The Eight Conversations About Benefits Ronald S. Leopold, MD, MBA, MPH National Medical Director, Vice President METLIFE EMPLOYER SPONSORED BENEFITS Recalibrating.

The EightThe EightConversationsConversationsAbout BenefitsAbout Benefits

Ronald S. Leopold, MD, MBA, MPHNational Medical Director, Vice PresidentMETLIFE EMPLOYER SPONSORED BENEFITS

Recalibrating Health and Welfare

CERTAINTIESCERTAINTIES

The populationIs aging.

Health care costswill continue tooutpace mosteconomic indices*

Employers will continueto cost shift

Social Securityand Medicareare no longer

sure bets

Americans haven’t

saved nearly

enough for retirement.**

Technology will drive newdeliverypossibilities.

Funding retirement is going to be an

even bigger issue.

Consumerismin some form

is here to stay.

The competition for talentis increasing across all

employer sectors.

EMPLOYER

EMPLOYEE

RISK

FUNDING

HumanCapital

PersonalResponsibility

ROI /Value

Employee Choice

THE

EIGHTCONVERSATIONS

ABOUTBENEFITS

EMPLOYERMy CEO wants me to start from scratch and white board our benefits program.

Finding the Finding the right balanceright balancebetweenbetweenexpense andexpense andvalue is thevalue is thenew benefitsnew benefitsequation thatequation thatmust bemust besolved.solved.

The answer is differentThe answer is differentfor every employer.for every employer.

We agreed to drive efficiencies and valuein everything that we do.

Are we really driving efficienciesand value in benefits?

When it comes to benefits I know we’ve got to pay to play.

But we have to drive more valuewithout spending more.

Other benefits may offer better value for the Other benefits may offer better value for the dollar.dollar.

The challenge is to stretch the dollar as far as The challenge is to stretch the dollar as far as we can.we can.

With 5 years of health cost inflation my dollar With 5 years of health cost inflation my dollar buys less.buys less.

In spite of the huge increases weIn spite of the huge increases weface in costs and challenges...face in costs and challenges...

…we still do annual benefits planning on an incremental change basis.

What business value do we get What business value do we get from our benefits spend beyond from our benefits spend beyond

just meeting historic obligations?.just meeting historic obligations?.

ROI / ValueWhat business valuedo I get from offeringbenefits?

Importance of Employee Benefits Issues to Senior Level Management

Employee Benefits Issues Concerning Senior Level Management Most

Importance of Employee Benefits Issues toSenior Level Management (Scale of 1-7)

19%

28%

30%

44%

82%

Long term care

Workers'compensation

Benefits forretired

employees

Retirementsavings

accounts

Health carecosts

2%3%

25%

32%

9%29%

2%

7 6 5 4 3 2 1

Benefits have the attentionof the C-Suite.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

In aggregate,retainingemployeessurpassedbenefit costcontrol for the first time.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

55%

53%

53%

52%

50%

55%

Controllinghealth/welfarebenefit costs

Retainingemployees

2004 2005 2006

Employers’ Top Benefits Objectives

Retaining employees became top objective for the first time.

77%

10% 12%

74%

11%15%

Increase Decrease Same

20062005

Do you anticipate an increase in competition over the next 18 months?

77% of employer respondents expected competition for talent to increase.

Competitionfor talent willbe fiercer than ever.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

What will it take to get your employeeWhat will it take to get your employeeto stay? What role do benefits play?to stay? What role do benefits play?

Sibson 2006 Rewards of Work Study survey concludes that there has been a decline in employee satisfaction with all types of benefits, including time off, retirement benefits, health care benefits, benefit administration satisfaction and benefit level satisfaction.

Benefits will be a more importantbusiness driver in the future.

Medical benefits are a given.Medical benefits are a given.

My benefits package needs todifferentiate me from my competition.

It’s not just about richness of benefits.It’s not just about richness of benefits.It’s about breadth of portfolio.It’s about breadth of portfolio.

FUNDINGHow can non-medicalbenefits enhance the valuewe get from offeringhealth insurance?

