© 2007 Removed. All rights reserved. HSA Product Training January 18, 2007 Smith Co.

© 2007 Removed. All rights reserved.

HSA Product Training

January 18, 2007

Smith Co.

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Agenda The Product

HSA Overview Market Demand Product Purpose Product Overview Feature Functionality Review Product Advantages Future Enhancements Pricing Model

The Program Ceridian’s Vanilla HSA Product Launch Timeline Product Pricing HSA Recap


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HSA Overview

• Used to pay for eligible medical expenses

• Must be paired with high deductible health plan

• Employee owned account

• Employee and employer may contribute to HSA

• Contributions may be deducted from employee paycheck or made as a

post tax contribution

• Contribution amount can be changed as frequently as monthly without life

status event

• Contributions held and maintained by HSA Custodian or trustee


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HSA Overview• Contributions can be invested

• Tax favored account – “triple tax advantage”

Contributions (i.e. deposits)

Earnings on Invested Money

Distributions (i.e. reimbursements)

• No “use it or lose it” rule – money rolls from year to year

• No claim substantiation required

• Portable – employee can take HSA with them if they

leave employer


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Why Do Employers Offer HSAs?• Employers are experiencing the pain

of healthcare as it continues to rise at almost double digit rates each year

• “Controlling health care costs” continues to be the #1 goal of HR representatives

• “The Cost of Healthcare: Starbucks will spend more money on healthcare in 2006, roughly $200 Million, than on the coffee it serves to consumers”HSA Insider – Fast Fact

Control health plan costs

0% 20% 40% 60% 80% 100%

Manage all health-related costs

Improve health of work force

Share more costs with employees

Improve benefits for employees already covered

Quantify healthcare impact on productivity

Expand benefits to more employees

For many employers, coupling an HSA with an HDHP helps them to reduce their costs, but still offer a health care package to their employees


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Why Do Employees Participate?

• Reduced health coverage premiums

• Can be considered catastrophic coverage for previously uninsured

• Employer may be contributing

• Benefits of the HSA Triple tax advantage

Investment opportunities

No “use it or lose it” – money rolls from year to year

Can stop or start contributions at any time

Account goes with employee if they leave employer

Easy to get money out – no receipt submission


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Why Offer HSA Administration?• Market Demand

Double digit rate increases associated with traditional HC premiums

More employers and consumers turning to High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA) as a way to reduce costs

• Market Parity

Lessen the gap between Ceridian and our competitors by offering HSA

Majority of TPA competitors introduced HSA product over 2 years ago

• Revenue Growth

Increase revenue by selling HSA services to new and existing customers

Alliance partnership opportunities (regional health TPAs, banks, etc.)

• Customer Loyalty/Retention

Decrease turnover of existing Reimbursement Services customers looking for “one stop shopping”

Build direct relationships with consumers© 2007 Removed. All rights reserved.

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HSA Product Overview HSA product offering will be the second product launched within Ceridian’s

Consumer Driven Health Care suite of services (LPFSA was first)

Utilizing Lighthouse1 (LH1) OnDemand platform for administration

Partnering with HealthcareBank (HCB) for custodial services

• Competition includes health plans, banks, TPAs

• Over 65+ cross industry alliances announced in 2005 and 2006

• $10B+ in acquisition activity during 2005 and 2006

• Majority of our TPA competitors introduced an HSA product over two years

ago (i.e., SHPS, WageWorks, Conexis, UHC, Aetna)

BearingPoint – Prepaid Card Expo presentation – Feb 15, 2006


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HSA Product Feature Functionality• Enrollment

• Contributions

• Custodian Banking Plan Design

• Distributions

• Investments

• Participant Portal

• Rollovers & Transfers (In & Out)

• Other Transaction Types

• Reporting

• Future Features


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HSA Enrollment• Employees enroll online

Enroll through the LH1 Participant Portal

Employee Demographics must be pre-loaded to the LH1 system

Future product enhancements will allow enrollment by spreadsheet or EDT (May also allow paper enrollment)

• Enrollment Support Materials

Online enrollment instructions

E-Learning tool – HSA Employee Experience


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HSA Contribution Types Employee Pre Tax

Withheld from employee payroll

Ceridian ACH’s the client each pay period

Employer Pre Tax

Ceridian ACH’s the client as scheduled

Employee Post Tax (Form required)

Employee sends a post-tax check to Ceridian with required form

Future – Employee requests an ACH transfer from their personal bank account

Election changes can be made at any point in time. Unlike most pre-tax benefits, there is no requirement for a change in status


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Custodian Banking Plan Design

• HSA funds must be held by a custodian or trustee

• LH1 Partners with Healthcare Bank as bank custodian

• Plan Design requires $1000 cash balance (non-interest

bearing, non-invested) be reached prior to investing funds

• Healthcare Bank automatically sweeps funds into

investment accounts when threshold is reached

• Healthcare Bank will automatically sell investments if cash

balance drops below the minimum amount


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HSA Banking - $1,000 Plan Design

• Cash Account Maximum Threshold: $1,000

• Cash Account Minimum Threshold: $750

• Minimum Auto-sweep amount: $100

• Cash Account to Investment Account Trigger: $1,100

• Investment Account to Cash Account Trigger: $650


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You and/or your employer make contributions to

your HSA

Money accumulates in your cash account until it

surpasses the $1000 threshold by $100. Money

is moved to the investment account in

$100 increments

Funds are deposited into a money market

account until you make investment elections.

