risk, in this context, includes interest rate, call, reinvestment rate, credit and liquidity risk. We typically do not make a concerted effort to alter duration on a portfolio basis in response to anticipated movements in interest rates. By continually investing in certificates of deposits, money market funds and investment and non-investment grade corporate bonds, we believe the portfolio mitigates the impact of adverse economic factors.

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Our regulated subsidiary’s state of domicile has statutory risk-based capital, or RBC, requirements for health and other insurance companies largely based on the NAIC’s RBC Model Act. These RBC requirements are intended to measure capital adequacy, taking into account the risk characteristics of an insurer’s investments and products. The NAIC sets forth the formula for calculating the RBC requirements, which are designed to take into account asset risks, insurance risks, interest rate risks and other relevant risks with respect to an individual insurance company’s business. In general, an insurance company must submit a report of its RBC level to the state insurance department or insurance commissioner, as appropriate, at the end of each calendar year. Our subsidiary’s risk-based capital as of December 31, 2017, which was the most recent date for which reporting was required, was in excess of all mandatory RBC thresholds.

Critical Accounting Policies

Recognition of Premium Revenue

There have been no material changes to our critical accounting policies from what was previously reported in our 2017 Annual Report on Form 10-K except for the adoption of ASC 606 on January 1, 2018 as described in Note 2 to our unaudited quarterly financial statements.

Liability for Claims Payable

We estimate liabilities for both incurred but not reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries and meet actuarial standards of practice. These actuarial standards of practice require that claim liability estimates be adequate under moderately adverse circumstances. The Company’s consulting actuary assists us in making these estimates. Since our liability for claims payable is based on actuarial estimates, the amount of claims eventually paid for services provided prior to the balance sheet date could differ from the estimated liability. Any such differences are recognized in the condensed consolidated statements of comprehensive income for the period in which the differences are identified. Historically, such differences have not been material.

We develop our estimate for the claims payable liability using actuarial methodologies and assumptions, primarily based on historical claim payments and claim receipt patterns, as well as historical dental cost trends. Depending on the period for which incurred claims are estimated, we apply a different method in determining our estimate. For periods prior to the most recent month, we calculate a “completion factor” which indicates the percentage of claims payable estimated for a prior period that have been paid as of the end of the current reporting period. We use the completion factor to determine historical patterns over a rolling 12-month period, made consistent by making adjustments for known changes in claims in process levels and known changes in claim payment processes. For the most recent month, we calculate a “claims trend factor” that estimates incurred claims primarily from a trend analysis based upon PMPM claims trends developed from our historical experience in the preceding months, adjusted for known provider contracting changes, changes in benefit levels, seasonality and consideration of any subsequent actual claims data available. When developing our estimate for claims payable liability as of June 30, 2018 and December 31, 2017, we considered actual paid claim data from July 2018 and January 2018. As a result, we were able to use the completion factors approach for all historical months at June 30, 2018 and December 31, 2017.

We have not changed the key actuarial methodologies used by management to estimate the IBNR and reported claims in process components of our claims payable liability during the periods presented, and management has not adjusted any of the key methodologies used in calculating the most recent estimate of the IBNR and reported claims in process components of our claims payable liability.

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The table below illustrates how our operating results are affected when there is a variance between estimated claims expense and actual claims expense. The table shows the sensitivity of the estimated fully-insured incurred claims payable liability to fluctuations in the expected completion factors that were used to estimate the claims payable liability as of June 30, 2018 within variance ranges historically experienced.

Completion Factor (a)
			Estimated claims
(Decrease)			payable liability
Increase			as of
In Factor			June 30, 2018
	(0.5)%		$	4,452,919
	0%	(estimate used)		4,142,250
	0.5%			3,947,594

(a)     Reflects estimated potential changes in incurred claims payable liability caused by changes in completion factors for months prior to the most recent month.

Based on historical experience, we believe the completion factors we use to estimate outstanding IBNR and reported claims in process are reliable for predicting actual claims paid at future times, with a variance range of approximately one-half of one percent, plus or minus.

Based on our healthcare services expense on a PMPM basis that adjusts the quarterly healthcare services expense for membership volume changes, we have observed that the utilization of our dental plan members is somewhat variable. In general, claims on a PMPM basis are lower in the second and fourth quarter than in the first quarter and the third quarter. The higher third quarter claim level on a PMPM basis is primarily due to the high level of dental services used in July and August by student members prior to returning to school. Use of dental services is lowest in the fourth quarter due to the holiday season and the fact that a portion of our members have already reached their maximum annual benefit level for the year. The following shows these trends in tabular form:

	Healthcare Service Expense
	2018				2017
	$000’s		$PMPM		$000’s		$PMPM
First Quarter	$	21,498	$	19.41	$	21,425	$	20.23
Second Quarter		21,054		19.20		20,383		19.24
Third Quarter						20,402		19.39
Fourth Quarter						19,398		18.59

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk that we will incur investment losses or increased interest expense due to adverse changes in market rates and prices. Our market risk exposures are substantially related to our investment portfolio and the impact of interest rate changes on these securities. In addition, interest rate changes can affect future interest expense for debt obligations that have a variable rate of interest associated with them.

Our portfolio includes approximately $8,109,000 and $8,259,000 of corporate bonds, approximately $243,000 and $181,000 of money market funds and approximately $1,101,000 and $1,152,000 of investments in FDIC-insured bank certificates of deposits at June 30, 2018 and December 31, 2017, respectively. We have instructed our investment manager to invest additional funds in shorter duration investment grade corporate bonds with maturities up to five years.

There is increased interest rate risk associated with our investment in longer duration investment grade and non-investment grade corporate bonds. We have evaluated the impact on the invested portfolio’s fair value considering an immediate 100 basis point change in interest rates. A 100 basis point increase in interest rates would result in an approximate $259,000 decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate $273,000 increase in fair value. The investment and non-investment grade corporate bonds as well as the certificates of deposits are all classified as available-for-sale.

At June 30, 2018 and December 31, 2017, we had a mortgage note with a bank with an outstanding principal balance of $1,068,000 and $1,095,000, respectively, with a variable rate based on LIBOR plus 1.95%. In December 2012, we entered into a variable to fixed interest rate swap contract that effectively eliminated the interest rate risk exposure on the entire outstanding loan principal. Management estimates that a 100 basis point increase in interest rates would not materially impact our annual pre-tax earnings.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the design and effectiveness of the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2018. Based on the evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15(d)-15(f)) during the three and six months ended June 30, 2018 that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Certain factors may have a material adverse effect on our business, financial condition and results of operations and you should carefully consider them. It is not possible to predict or identify all such factors. For discussion of our potential risks or uncertainties, refer to Part I, Item 1A, Risk Factors, included in our 2017 Annual Report on Form 10-K. There have been no material changes to the risk factors disclosed in our 2017 Annual Report on Form 10-K.

ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.      MINE SAFETY DISCLOSURES

None.

ITEM 5.      OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibits
31.1	CEO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2	CFO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32	CEO and CFO certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial information and Notes to Financial Statements for the three and six months ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DCP HOLDING COMPANY
August 10, 2018	By: /s/ Anthony A. Cook
	Anthony A. Cook.
	President, Chief Executive Officer and Director
	Principal Executive Officer
August 10, 2018	By: /s/ Robert C. Hodgkins, Jr.
	Robert C. Hodgkins, Jr.
	Vice President and Chief Financial Officer
	Principal Financial Officer

23

INDEX TO EXHIBITS

Exhibit No.	Item
31.1	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002
31.2	Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Financial information and Notes to Financial Statements for the three and six months ended June 30, 2018, formatted in XBRL (Extensible Business Reporting Language).

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EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Anthony A. Cook, certify that:

1. I have reviewed this Quarterly Report of DCP Holding Company (the “Company’) on Form 10-Q for the quarter ended June 30, 2018;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     August 10, 2018

Signature:	/s/ Anthony A. Cook
	Anthony A. Cook
	President, Chief Executive Officer and Director
	Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Robert C. Hodgkins, Jr., certify that:

1. I have reviewed this Quarterly Report of DCP Holding Company (the “Company’) on Form 10-Q for the quarter ended June 30, 2018;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     August 10, 2018

Signature:	/s/ Robert C. Hodgkins, Jr.
	Robert C. Hodgkins, Jr.
	Vice President and Chief Financial Officer
	Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of DCP Holding Company (the “Company’) on Form 10-Q for the quarter ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report’), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of the Company, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Anthony A. Cook

President, Chief Executive Officer and Director

Principal Executive Officer 

August 10, 2018

/s/ Robert C. Hodgkins, Jr.