Perception of Employer Contribution to Medical Insurance (per year)

Perception of Employee ContributionCompared to Previous Year

Higher60%Lower

11%

Same26%

Don't know3%

15%

32%

30%

22%

$7,500+

$3,000-$7,499

$1,000-$2,999

Less than$1,000

Employees’ Perception of Medical Insurance Costs

Employees are paying more for medical but not recognizing their employers’ contributions.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

*National Health Care Reform: The Position of the National Business Group On Health, 2006

What am I getting for my health care spend?

I’m still funding an inefficient health care system.

Do Workers Understand They Are Giving Their Pay Raises to the Health System?

(With) the continued rise in health care costs (e.g. more than 2 times the CPI), the resultant effect (is) on affordability

so that fewer workers choose to taketheir employer sponsored coverage

even when they are paying relatively little for the benefits and that workers are essentially giving their pay raises

to the health care system. - Helen Darling, NBGH*

The Employee Benefit Research The Employee Benefit Research Institute’s ninth annual Health Institute’s ninth annual Health Confidence Survey shows that Confidence Survey shows that

most Americans rate the healthmost Americans rate the health care system as fair (28%) or care system as fair (28%) or

poor (51%).poor (51%).

Health Health insuranceinsuranceis financial is financial protectionprotectionin the event of in the event of a significant a significant medical event medical event or situation.or situation.

The value of a The value of a benefits benefits packagepackageaddresses this addresses this protection on protection on behalf of behalf of employees and employees and their families. their families.

Other benefits also offer financial protection in the event of a medical event or situation.

LTD Critical Illness DENTAL

LIFE Long Term Care STD

Employee ChoiceWhy should I consider more than just my standard core benefits set?

SystemsSystemstechnologytechnology

and otherand otherinnovationsinnovationswill enablewill enableemployersemployersto offer….to offer….

UNPRECEDENTEDUNPRECEDENTEDCUSTOMIZATIONCUSTOMIZATION

SingleYoung FamiliesBaby BoomersPre-Retirees

Employeesmay value

certainvoluntary

advantagesmore thanemployers

realize.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

27%

37%

38%

46%

47%

48%

55%

58%

63%

25%

36%

38%

38%

45%

45%

39%

40%

51%

Employees get better customer service

Receive objective information fromemployer

Employers screen to find best productsand services

Saves time to buy voluntary benefitsthrough workplace

Better rates

More convenient than buying productson own

Payroll deduction helps employees bemore disciplined about savings

No medical exams

Payroll deduction, convenient way foremployee to make payments

Employer

Employee

Top perceived advantages for providing voluntary benefits, a comparison of Employer and Employee views

Fourth Annual MetLife Employee Benefits Trend Study, 2006

Benefits should giveBenefits should giveus what we want us what we want

and what we need.and what we need.Help us better understand

what we need.

Give us more options Give us more options and choices.and choices.

RISKNot only am I shifting cost,I’m shifting risk. What do Ineed to be thinking aboutto protect my employees?

My pension will be there.

Social security will be there.

Medicare will be there.

My employer has my back.

I’ve saved enough.

My job is secure.

My spouse’s job is secure.

My health will hold out.

My house is enough to retire on.

I’ll inherit money from my parents.

The economy will hold out.

There must be other safety nets.

Real risk isReal risk isincreasing.increasing.

Recognition of thatRecognition of thatrisk will increase.risk will increase.

The value ofThe value ofrisk protectionrisk protectionwill grow.will grow.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Having enoughmoney to make ends

meet

Having appropriatehealth insurance foryou and your family

Having enoughmoney so that onespouse/partner canstay at home with

their children

Having enoughmoney for your

children's education

Having enoughmoney to pay yourbills during a period

of sudden income loss

Singles Young Families Baby Boomers Pre-Retirees

Top employee concerns by life stage

Fifth Annual MetLife Employee Benefits Trend Study, 2007

Financialconcerns

aresignificantacross allemployee

segments.

I’m starting to I’m starting to getget the fact the factthat my family is facingthat my family is facinggreater risk.greater risk.

My employer has been costshifting for several years.