Once elections are made, new funds will be moved directly to those

investments


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You make an HSA distribution request.

Requests for distribution are paid from your HSA Cash

Account

Your request is processed and

your receive your tax-free money

If your request exceeds your cash balance, monies will be moved from your investment account to your cash account

in $100 increments

If the cash balance falls below $650, monies will be withdrawn from your investment account

in $100 increments until the cash balance is back up to $750


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Distributions• Distribution Types

Normal – Request funds for eligible expenses

Supplemental – Request funds for contributions over the limit, prohibited transactions, or disability

Death Beneficiary – Request by designated HSA beneficiary

• Methods

Direct Deposit

Reimbursement Checks

Debit Card (Future)

• Requests

Online distribution request

Paper distribution request

No substantiation required for normal distributions© 2007 Removed. All rights reserved.

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Investment Options• Investment options include the default money market account,

mutual funds and more aggressive options

• Contributions above the threshold will flow to the default money market account

• Dollars in the default money market account can be moved by accountholder to mutual funds or other investment options

• All investment related information is available on the Investment Portal – Via a link from the Participant Portal

• All investment related activity is performed by the accountholder on the Investment Portal

• Smith Co. can assist the accountholder with Investment Portal navigation, but will not provide investment advice


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Matrix of Investments

SAMPLE


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Participant Portal Functionality

• Account Summary & Transaction Detail Information

• Cash Account & Investment Account Balance

• Contribution Details

• Contribution Changes

• Bank Account Changes

• Account Summary Information

• Distribution Details

• Link to HealthcareBank Investment Portal


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Rollovers & TransfersOutgoing

Rollover to another HSA

Transfers to another HSA

Incoming

Rollover from another HSA

Transfer from another HSA

Rollover from another IRA/HRA/FSA (Future)

Transfer from another IRA/HRA/FSA (Future)


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Other Transaction Types

• Election changes online

• Death beneficiary changes

• Death beneficiary distribution

• Name Changes

• Post-tax contributions

• Distribution corrections

• Excess contribution corrections


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Reporting• Employer

Enrollment Report

HSA Contribution Notification

HSA Funding Collection Notification

• Employee

Account Summary (Online)

Tax Reporting Form 1099 & Form 5498 (from HealthcareBank)

Confirmation Statement (Future - Import File or Paper Enrollment)


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HSA Product– Future Features

• Integration with other Ceridian service offerings

H&W

• Multiple enrollment options

EDT / Spreadsheet

• Debit card

ATM withdrawals

• Plan stacking with LPFSA

• Decision support tools

HSA Calculator

• Employee post-tax contributions by ACH


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HSA Product - Ceridian’s Advantage

• Health plan agnostic – our HSA not tied to a specific health insurance carrier which provides employer flexibility

• Competitive investment thresholds

• Competitive Pricing - No hidden fees

• Future “one stop shopping” – single experience for most CDHC benefits including HFSA, DFSA, LPFSA, and HSA

• Multi purse debit card will help consumers manage health care spend with payment hierarchy (i.e., stacking)

• Future - Integration with H&W platform


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Plan Design

($1000 Threshold)

Implementation Fee $750.00

One Time Set Up

Fee Per Account$15.00

PPPM $3.75

Account Closure Fee

(Charged to participant)$20.00

HSA Pricing Model


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Vanilla HSA Project Timeline

December January MarchFebruary

Vanilla HSA Project Kickoff

Conduct Sales Training

Refine Service Delivery Model

Conduct BU Training

April

Vanilla HSA Go Live

Finalize SOPs & Other Documentation

Vanilla HSA Start Sell

May


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Vanilla HSA Recap

• Competitive Functionality – The HSA service offering will provide

basic feature functionality with specific competitive features

• Client Retention – HSA product will allow us to retain existing and

prospective Reimbursement Services customers that we are

currently losing today

• Familiar Service Delivery – HSA service delivery model will be

similar in setup to other benefit product offerings today, with the

exception of services for consumers terminated from their employers© 2007 Removed. All rights reserved.

Smith Co.

Questions?

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© 2007 Removed. All rights reserved. HSA Product Training January 18, 2007 Smith Co.

Documents

hsa contributions

hsa custodian

hsa services

hsa product training

hsa overview contributions

hsa enrollment employees

offer hsa administration

health savings accounts