Vice President and Chief Financial Officer

Principal Financial Officer

August 10, 2018

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2018 shares
Document Information [Line Items]
Entity Registrant Name	DCP Holding CO
Entity Central Index Key	0001361025
Trading Symbol	dcph
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Class C [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)	3,771
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)	8,653
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)	500

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
ASSETS
Fixed maturities, available for sale at fair value, amortized cost of $8,837,000 and $8,790,000 at June 30, 2018 and December 31, 2017, respectively	$ 8,608,684	$ 8,810,056
Short-term investments, available for sale at fair value, cost of $843,000 and $781,000 at June 30, 2018 and December 31, 2017, respectively	843,664	781,951
Total investments	9,452,348	9,592,007
CASH AND CASH EQUIVALENTS	13,652,167	13,177,193
ACCRUED INVESTMENT INCOME	83,226	80,904
ACCOUNTS RECEIVABLE, including billed premiums of $1,449,805 and $1,118,996, net of allowance of $37,962 and $45,809 at June 30, 2018 and December 31, 2017, respectively	46,804,456	36,400,634
DEFERRED ACQUISITION COSTS	3,383,514	2,636,858
PROPERTY AND EQUIPMENT, net of depreciation and amortization of $3,917,503 and $3,684,537 at June 30, 2018 and December 31, 2017, respectively	3,781,477	3,661,598
OTHER ASSETS	5,319,254	4,780,001
TOTAL ASSETS	82,476,442	70,329,195
LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY
CLAIMS PAYABLE	4,142,250	3,576,185
UNEARNED PREMIUM REVENUE	47,398,955	36,818,123
OTHER PAYABLES AND ACCRUALS	7,423,097	7,175,048
MORTGAGE LOAN PAYABLE	1,067,600	1,095,200
CAPITAL LEASE OBLIGATIONS	962,908	1,200,925
DEFERRED COMPENSATION	4,964,377	4,821,982
TOTAL LIABILITIES	65,959,187	54,687,463
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED AND COMMON SHARES:
Redeemable shares	16,517,255	15,641,732
SHAREHOLDERS’ EQUITY—Preferred Shares; no par value—authorized, 92,700 shares; none outstanding
TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS’ EQUITY	82,476,442	70,329,195
Common Class A [Member]
REDEEMABLE PREFERRED AND COMMON SHARES:
Redeemable shares	639,015	605,143
Common Class B [Member]
REDEEMABLE PREFERRED AND COMMON SHARES:
Redeemable shares	11,058,790	10,472,602
Common Class C [Member]
REDEEMABLE PREFERRED AND COMMON SHARES:
Redeemable shares	$ 4,819,450	$ 4,563,987

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fixed maturities, available for sale at fair value, amortized cost	$ 8,837,000	$ 8,790,000
Short-term investments, available for sale at fair value, amortized cost	843,000	781,000
Accounts receivable, uncollected premiums	1,449,805	1,118,996
Accounts receivable, allowance	37,962	45,809
Depreciation and amortization, property and equipment	$ 3,917,503	$ 3,684,537
Preferred shares, no par value (in dollars per share)	$ 0	$ 0
Preferred shares, authorized (in shares)	92,700	92,700
Preferred shares, outstanding (in shares)	0	0
Common Class A [Member]
Redeemable shares, par value (in dollars per share)	$ 0	$ 0
Redeemable shares, authorized (in shares)	7,500	7,500
Redeemable shares, issued (in shares)	500	500
Redeemable shares, outstanding (in shares)	500	500
Common Class B [Member]
Redeemable shares, par value (in dollars per share)	$ 0	$ 0
Redeemable shares, authorized (in shares)	120,000	120,000
Redeemable shares, issued (in shares)	8,653	8,653
Redeemable shares, outstanding (in shares)	8,653	8,653
Common Class C [Member]
Redeemable shares, par value (in dollars per share)	$ 0	$ 0
Redeemable shares, authorized (in shares)	80,000	80,000
Redeemable shares, issued (in shares)	3,771	3,771
Redeemable shares, outstanding (in shares)	3,771	3,771

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
REVENUES
Premium revenue	$ 27,890,853	$ 26,789,418	$ 56,116,234	$ 53,887,072
Investment income	72,581	58,289	150,638	123,614
Realized (losses) gains on investments, net	(16,378)	62,835	(3,329)	132,422
Total revenues	27,947,056	26,910,542	56,263,543	54,143,108
EXPENSES
Healthcare services expense	21,054,292	20,382,516	42,553,095	41,807,191
Insurance expense:
Salaries and benefits expense	2,357,581	2,276,259	4,730,719	4,588,319
Commission expenses and other acquisition costs	1,567,447	1,418,244	2,787,681	2,701,224
Other insurance expense	2,378,964	2,047,348	4,805,024	4,020,953
Total insurance expense	6,303,992	5,741,851	12,323,424	11,310,496
Total expenses	27,358,284	26,124,367	54,876,519	53,117,687
INCOME BEFORE INCOME TAX	588,772	786,175	1,387,024	1,025,421
INCOME TAX EXPENSE	164,251	279,949	386,946	365,348
NET INCOME	424,521	506,226	1,000,078	660,073
OTHER COMPREHENSIVE (LOSS) INCOME
Change in the fair value of interest rate swap, net of income (benefit) tax of $1,324, ($1,428), $4,929 and $465, respectively	4,983	(2,776)	18,543	902
Change in the fair value of investments, net of income (benefit) tax ($12,206), $21,285, ($52,716) and $35,126, respectively	(45,915)	41,317	(198,312)	68,186
Reclassification adjustment for realized (loss) gains included in net income, net of income tax (benefit) of $964, ($2,552), $669 and ($12,485), respectively	3,628	(4,955)	2,517	(24,237)
Effect on other comprehensive income (loss), net	(37,304)	33,586	(177,252)	44,851
TOTAL COMPREHENSIVE INCOME	$ 387,217	$ 539,812	$ 822,826	$ 704,924

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest rate swap, tax expense	$ 1,324	$ (1,428)	$ 4,929	$ 465
Investments, tax expense	(12,206)	21,285	(52,716)	35,126
Reclassification adjustment for gains included in net income, expense	$ 964	$ (2,522)	$ 699	$ (12,485)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,000,078	$ 660,073
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	245,258	241,570
Realized loss (gain) on investments, net	3,329	(132,422)
Deferred compensation	142,395	453,139
Effects of changes in operating assets and liabilities:
Accrued investment income	(2,322)	2,690
Accounts receivable	(10,351,125)	(7,309,423)
Deferred acquisition costs	(746,656)	(508,601)
Other assets	(468,368)	(298,358)
Claims payable	566,065	66,129
Unearned premium revenue	10,580,832	8,101,177
Other payables and accruals	271,749	(1,065,508)
Net cash provided by operating activities	1,241,235	210,466
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments	(1,732,714)	(2,723,131)
Sales of investments	1,208,615	2,346,789
Maturities of investments	400,000	350,000
Acquisition of property and equipment	(376,545)	(745,541)
Net cash used in investing activities	(500,644)	(771,883)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loan repayments	(27,600)	(26,400)
Payments on capital lease	(238,017)	(115,949)
Repurchase of redeemable common shares		(123,917)
Dividends paid		(547,443)
Net cash used in financing activities	(265,617)	(813,709)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	474,974	(1,375,126)
CASH AND CASH EQUIVALENTS—Beginning of period	13,177,193	11,221,951
CASH AND CASH EQUIVALENTS—End of period	13,652,167	9,846,825
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	41,000	31,000
Cash paid for income taxes	1,058,000	830,000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Redeemed common shares (in other payables and accruals)	$ 11,871	$ 38,426

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Note 1 - Basis of Presentation

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. BASIS OF PRESENTATION

DCP Holding Company (the “Company”) is the parent holding company of

three

wholly-owned operating subsidiaries which include Dental Care Plus, Inc., an Ohio corporation; Insurance Associates Plus, Inc., an Ohio corporation; and Adenta, Inc., a Kentucky corporation. Providers who participate in

one

or more of the Dental Care Plus networks own a majority of the Company’s Redeemable Common Shares. The Company’s Redeemable Common Shares are also owned by retired providers, Company board members, non-provider individuals and employees. The Company primarily offers to employer groups of all sizes and individuals health maintenance organization (“HMO”), participating provider organization (“PPO”) and indemnity plans for dental care services and vision benefit plans. The condensed consolidated interim financial statements included in this report have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation are reflected in the interim financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited

2017

financial statements and notes thereto as included in the DCP Holding Company annual report on Form

10

-K for the year ended

December 31, 2017

filed with the Commission on

March 30, 2018.

These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain financial information that is required in the annual financial statements

may

not

be required for interim financial reporting purposes and has been condensed or omitted. Operating results for the

three

and

six

months ended

June 30, 2018

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2018.

The accounting policies of the Company conform to GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accompanying consolidated financial statements include estimates. Actual results could differ from those estimates.

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Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the notes to the Company’s consolidated financial statements for the year ended

December 31, 2017.

While management believes that the procedures followed in preparation of interim financial information are reasonable, the accompanying condensed consolidated financial statements include estimates for items such as changes in claims payable, income tax accounts, deferred acquisition costs, deferred share-based compensation and accrued expenses and various other liability accounts. Any adjustments related to such estimates during the reporting period were of a normal recurring nature.

Premium Revenue

—

Fully-Insured

—Membership contracts are written on an annual or multi-year basis and are subject to cancellation by the employer group upon

thirty

days written notice. The Company’s unearned premium revenue was approximately

$47,399,000

and

$36,818,000

at

June 30, 2018

and

December 31, 2017,

respectively, and primarily relates to the estimated premium revenue associated with the remaining contract periods. Related unbilled amounts recorded in accounts receivable were approximately

$45,355,000

and

$35,281,000

at

June 30, 2018

and

December 31, 2017,

respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts

not

received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Premiums received in advance were approximately

$2,044,000

and

$1,537,000

at

June 30, 2018

and

December 31, 2017,

respectively. Management has determined that as of

June 30, 2018

and

December 31, 2017,

respectively,

no

premium deficiency reserve is required. The Company’s premium deficiency reserve analysis includes an allocation of investment income.

Self-Insured

—The Company provides administrative and claims processing services, benefit plan design, and access to the Company-managed provider networks for an administrative fee to self-insured groups. The Company has

no

underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records self-insured premiums on a gross basis because it controls the services as evidenced by: (i) the Company is primarily responsible for fulfilling the service and (ii) the Company establishes the pricing for the services provided. The self-insured services constitute a series of distinct services accounted for as a single performance obligation.

Administration fee revenue (“ASO fees”) is recognized monthly when earned and is normally based on annual or multi-year contracts with the self-insured groups. ASO fees are charged to self-insured employer groups monthly on a per subscriber per month basis and included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any unearned ASO fee revenue received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Self-insured ASO fee receivable and revenue received in advance were immaterial at

June 30, 2018.

Self-insured premium revenue is recognized upon the adjudication of claims for self-insured members in accordance with agreements with self-insured employers and is included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any self-insured premium amounts

not

received by the end of a reporting period are recorded as accounts receivable by the Company. The Company’s account receivable was approximately

$423,000

at

June 30, 2018.

Collection of the self-insured premium revenue occurs within the

first

month after the reporting period. In addition, the Company also holds deposits from self-insured groups which were approximately

$127,000

at

June 30, 2018.

Self-insured deposits are recorded as other payables and accruals in the accompanying condensed consolidated balance sheet.

Healthcare Services Expense

—Healthcare services expense is recognized on a monthly basis. In the case of the fully-insured dental HMO and indemnity and dental PPO segments, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in the claims payable liability determined using actuarial estimates. For the self-insured dental segment, the healthcare services expense is based solely on the adjudicated claims for the self-insured membership.

Investments

—The Company invests in certificates of deposit, corporate bonds and money market funds. The Company classifies all investments as available-for-sale. The Company engages a fixed income portfolio manager to manage the Company’s investment grade and non-investment grade corporate bonds, under the Company’s direction, in order to maximize investment returns. Such investments are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive income. The Company recognizes gains and losses when these securities have other than temporary impairment, mature or are sold using the specific identification method.

Deferred Acquisition Costs—

Deferred acquisition costs are those incremental direct costs related to the successful acquisition of new and renewal business. These incremental direct costs are those that are essential to the contract transaction and would

not

have been incurred had the contract transaction

not

occurred. Such incremental direct costs include commissions, costs of contract issuance and underwriting, state premium taxes and other costs the Company incurs to successfully acquire new business or renew existing business. The Company defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately

$635,000

and

$647,000

and amortized approximately

$1,350,000

and

$1,239,000

of these capitalized costs for the

three

months ended

June 30, 2018

and

2017,

respectively. The Company capitalized deferred acquisition costs of approximately

$3,443,000

and

$2,976,000

and amortized approximately

$2,696,000

and

$2,467,000

of these capitalized costs for the

six

months ended

June 30, 2018

and

2017,

respectively. The amortization of these costs is recorded in commission expense and other acquisition costs included in the condensed consolidated statements of comprehensive income.     

Claims Payable—

The Company estimates liabilities for both incurred but

not

reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries.  These estimates meet actuarial standards of practice and are also recorded in accordance with generally accepted accounting principles.  Management’s estimates of dental services provided are based on the Company’s historical experience and current trends, with assistance from the Company’s consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims data, dental utilization statistics and other pertinent information. However, final claim payments

may

differ from the established reserves. Any resulting adjustments are reflected in current operations in the condensed consolidated statements of comprehensive income.     

New Accounting Guidance

— In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

2014

-

09,

Revenue from Contracts with Customers

(“ASC

606”

)

. The new guidance requires that an entity recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Insurance contracts are

not

included in the scope of this new guidance and therefore our fully-insured dental HMO/IND and fully-insured dental PPO segments are

not

impacted. Our self-insured administrative fee revenue and self-insured premium revenue represents approximately

28%

of our total premium revenue. We adopted the standard on

January 1, 2018

using the modified retrospective approach. Upon adopting the guidance, the cumulative effect was presented as an adjustment to beginning retained earnings of approximately

$53,000.

There was

no

material change to the timing or pattern of revenue recognition due to the adoption of ASC

606.

The net increase in premium revenue and healthcare service expense were approximately

$27,000

for the

six

months ended

June 30, 2018.

The net increase in accounts receivable was approximately

$776,000

and the net increase in other liabilities was approximately

$703,000

at

June 30, 2018. 

In

January 2016,

the FASB issued ASU

2016

-

01,

 

Financial Instruments - Overall (Subtopic

825

-

10

) - Recognition and Measurement of Financial Assets and Financial Liabilities

. ASU

2016

-

01

revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU

2016

-

01

is for interim and annual reporting periods beginning after

December 15, 2017.

The Company adopted the requirements of ASU

2016

-

01

on

January 1, 2018.

The adoption of these standards did

not

have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

Leases (Topic

842

).

ASU

2016

-

02

introduces new guidance that requires a lessee to recognize assets and liabilities for leases with lease terms of more than

12

months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. The new guidance will also require new qualitative and quantitative disclosures. The effective date of ASU

2016

-

02

is for interim and annual reporting periods beginning after

December 15, 2018.

The ASU has

not

yet been adopted by the Company. The Company’s implementation efforts are primarily focused on the review of its existing lease contracts as well as identification of other contracts that

may

fall under the scope of the new guidance. We do

not

expect the adoption to have a material impact on the Company’s consolidated financial position, cash flows and results of operations.     

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments. ASU

2016

-

13

amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU

2016

-

13

is for interim and annual reporting periods beginning after

December 15, 2019.

The ASU has

not

yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is

not

expected to have a significant impact.

In

March 2017,

the FASB issued ASU

2017

-

08,

Receivables – Nonrefundable Fees and Other Costs (Subtopic

310

-

20

)

:Premium Amortization on Purchased Callable Debt Securities. ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU

2017

-

08

is for interim and annual reporting periods beginning after

December 15, 2018.

The ASU has

not

yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is

not

expected to have a significant impact.

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Note 3 - Investments

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3. INVESTMENTS

The Company owned certificates of deposit insured by the Federal Deposit Insurance Corporation (“FDIC”) with an amortized cost of

$1,100,000

and

$1,150,000

as of

June 30, 2018

and

December 31, 2017,

respectively. The certificates of deposit included in short term and fixed maturities investments are classified as available-for-sale and are carried at fair value. The Company also invests in money market funds included in short term investments that are classified as available-for-sale, with a cost of approximately

$243,000

and

$181,000

as of

June 30, 2018

and

December 31, 2017,

respectively. The Company invested in corporate bonds with an amortized cost of approximately

$8,337,000

and

$8,240,000

as of

June 30, 2018

and

December 31, 2017,

respectively. These corporate bonds included in fixed maturity investments are classified as available-for-sale and are carried at fair value.

The Company owned corporate bonds at

June 30, 2018,

which consisted primarily of investment grade securities. At

June 30, 2018,

total bond fair value was approximately

$8,109,000,

which consisted of approximately

$7,457,000

with a credit rating of BBB- or better. The remaining securities, totaling approximately

$652,000

had a credit rating of BB+ or lower. The weighted average yield-to-cost of the Company’s corporate bonds was approximately

3.31%

at

June 30, 2018.

The weighted average maturity of the Company’s corporate bonds was

5.05

years at

June 30, 2018.

At

June 30, 2018

and

December 31, 2017,

maturity dates for fixed maturities and short term investments (excluding the money market funds) were:

	Available-for-Sale
	Amortized		Fair		% of Total
June 30, 2018	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,796		6.5	%
Years 1-5		5,928,973		5,810,455		63.1	%
Years 5-10		2,758,920		2,654,829		28.8	%
Due after ten years		149,045		143,399		1.6	%
Total	$	9,436,938	$	9,209,479		100.0	%

	Available-for-Sale
	Amortized		Fair		% of Total
December 31, 2017	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,767		6.4	%
Years 1-5		5,326,884		5,320,683		56.5	%
Years 5-10		3,313,024		3,340,138		35.5	%
Due after ten years		150,374		149,236		1.6	%
Total	$	9,390,282	$	9,410,824		100.0	%

Investments classified at

June 30, 2018

and

December 31, 2017

as fixed maturities and short term investments were as follows:

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
June 30, 2018	Cost		Gain		Loss			Value
Money market fund	$	242,868						$	242,868
Certificates of deposit, short term		600,000	$	796					600,796
Certificates of deposit, fixed maturities		500,000							500,000
Corporate bonds, fixed maturities		8,336,939		11,562		(239,817	)		8,108,684
Total investments	$	9,679,807	$	12,358	$	(239,817	)	$	9,452,348

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gain		Loss			Value
Money market fund	$	181,183						$	181,183
Certificates of deposit, short term		600,000	$	782	$	(15	)		600,767
Certificates of deposit, fixed maturities		550,000		983					550,983
Corporate bonds, fixed maturities		8,240,282		73,769		(54,977	)		8,259,074
Total investments	$	9,571,465	$	75,534	$	(54,992	)	$	9,592,007

Unrealized losses on investments at

June 30, 2018

and

December 31, 2017

were generally due to higher current market yields relative to the yields of the investments at their amortized cost. Unrealized losses due to credit risk associated with the underlying collateral of the investments, if any, are

not

material. All investments with unrealized losses are reviewed quarterly to determine if any impairment is other than temporary, requiring a charge to earnings. The Company considers the severity of the loss on a security, duration of loss, duration of the investment, credit rating of the security, as well as payment performance and the Company’s intent or requirement to sell the investment before recovery when determining whether any impairment is other than temporary. The Company had

no

investments in a material unrealized loss position for greater than

one

year at

June 30, 2018

or

December 31, 2017.

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Note 4 - Deferred Compensation Plan

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Compensation Related Costs, General [Text Block]

4. DEFERRED COMPENSATION PLAN

In accordance with the

2006

Dental Care Plus Management Equity Incentive Plan and the Dental Care Plus, Inc. and DCP Holding Company Deferred Compensation Plan (the “Plans”), Company directors and certain key employees elected to defer portions of their director fees and employee compensation, as applicable. In

2018,

key employees were granted cash retention awards. The retention awards

may

be subject to deferral elections upon vesting.

In

2017,

the non-employee members of the Board were granted a total of

216

share-based awards and key employees were granted

99

share-based awards. Share-based awards

may

be subject to deferral elections upon vesting, in which case these accounts in the Deferred Compensation Plan will increase or decrease in value based upon the value of the Company’s Redeemable Common Shares.

The Company recorded deferred compensation expense of approximately

$193,000

and

$313,000

related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the

three

months ended

June 30, 2018

and

2017,

respectively. The Company recorded deferred compensation expense of approximately

$13,400

and

$13,000

related to deferred director fees and deferred employee compensation for the

three

months ended

June 30, 2018

and

2017,

respectively.

The Company recorded deferred compensation expense of approximately

$137,000

and

$421,000

related to cash retention awards and share-based awards that were deferred at vesting and the change in the value of deferred employee compensation for the

six

months ended

June 30, 2018

and

2017,

respectively. The Company recorded deferred compensation expense of approximately

$29,700

and

$32,000

related to deferred director fees and deferred employee compensation for the

six

months ended

June 30, 2018

and

2017,

respectively.

 In

February 2017,

the Board declared a per share cash dividend for all Redeemable Common Shares in the amounts of

$42.50

per share, respectively. With the dividend, the holders of restricted share units and phantom shares received an equivalent share based dividend that resulted in an increase in the deferred compensation liability of approximately

$115,000

in

February 2017. 

At

June 30, 2018

and

December 31, 2017,

the deferred compensation liability was approximately

$4,964,000

and

$4,822,000,

respectively.

XML

Note 5 - Liability for Claims Payable

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Liability for Claims Payable [Text Block]

5. LIABILITY FOR CLAIMS PAYABLE

Activity in the liability for claims payable for members is summarized as follows:

	Six months ended			Six months ended
	June 30, 2018			June 30, 2017
Balance—January 1	$	3,576,185		$	3,743,551
Net incurred claims related to:
Current year		29,133,575			29,248,270
Prior years		(102,430	)		(102,369	)
Net incurred claims		29,031,145			29,145,901
Net paid claims related to:
Current year		25,093,164			25,547,725
Prior years		3,371,916			3,532,047
Net paid claims		28,465,080			29,079,772
Balance—June 30	$	4,142,250		$	3,809,680

XML

Note 6 - Federal Income Taxes

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. FEDERAL INCOME TAXES

The Company calculates its year to date income tax provision by applying the estimated annual effective tax rate for the year to pretax income. The effective tax rate for the

three

and

six

months ended

June 30, 2018

was

27.9%

with tax expense of approximately

$164,000

and

$387,000,

respectively. The effective tax rate for the

three

and

six

months ended

June 30, 2017

was

35.6%

with tax expense of approximately

$280,000

and

$365,000,

respectively. The decrease in federal income tax is the result of the U.S. government tax legislation commonly referred to as the Tax Cuts and Jobs Act, which reduced the corporate tax rate from

34%

to

21%.

This reduction is offset by the non-deductible federal premium tax in

2018.

Tax years subsequent to

2013

remain open to examination by the Internal Revenue Service (“IRS”), and

2012

remains open to state and local tax authorities.  The Company has recorded

no

uncertain tax positions in the tax years that are subject to examination.

On

December 22, 2017,

the U.S. Government issued the Tax Cuts and Jobs Act (the “Tax Act”). Interpretive guidance of the Tax Act will be received throughout

2018,

and we expect to update the Company’s estimates and disclosure on a quarterly basis as interpretative guidance is received. During the period ended

June 30, 2018,

the U.S. Treasury Department (the “Treasury”) and the Internal Revenue Service (the ”IRS”) have

not

issued further clarification or guidance on matters impacting the Company. We expect to complete our determination of the effects of the Tax Act on our deferred tax assets and liabilities in connection with the preparation of our annual income tax return.

XML

Note 7 - Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

7. ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income includes changes in unrealized gains and losses on available for sale and other invested assets as follows:

	Three months ended									Three months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized loss, net, on investments available for sale, beginning of period	$	(193,341	)	$	(40,470	)	$	(152,871	)	$	(1,881	)	$	(636	)	$	(1,245	)
Other comprehensive (loss) income before reclassification		(58,121	)		(12,206	)		(45,915	)		62,602			21,285			41,317
Reclassification adjustment for realized investment loss (gains), net, included in realized gains on investments, net		4,592			964			3,628			(7,507	)		(2,552	)		(4,955	)
Effect on other comprehensive (loss) income		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Accumulated unrealized (loss) gains, net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	24,170		$	5,986		$	18,184		$	(1,126	)	$	(384	)	$	(742	)
Other comprehensive income (loss) before reclassification		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive gains (loss)		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive loss, beginning of period	$	(169,171	)	$	(34,484	)	$	(134,687	)	$	(3,007	)	$	(1,020	)	$	(1,987	)
Change in unrealized (loss) gains, net, on investments available for sale		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Change in unrealized gains (loss), net, on interest rate swap		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive (loss) income		(47,222	)		(9,918	)		(37,304	)		50,891			17,305			33,586
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

	Six months ended									Six months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized gains (loss), net, on investments available for sale, beginning of period	$	972		$	335		$	637		$	(13,376	)	$	(4,544	)	$	(8,832	)
Other comprehensive (loss) income before reclassification		(251,028	)		(52,716	)		(198,312	)		103,312			35,126			68,186
Reclassification adjustment for realized investment gains (loss), net, included in realized gains on investments, net		3,186			669			2,517			(36,722	)		(12,485	)		(24,237	)
Effect on other comprehensive (loss) income		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Accumulated unrealized (loss) gains net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	7,005		$	2,381		$	4,624		$	(6,697	)	$	(2,277	)	$	(4,420	)
Other comprehensive income before reclassification		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive income		23,472			4,929			18,543			1,367			465			902
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive gain (loss), beginning of period	$	7,977		$	2,716		$	5,261		$	(20,073	)	$	(6,821	)	$	(13,252	)
Change in unrealized (loss) gains, net, on investments available for sale		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Change in unrealized gains, net, on interest rate swap		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive (loss) income		(224,370	)		(47,118	)		(177,252	)		67,957			23,106			44,851
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

XML

Note 8 - Segment Information

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

8. SEGMENT INFORMATION

The Company manages its business with

four

segments: fully-insured dental HMO and indemnity, fully-insured dental PPO, self-insured dental and corporate, all other. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other consists of revenue associated with the Company’s dental indemnity and vision products underwritten by

third

-party insurance carriers and certain other corporate activities. These segments are consistent with information used by the Chief Executive Officer (the chief operating decision maker) in managing the business.

The results of the fully-insured dental HMO and indemnity, fully-insured dental PPO and self-insured dental segments are measured by gross profit. The Company does

not

allocate insurance expense, investment and other income, assets or liabilities to these segments because the Company does

not

use these measures to analyze the segments. These items are assigned to the remainder of the Company’s business, which it identifies as corporate, all other. The Company’s gross profit was approximately

$6,836,000

and

$6,407,000

for the

three

months ended

June 30, 2018

and

2017,

respectively. The Company’s gross profit was approximately

$13,562,000

and

$12,080,000

for the

six

months ended

June 30, 2018

and

2017,

respectively.

Listed below is financial information required for each reportable segment for the

three

and

six

months ended

June 30, 2018

and

2017

(amounts in thousands):

	Three Months Ended							Three Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	12,723	$	9,655	$	3,068		$	12,896	$	9,745	$	3,151
Fully-insured dental PPO		7,137		4,667		2,470			6,572		4,511		2,061
Self-insured dental		7,821		6,732		1,089			7,129		6,126		1,003
Corporate, all other		209				209			192				192
Total	$	27,890	$	21,054		6,836		$	26,789	$	20,382		6,407
Investment income						73							58
Realized (losses) gains on investments, net						(16	)						63
Insurance expense						6,304							5,742
Income before income tax					$	589						$	786
Total assets-corporate					$	82,476

	Six Months Ended							Six Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	25,332	$	19,471	$	5,861		$	25,778	$	20,023	$	5,755
Fully-insured dental PPO		14,546		9,561		4,985			13,030		9,123		3,907
Self-insured dental		15,706		13,522		2,184			14,681		12,661		2,020
Corporate, all other		532				532			398				398
Total	$	56,116	$	42,554		13,562		$	53,887	$	41,807		12,080
Investment income						151							124
Realized (losses) gains on investments, net						(3	)						132
Insurance expense						12,323							11,311
Income before income tax					$	1,387						$	1,025
Total assets-corporate					$	82,476

Inter-segment revenues were

not

significant for the

three

and

six

months ended

June 30, 2018

and

2017.

XML

Note 9 - Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9. FAIR VALUE MEASUREMENTS

The Company classifies the assets and liabilities that require measurement of fair value based on the priority of the observable and market-based sources of data into a

three

-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level

1

) and the lowest priority to unobservable inputs (Level

3

). The

three

levels of the fair value hierarchy are as follows:

● Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

● Level 2 – Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

● Level 3 – Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents each of the fair value levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis as of

June 30, 2018

and

December 31, 2017 (

amounts in thousands):

	June 30, 2018						December 31, 2017
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	500	$	500			$	551	$	551
Investment grade corporate bonds				7,457		7,457				7,588		7,588
Non-investment grade corporate bonds				652		652				671		671
Short-term investments
Money market funds	$	243				243	$	181				181
Federally-Insured certificates of deposit				601		601				601		601
Deferred compensation investments (a)
Equity mutual fund investments		1,194				1,194		1,194				1,194
State guarantee fund deposits (b)
Government securities		1,765				1,765		1,763				1,763
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				30		30				7		7
Total	$	3,202	$	9,315	$	12,517	$	3,138	$	9,493	$	12,631

(a) Included as a trading security in other assets

(b) Included in other assets

The Company measures fair value using the following valuation methodologies. The Company uses quoted market prices to determine the fair value of the deferred compensation investments and certain state fund guarantee deposits; such items are classified as Level

1

of the fair value hierarchy. Examples include government securities and mutual fund equity securities. The Company primarily bases fair value for investments in fixed-maturity securities on quoted market prices or on prices from a pricing vendor, an outside resource that supplies independent securities pricing, dividend, corporate action and descriptive information to support fund pricing, securities operations, research and portfolio management. The Company obtains and reviews the pricing service’s valuation methodologies and validates these prices using various inputs including quotes from other independent regulatory sources. When deemed necessary, the Company validates prices by replicating a sample using a discounted cash flow model. Such items are classified as Level

2

of the fair value hierarchy. The Company obtains a price from an independent vendor to determine the fair value of the interest rate swap. The independent vendor uses a discounted cash flow method whereby the significant observable inputs include the replacement interest rates of similar swap instruments in the market and swap curves; such items are classified as Level

2

of the fair value hierarchy.

As of

June 30, 2018

and

December 31, 2017,

there were

no

assets or liabilities that were required to be measured at fair value on a non-recurring basis. The Company did

not

have any transfers between fair value hierarchy levels during the

three

and

six

months ended

June 30, 2018.

As of

June 30, 2018

and

December 31, 2017,

the Company did

not

have any assets or liabilities classified as Level

3

of the fair value hierarchy.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Insurance Premiums Revenue Recognition, Policy [Policy Text Block]

Premium Revenue

—

Fully-Insured

—Membership contracts are written on an annual or multi-year basis and are subject to cancellation by the employer group upon

thirty

days written notice. The Company’s unearned premium revenue was approximately

$47,399,000

and

$36,818,000

at

June 30, 2018

and

December 31, 2017,

respectively, and primarily relates to the estimated premium revenue associated with the remaining contract periods. Related unbilled amounts recorded in accounts receivable were approximately

$45,355,000

and

$35,281,000

at

June 30, 2018

and

December 31, 2017,

respectively. Premiums are due monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts

not

received by the end of a reporting period are recorded as accounts receivable by the Company. Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Premiums received in advance were approximately

$2,044,000

and

$1,537,000

at

June 30, 2018

and

December 31, 2017,

respectively. Management has determined that as of

June 30, 2018

and

December 31, 2017,

respectively,

no

premium deficiency reserve is required. The Company’s premium deficiency reserve analysis includes an allocation of investment income.

Self-Insured

—The Company provides administrative and claims processing services, benefit plan design, and access to the Company-managed provider networks for an administrative fee to self-insured groups. The Company has

no

underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records self-insured premiums on a gross basis because it controls the services as evidenced by: (i) the Company is primarily responsible for fulfilling the service and (ii) the Company establishes the pricing for the services provided. The self-insured services constitute a series of distinct services accounted for as a single performance obligation.

Administration fee revenue (“ASO fees”) is recognized monthly when earned and is normally based on annual or multi-year contracts with the self-insured groups. ASO fees are charged to self-insured employer groups monthly on a per subscriber per month basis and included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any unearned ASO fee revenue received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Self-insured ASO fee receivable and revenue received in advance were immaterial at

June 30, 2018.

Self-insured premium revenue is recognized upon the adjudication of claims for self-insured members in accordance with agreements with self-insured employers and is included in premium revenue in the accompanying condensed consolidated statements of comprehensive income. Any self-insured premium amounts

not

received by the end of a reporting period are recorded as accounts receivable by the Company. The Company’s account receivable was approximately

$423,000

at

June 30, 2018.

Collection of the self-insured premium revenue occurs within the

first

month after the reporting period. In addition, the Company also holds deposits from self-insured groups which were approximately

$127,000

at

June 30, 2018.

Self-insured deposits are recorded as other payables and accruals in the accompanying condensed consolidated balance sheet.

Healthcare Services Expense [Policy Text Block]

Healthcare Services Expense

—Healthcare services expense is recognized on a monthly basis. In the case of the fully-insured dental HMO and indemnity and dental PPO segments, healthcare services expense is calculated by taking the paid claims associated with the fully-insured membership and adjusting this amount for the change in the claims payable liability determined using actuarial estimates. For the self-insured dental segment, the healthcare services expense is based solely on the adjudicated claims for the self-insured membership.

Investment, Policy [Policy Text Block]

Investments

—The Company invests in certificates of deposit, corporate bonds and money market funds. The Company classifies all investments as available-for-sale. The Company engages a fixed income portfolio manager to manage the Company’s investment grade and non-investment grade corporate bonds, under the Company’s direction, in order to maximize investment returns. Such investments are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive income. The Company recognizes gains and losses when these securities have other than temporary impairment, mature or are sold using the specific identification method.

Deferred Policy Acquisition Costs, Policy [Policy Text Block]

Deferred Acquisition Costs—

Deferred acquisition costs are those incremental direct costs related to the successful acquisition of new and renewal business. These incremental direct costs are those that are essential to the contract transaction and would

not

have been incurred had the contract transaction

not

occurred. Such incremental direct costs include commissions, costs of contract issuance and underwriting, state premium taxes and other costs the Company incurs to successfully acquire new business or renew existing business. The Company defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately

$635,000

and

$647,000

and amortized approximately

$1,350,000

and

$1,239,000

of these capitalized costs for the

three

months ended

June 30, 2018

and

2017,

respectively. The Company capitalized deferred acquisition costs of approximately

$3,443,000

and

$2,976,000

and amortized approximately

$2,696,000

and

$2,467,000

of these capitalized costs for the

six

months ended

June 30, 2018

and

2017,

respectively. The amortization of these costs is recorded in commission expense and other acquisition costs included in the condensed consolidated statements of comprehensive income.     

Unpaid Policy Claims and Claims Adjustment Expense, Policy [Policy Text Block]

Claims Payable—

The Company estimates liabilities for both incurred but

not

reported (“IBNR”) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries.  These estimates meet actuarial standards of practice and are also recorded in accordance with generally accepted accounting principles.  Management’s estimates of dental services provided are based on the Company’s historical experience and current trends, with assistance from the Company’s consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims data, dental utilization statistics and other pertinent information. However, final claim payments

may

differ from the established reserves. Any resulting adjustments are reflected in current operations in the condensed consolidated statements of comprehensive income.     

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Guidance

— In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

2014

-

09,

Revenue from Contracts with Customers

(“ASC

606”

)

. The new guidance requires that an entity recognize revenue for the transfer of goods or services to a customer at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Insurance contracts are

not

included in the scope of this new guidance and therefore our fully-insured dental HMO/IND and fully-insured dental PPO segments are

not

impacted. Our self-insured administrative fee revenue and self-insured premium revenue represents approximately

28%

of our total premium revenue. We adopted the standard on

January 1, 2018

using the modified retrospective approach. Upon adopting the guidance, the cumulative effect was presented as an adjustment to beginning retained earnings of approximately

$53,000.

There was

no

material change to the timing or pattern of revenue recognition due to the adoption of ASC

606.

The net increase in premium revenue and healthcare service expense were approximately

$27,000

for the

six

months ended

June 30, 2018.

The net increase in accounts receivable was approximately

$776,000

and the net increase in other liabilities was approximately

$703,000

at

June 30, 2018. 

In

January 2016,

the FASB issued ASU

2016

-

01,

 

Financial Instruments - Overall (Subtopic

825

-

10

) - Recognition and Measurement of Financial Assets and Financial Liabilities

. ASU

2016

-

01

revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU

2016

-

01

is for interim and annual reporting periods beginning after

December 15, 2017.

The Company adopted the requirements of ASU

2016

-

01

on

January 1, 2018.

The adoption of these standards did

not

have a material impact on the Company’s consolidated financial position, cash flows and results of operations.

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

Leases (Topic

842

).

ASU

2016

-

02

introduces new guidance that requires a lessee to recognize assets and liabilities for leases with lease terms of more than

12

months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. The new guidance will also require new qualitative and quantitative disclosures. The effective date of ASU

2016

-

02

is for interim and annual reporting periods beginning after

December 15, 2018.

The ASU has

not

yet been adopted by the Company. The Company’s implementation efforts are primarily focused on the review of its existing lease contracts as well as identification of other contracts that

may

fall under the scope of the new guidance. We do

not

expect the adoption to have a material impact on the Company’s consolidated financial position, cash flows and results of operations.     

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments. ASU

2016

-

13

amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU

2016

-

13

is for interim and annual reporting periods beginning after

December 15, 2019.

The ASU has

not

yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is

not

expected to have a significant impact.

In

March 2017,

the FASB issued ASU

2017

-

08,

Receivables – Nonrefundable Fees and Other Costs (Subtopic

310

-

20

)

:Premium Amortization on Purchased Callable Debt Securities. ASU

2017

-

08

amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU

2017

-

08

is for interim and annual reporting periods beginning after

December 15, 2018.

The ASU has

not

yet been adopted by the Company. Management is currently evaluating the impact on our Company’s consolidated financial position, cash flows and results of operations, but it is

not

expected to have a significant impact.

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Note 3 - Investments (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available-for-Sale
	Amortized		Fair		% of Total
June 30, 2018	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,796		6.5	%
Years 1-5		5,928,973		5,810,455		63.1	%
Years 5-10		2,758,920		2,654,829		28.8	%
Due after ten years		149,045		143,399		1.6	%
Total	$	9,436,938	$	9,209,479		100.0	%

	Available-for-Sale
	Amortized		Fair		% of Total
December 31, 2017	Cost		Value		Fair Value
Maturity dates occurring:
Less than 1 year	$	600,000	$	600,767		6.4	%
Years 1-5		5,326,884		5,320,683		56.5	%
Years 5-10		3,313,024		3,340,138		35.5	%
Due after ten years		150,374		149,236		1.6	%
Total	$	9,390,282	$	9,410,824		100.0	%

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
June 30, 2018	Cost		Gain		Loss			Value
Money market fund	$	242,868						$	242,868
Certificates of deposit, short term		600,000	$	796					600,796
Certificates of deposit, fixed maturities		500,000							500,000
Corporate bonds, fixed maturities		8,336,939		11,562		(239,817	)		8,108,684
Total investments	$	9,679,807	$	12,358	$	(239,817	)	$	9,452,348

	Available-for-Sale
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gain		Loss			Value
Money market fund	$	181,183						$	181,183
Certificates of deposit, short term		600,000	$	782	$	(15	)		600,767
Certificates of deposit, fixed maturities		550,000		983					550,983
Corporate bonds, fixed maturities		8,240,282		73,769		(54,977	)		8,259,074
Total investments	$	9,571,465	$	75,534	$	(54,992	)	$	9,592,007

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Note 5 - Liability for Claims Payable (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

	Six months ended			Six months ended
	June 30, 2018			June 30, 2017
Balance—January 1	$	3,576,185		$	3,743,551
Net incurred claims related to:
Current year		29,133,575			29,248,270
Prior years		(102,430	)		(102,369	)
Net incurred claims		29,031,145			29,145,901
Net paid claims related to:
Current year		25,093,164			25,547,725
Prior years		3,371,916			3,532,047
Net paid claims		28,465,080			29,079,772
Balance—June 30	$	4,142,250		$	3,809,680

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Note 7 - Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three months ended									Three months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized loss, net, on investments available for sale, beginning of period	$	(193,341	)	$	(40,470	)	$	(152,871	)	$	(1,881	)	$	(636	)	$	(1,245	)
Other comprehensive (loss) income before reclassification		(58,121	)		(12,206	)		(45,915	)		62,602			21,285			41,317
Reclassification adjustment for realized investment loss (gains), net, included in realized gains on investments, net		4,592			964			3,628			(7,507	)		(2,552	)		(4,955	)
Effect on other comprehensive (loss) income		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Accumulated unrealized (loss) gains, net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	24,170		$	5,986		$	18,184		$	(1,126	)	$	(384	)	$	(742	)
Other comprehensive income (loss) before reclassification		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive gains (loss)		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive loss, beginning of period	$	(169,171	)	$	(34,484	)	$	(134,687	)	$	(3,007	)	$	(1,020	)	$	(1,987	)
Change in unrealized (loss) gains, net, on investments available for sale		(53,529	)		(11,242	)		(42,287	)		55,095			18,733			36,362
Change in unrealized gains (loss), net, on interest rate swap		6,307			1,324			4,983			(4,204	)		(1,428	)		(2,776	)
Effect on other comprehensive (loss) income		(47,222	)		(9,918	)		(37,304	)		50,891			17,305			33,586
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

	Six months ended									Six months ended
	June 30, 2018									June 30, 2017
	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Accumulated unrealized gains (loss), net, on investments available for sale, beginning of period	$	972		$	335		$	637		$	(13,376	)	$	(4,544	)	$	(8,832	)
Other comprehensive (loss) income before reclassification		(251,028	)		(52,716	)		(198,312	)		103,312			35,126			68,186
Reclassification adjustment for realized investment gains (loss), net, included in realized gains on investments, net		3,186			669			2,517			(36,722	)		(12,485	)		(24,237	)
Effect on other comprehensive (loss) income		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Accumulated unrealized (loss) gains net, on investments available for sale, end of period	$	(246,870	)	$	(51,712	)	$	(195,158	)	$	53,214		$	18,097		$	35,117
Accumulated unrealized gains (loss), net, on interest rate swap, beginning of period	$	7,005		$	2,381		$	4,624		$	(6,697	)	$	(2,277	)	$	(4,420	)
Other comprehensive income before reclassification		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive income		23,472			4,929			18,543			1,367			465			902
Accumulated unrealized income (loss), net, on interest rate swap, end of period	$	30,477		$	7,310		$	23,167		$	(5,330	)	$	(1,812	)	$	(3,518	)
Accumulated other comprehensive gain (loss), beginning of period	$	7,977		$	2,716		$	5,261		$	(20,073	)	$	(6,821	)	$	(13,252	)
Change in unrealized (loss) gains, net, on investments available for sale		(247,842	)		(52,047	)		(195,795	)		66,590			22,641			43,949
Change in unrealized gains, net, on interest rate swap		23,472			4,929			18,543			1,367			465			902
Effect on other comprehensive (loss) income		(224,370	)		(47,118	)		(177,252	)		67,957			23,106			44,851
Accumulated other comprehensive (loss) income, end of period	$	(216,393	)	$	(44,402	)	$	(171,991	)	$	47,884		$	16,285		$	31,599

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Note 8 - Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended							Three Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	12,723	$	9,655	$	3,068		$	12,896	$	9,745	$	3,151
Fully-insured dental PPO		7,137		4,667		2,470			6,572		4,511		2,061
Self-insured dental		7,821		6,732		1,089			7,129		6,126		1,003
Corporate, all other		209				209			192				192
Total	$	27,890	$	21,054		6,836		$	26,789	$	20,382		6,407
Investment income						73							58
Realized (losses) gains on investments, net						(16	)						63
Insurance expense						6,304							5,742
Income before income tax					$	589						$	786
Total assets-corporate					$	82,476

	Six Months Ended							Six Months Ended
	June 30, 2018							June 30, 2017
	Revenues-		Healthcare					Revenues-		Healthcare
	External		Services					External		Services
	Customers		Expense		Total			Customers		Expense		Total
Reportable segments:
Fully-insured dental HMO/Indemnity	$	25,332	$	19,471	$	5,861		$	25,778	$	20,023	$	5,755
Fully-insured dental PPO		14,546		9,561		4,985			13,030		9,123		3,907
Self-insured dental		15,706		13,522		2,184			14,681		12,661		2,020
Corporate, all other		532				532			398				398
Total	$	56,116	$	42,554		13,562		$	53,887	$	41,807		12,080
Investment income						151							124
Realized (losses) gains on investments, net						(3	)						132
Insurance expense						12,323							11,311
Income before income tax					$	1,387						$	1,025
Total assets-corporate					$	82,476

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Note 9 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 30, 2018						December 31, 2017
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	500	$	500			$	551	$	551
Investment grade corporate bonds				7,457		7,457				7,588		7,588
Non-investment grade corporate bonds				652		652				671		671
Short-term investments
Money market funds	$	243				243	$	181				181
Federally-Insured certificates of deposit				601		601				601		601
Deferred compensation investments (a)
Equity mutual fund investments		1,194				1,194		1,194				1,194
State guarantee fund deposits (b)
Government securities		1,765				1,765		1,763				1,763
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				30		30				7		7
Total	$	3,202	$	9,315	$	12,517	$	3,138	$	9,493	$	12,631

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Note 1 - Basis of Presentation (Details Textual)	6 Months Ended
	Jun. 30, 2018
Number of Wholly Owned Subsidiaries	3

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Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	Jan. 01, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Financial Guarantee Insurance Contracts, Unearned Premium Revenue, Total		$ 47,399,000		$ 47,399,000		$ 36,818,000
Unbilled Contracts Receivable		45,355,000		45,355,000		35,281,000
Advance Premium Received		2,044,000		2,044,000		1,537,000
Premium Deficiency Reserve		0		0		$ 0
Deferred Policy Acquisition Costs, Additions		635,000	$ 647,000	3,443,000	$ 2,976,000
Deferred Policy Acquisition Costs, Amortization Expense, Total		1,350,000	1,239,000	2,696,000	2,467,000
Percent of Self-insured Administrative Fees and Premium Revenues to Total Premium Revenues	28.00%
Premiums Earned, Net, Total		27,890,853	26,789,418	56,116,234	53,887,072
Increase (Decrease) in Accounts Receivable				10,351,125	7,309,423
Policyholder Benefits and Claims Incurred, Net, Total		21,054,292	$ 20,382,516	42,553,095	$ 41,807,191
Accounting Standards Update 2014-09 [Member]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ 53,000
Premiums Earned, Net, Total				27,000
Increase (Decrease) in Accounts Receivable	776,000
Increase (Decrease) in Other Accrued Liabilities	$ 703,000
Policyholder Benefits and Claims Incurred, Net, Total				27,000
Deposits From Self-Insured Groups [Member]
Deposit Liability, Current		127,000		127,000
Self-insurance Premium [Member]
Accounts Receivable, Gross		$ 423,000		$ 423,000

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Note 3 - Investments (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Amortized Cost Basis, Total	$ 9,679,807	$ 9,571,465
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Certificates of Deposit [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	1,100,000	1,150,000
Money Market Funds [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	242,868	181,183
Available-for-sale Securities, Total	243,000	181,000
Corporate Bond Securities [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	8,336,939	$ 8,240,282
Investment Owned, at Fair Value	$ 8,109,000
Weighted Average Yield to Book Value of Investment Grade Corporate Bonds	3.31%
Weighted Average Maturity of Investment	5 years 18 days
Corporate Bond Securities [Member] | BBB- or Better [Member]
Investment Owned, at Fair Value	$ 7,457,000
Corporate Bond Securities [Member] | BB + or Lower [Member]
Investment Owned, at Fair Value	$ 652,000

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Note 3 - Investments - Maturity Dates for Fixed Maturities and Short-term Investments (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Total, amortized cost	$ 8,837,000	$ 8,790,000
Fixed Maturities and Short Term Investments Excluding the Money Market Funds [Member]
Less than 1 year, amortized cost	600,000	600,000
Less than 1 year, fair value	$ 600,796	$ 600,767
Less than 1 year, percentage of total fair value	6.50%	6.40%
Years 1-5, amortized cost	$ 5,928,973	$ 5,326,884
Years 1-5, fair value	$ 5,810,455	$ 5,320,683
Years 1-5, percentage of total fair value	63.10%	56.50%
Years 5-10, amortized cost	$ 2,758,920	$ 3,313,024
Years 5-10, fair value	$ 2,654,829	$ 3,340,138
Years 5-10, percentage of total fair value	28.80%	35.50%
Due after ten years, amortized cost	$ 149,045	$ 150,374
Due after ten years, fair value	$ 143,399	$ 149,236
Due after ten years, percentage of total fair value	1.60%	1.60%
Total, amortized cost	$ 9,436,938	$ 9,390,282
Total, fair value	$ 9,209,479	$ 9,410,824
Total, percentage of total fair value	100.00%	100.00%

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Note 3 - Investments - Fixed Maturities and Short-term Investments (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Amortized Cost Basis, Total	$ 9,679,807	$ 9,571,465
Available-for-sale securities, gross unrealized gain	12,358	75,534
Available-for-sale securities, gross unrealized loss	(239,817)	(54,992)
Available-for-sale securities, fair value	9,452,348	9,592,007
Money Market Funds [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	242,868	181,183
Available-for-sale securities, gross unrealized gain	0	0
Available-for-sale securities, gross unrealized loss	0	0
Available-for-sale securities, fair value	242,868	181,183
Certificates of Deposit Short Term [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	600,000	600,000
Available-for-sale securities, gross unrealized gain	796	782
Available-for-sale securities, gross unrealized loss		(15)
Available-for-sale securities, fair value	600,796	600,767
Certificates of Deposit, Fixed Maturities [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	500,000	550,000
Available-for-sale securities, gross unrealized gain		983
Available-for-sale securities, gross unrealized loss
Available-for-sale securities, fair value	500,000	550,983
Corporate Bond Securities [Member]
Available-for-sale Securities, Amortized Cost Basis, Total	8,336,939	8,240,282
Available-for-sale securities, gross unrealized gain	11,562	73,769
Available-for-sale securities, gross unrealized loss	(239,817)	(54,977)
Available-for-sale securities, fair value	$ 8,108,684	$ 8,259,074

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Note 4 - Deferred Compensation Plan (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 28, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Dividends Payable, Amount Per Share	$ 42.50
Increase (Decrease) in Deferred Compensation				$ 142,395	$ 453,139
Deferred Compensation Liability, Current and Noncurrent, Total		$ 4,964,377		4,964,377		$ 4,821,982
Dividend Declared [Member]
Increase (Decrease) in Deferred Compensation	$ 115,000
Deferred Share and Phantom Shares [Member]
Deferred Compensation Arrangement with Individual, Compensation Expense		193,000	$ 313,000	137,000	421,000
Directors and Employees [Member]
Deferred Compensation Arrangement with Individual, Compensation Expense		$ 13,400	$ 13,000	$ 29,700	$ 32,000
Non-employee [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period						216
Key Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period						99

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Note 5 - Liability for Claims Payable - Activity in Liability for Claims Payable for Members (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Balance - January 1	$ 3,576,185	$ 3,743,551
Net incurred claims related to:
Current year	29,133,575	29,248,270
Prior years	(102,430)	(102,369)
Net incurred claims	29,031,145	29,145,901
Net paid claims related to:
Current year	25,093,164	25,547,725
Prior years	3,371,916	3,532,047
Net paid claims	28,465,080	29,079,772
Balance - December 31	$ 4,142,250	$ 3,809,680

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Note 6 - Federal Income Taxes (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, Percent, Total	27.90%	35.60%	27.90%	35.60%
Income Tax Expense (Benefit), Total	$ 164,251	$ 279,949	$ 386,946	$ 365,348
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent						34.00%
Domestic Tax Authority [Member] | Earliest Tax Year [Member]
Open Tax Year			2013
State and Local Jurisdiction [Member]
Open Tax Year			2012
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent					21.00%

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Note 7 - Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Effect on other comprehensive income (loss), net	$ (37,304)	$ 33,586	$ (177,252)	$ 44,851
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Accumulated unrealized gains (losses), before tax	(193,341)	(1,881)	972	(13,376)
Accumulated unrealized gains (losses), tax	(40,470)	(636)	335	(4,544)
Accumulated unrealized gains (losses), net of tax	(152,871)	(1,245)	637	(8,832)
Other comprehensive income (loss) before reclassification, before tax	(58,121)	62,602	(251,028)	103,312
Other comprehensive income (loss) before reclassification, tax	(12,206)	21,285	(52,716)	35,126
Other comprehensive income (loss) before reclassification, net	(45,915)	41,317	(198,312)	68,186
Reclassification adjustment for realized investment (gains) losses, net, included in realized gains on investments, before tax	4,592	(7,507)	3,186	(36,722)
Reclassification adjustment for realized investment (gains) losses, net, included in realized gains on investments, tax	964	(2,552)	669	(12,485)
Reclassification adjustment for realized investment gains, net, included in realized gains on investments, net	3,628	(4,955)	2,517	(24,237)
Effect on other comprehensive income (loss), before tax	(53,529)	55,095	(247,842)	66,590
Effect on other comprehensive income (loss), tax	(11,242)	18,733	(52,047)	22,641
Effect on other comprehensive income (loss), net	(42,287)	36,362	(195,795)	43,949
Accumulated unrealized gains (losses), before tax	(246,870)	53,214	(246,870)	53,214
Accumulated unrealized gains (losses), tax	(51,712)	18,097	(51,712)	18,097
Accumulated unrealized gains (losses), net of tax	(195,158)	35,117	(195,158)	35,117
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Accumulated unrealized gains (losses), before tax	24,170	(1,126)	7,005	(6,697)
Accumulated unrealized gains (losses), tax	5,986	(384)	2,381	(2,277)
Accumulated unrealized gains (losses), net of tax	18,184	(742)	4,624	(4,420)
Other comprehensive income (loss) before reclassification, before tax	6,307	(4,204)	23,472	1,367
Other comprehensive income (loss) before reclassification, tax	1,324	(1,428)	4,929	465
Other comprehensive income (loss) before reclassification, net	4,983	(2,776)	18,543	902
Effect on other comprehensive income (loss), before tax	6,307	(4,204)	23,472	1,367
Effect on other comprehensive income (loss), tax	1,324	(1,428)	4,929	465
Effect on other comprehensive income (loss), net	4,983	(2,776)	18,543	902
Accumulated unrealized gains (losses), before tax	30,477	(5,330)	30,477	(5,330)
Accumulated unrealized gains (losses), tax	7,310	(1,812)	7,310	(1,812)
Accumulated unrealized gains (losses), net of tax	23,167	(3,518)	23,167	(3,518)
AOCI Attributable to Parent [Member]
Accumulated unrealized gains (losses), before tax	(169,171)	(3,007)	7,977	(20,073)
Accumulated unrealized gains (losses), tax	(34,484)	(1,020)	2,716	(6,821)
Accumulated unrealized gains (losses), net of tax	(134,687)	(1,987)	5,261	(13,252)
Effect on other comprehensive income (loss), before tax	(47,222)	50,891	(224,370)	67,957
Effect on other comprehensive income (loss), tax	(9,918)	17,305	(47,118)	23,106
Effect on other comprehensive income (loss), net	(37,304)	33,586	(177,252)	44,851
Accumulated unrealized gains (losses), before tax	(216,393)	47,884	(216,393)	47,884
Accumulated unrealized gains (losses), tax	(44,402)	16,285	(44,402)	16,285
Accumulated unrealized gains (losses), net of tax	(171,991)	31,599	(171,991)	31,599
Change in unrealized gains, net, on investments available for sale, before tax	(53,529)	55,095	(247,842)	66,590
Change in unrealized gains, net, on investments available for sale, tax	(11,242)	18,733	(52,047)	22,641
Change in unrealized gains, net, on investments available for sale, net	(42,287)	36,362	(195,795)	43,949
Change in unrealized gains (losses), net, on interest rate swap, before tax	6,307	(4,204)	23,472	1,367
Change in unrealized gains (losses), net, on interest rate swap, tax	1,324	(1,428)	4,929	465
Change in unrealized gains (losses), net, on interest rate swap, net	$ 4,983	$ (2,776)	$ 18,543	$ 902

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Note 8 - Segment Information (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Number of Reportable Segments			4
Gross Profit, Total	$ 6,836,000	$ 6,407,000	$ 13,562,000	$ 12,080,000

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Note 8 - Segment Information - Reportable Segments (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Premiums Earned, Net, Total	$ 27,890,853	$ 26,789,418	$ 56,116,234	$ 53,887,072
Policyholder Benefits and Claims Incurred, Net, Total	21,054,292	20,382,516	42,553,095	41,807,191
Total	6,836,000	6,407,000	13,562,000	12,080,000
Investment income	72,581	58,289	150,638	123,614
Realized (losses) gains on investments, net	(16,378)	62,835	(3,329)	132,422
Insurance expense	6,303,992	5,741,851	12,323,424	11,310,496
Income before income tax	588,772	786,175	1,387,024	1,025,421
Total assets-corporate	82,476,442		82,476,442		$ 70,329,195
Fully Insured Dental HMO [Member]
Premiums Earned, Net, Total	12,723,000	12,896,000	25,332,000	25,778,000
Policyholder Benefits and Claims Incurred, Net, Total	9,655,000	9,745,000	19,471,000	20,023,000
Total	3,068,000	3,151,000	5,861,000	5,755,000
Fully Insured Dental PPO [Member]
Premiums Earned, Net, Total	7,137,000	6,572,000	14,546,000	13,030,000
Policyholder Benefits and Claims Incurred, Net, Total	4,667,000	4,511,000	9,561,000	9,123,000
Total	2,470,000	2,061,000	4,985,000	3,907,000
Self-insured Dental [Member]
Premiums Earned, Net, Total	7,821,000	7,129,000	15,706,000	14,681,000
Policyholder Benefits and Claims Incurred, Net, Total	6,732,000	6,126,000	13,522,000	12,661,000
Total	1,089,000	1,003,000	2,184,000	2,020,000
Corporate and Other [Member]
Premiums Earned, Net, Total	209,000	192,000	532,000	398,000
Policyholder Benefits and Claims Incurred, Net, Total
Total	$ 209,000	$ 192,000	$ 532,000	$ 398,000

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Note 9 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Assets, Fair Value Disclosure	[1]	$ 12,517	$ 12,631
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure		0	0
Financial Liabilities Fair Value Disclosure, Total		0	0
Fair Value, Measurements, Nonrecurring [Member]
Assets, Fair Value Disclosure		0	0
Financial and Nonfinancial Liabilities, Fair Value Disclosure		$ 0	$ 0

[1] Included in other assets

XML

Note 9 - Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Assets
Assets	[1]	$ 12,517	$ 12,631
Interest Rate Swap [Member]
Assets
Assets	[1]	30	7
Fair Value, Inputs, Level 2 [Member]
Assets
Assets	[1]	9,315	9,493
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Assets
Assets	[1]	30	7
Fair Value, Inputs, Level 1 [Member]
Assets
Assets	[1]	3,202	3,138
Fixed Maturities [Member] | Federally Insured Certificates of Deposit [Member]
Assets
Assets		500	551
Fixed Maturities [Member] | Federally Insured Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets		500	551
Fixed Maturities [Member] | Investment Grade Corporate Bonds [Member]
Assets
Assets		7,457	7,588
Fixed Maturities [Member] | Investment Grade Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets		7,457	7,588
Fixed Maturities [Member] | Non-investment Grade Corporate Bonds [Member]
Assets
Assets		652	671
Fixed Maturities [Member] | Non-investment Grade Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets		652	671
Short-term Investments [Member] | Money Market Funds [Member]
Assets
Assets		243	181
Short-term Investments [Member] | Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member]
Assets
Assets
Short-term Investments [Member] | Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Assets
Assets		243	181
Short-term Investments [Member] | Federally Insured Certificates of Deposit [Member]
Assets
Assets		601	601
Short-term Investments [Member] | Federally Insured Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets		601	601
Deferred Compensation Investment [Member] | Equity Mutual Fund Investments [Member]
Assets
Assets	[2]	1,194	1,194
Deferred Compensation Investment [Member] | Equity Mutual Fund Investments [Member] | Fair Value, Inputs, Level 1 [Member]
Assets
Assets	[2]	1,194	1,194
State Guarantee Fund Deposits [Member] | US Government Agencies Debt Securities [Member]
Assets
Assets	[1]	1,765	1,763
State Guarantee Fund Deposits [Member] | Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member]
Assets
Assets	[1]	1,765	1,763
State Guarantee Fund Deposits [Member] | Federally Insured Certificates of Deposit [Member]
Assets
Assets	[1]	75	75
State Guarantee Fund Deposits [Member] | Federally Insured Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets	[1]	$ 75	$ 75

[1] Included in other assets

[2] Included as a trading security in other assets