Risk protection is somethingRisk protection is somethingthat I’m starting to that I’m starting to appreciate more.appreciate more.

It’s not just about medicalcosts.

It’s about protection aroundIt’s about protection aroundall the risks in life.all the risks in life.

Personal Responsibility

What do I need to communicate to my people to foster individual accountability?

WSJ.com / Harris Interactive Poll, July 2006

2003 WSJ POLL:

37% said it is fair to ask those that live unhealthy lives to pay higher insurance premiums.

46% said it would be unfair.

Public Opinion Poll

When the When the pollsters pollsters

asked the asked the same same

questions questions in 2006,in 2006,

53%53% said it said it

would be would be fair to fair to

charge charge people people

more; with more; with 32% saying 32% saying

it would it would be unfairbe unfair

. .

Do your employees recognize these assets?Do they think about health as much as they do income?

Diet, exercise and Diet, exercise and a healthy lifestylea healthy lifestyle

lay the foundation lay the foundation for healthy longevity.for healthy longevity.

Smart, responsibleSmart, responsiblefinancial planningfinancial planninglays the foundation for lays the foundation for a wealthy longevity.a wealthy longevity.

MedicalMedical

ProtectionProtection

IncomeIncome

PlanningPlanning

HealthHealthCoverageCoverage

PreventingPreventingDiseaseDisease

HealthHealthTodayToday

HealthyHealthyLifestyleLifestyle

Smart planning for the future depends

on an informed personal approach

to health andwealth.

How much further would benefits dollars go ifeveryone made the connection between HEALTH and WEALTH?

Your health impactsyour wealth.

Health decisions today may Health decisions today may have an impact on future finances.have an impact on future finances.

When employees takeresponsibility for their own health and wealth…

...everyone gets better value from...everyone gets better value fromthe resources invested.the resources invested.

EMPLOYEEWhy is employee satisfactionand job loyalty more important than ever?

Strongcorrelation.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

0%10%20%30%40%50%60%70%80%90%

I am very satisfiedwith my current job

Neither very nor notvery satisfied

I am not verysatisfied with my

job

0%

10%

20%

30%

40%

50%

60%

EE believes stronglythat their employerhas loyalty to them

Neither agrees nordisagrees that ER is

loyal to EE

EE stronglydisagrees that ER has

a strong sense ofloyalty

0%

10%

20%

30%

40%

50%

60%

70%

80%

EE has a strong senseof loyalty to ER

Neither agrees nordisagrees

EE does not have astong sense of Loyalty

to ER

0%

100%

EE SATISFIED WithBenefits

EE NOT Satisfied WithBenefits

80% of Employees (EE) who are satisfied with their benefits are very satisfied with their job

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Total FTE Singles YoungFamilies

BabyBoomers

Pre-Retirees

Important reason why Icame to current ER

Important reason why Iremain at current ER

Benefits as reason to work for employer

Benefitsdrive bothattraction

and retention.

Fifth Annual MetLife Employee Benefits Trend Study, 2007

Fourth Annual MetLife Employee Benefits Trend Study, 2006

SATISFACTION?

Let me makeLet me makeinformed decisionsinformed decisionson my own behalf.on my own behalf.

With the moneyWith the moneyyou’re contributingyou’re contributing

to my benefits…to my benefits…

...define less of it....define less of it.Let me decide how toLet me decide how to

spend more of it.spend more of it.

Competition for talent appears Competition for talent appears to loom greater than ever.to loom greater than ever.

Benefits satisfaction is driven notonly by depth, but by breadth of portfolio.

A rich and diverse portfolio of core A rich and diverse portfolio of core and voluntary benefits is a good and voluntary benefits is a good business strategy.business strategy.

Human CapitalGiven my demographics, what do I need to anticipate?

Sunglass Association of America, 2006

Sales of reading glasses are on the rise.Sales of reading glasses are on the rise.*Sales of reading glasses are on the rise.*

Born between 1946 and Born between 1946 and 1964.1964.

78 million strong.78 million strong.

OLDER BOOMEROLDER BOOMER

MIDDLE MIDDLE BOOMERBOOMERYOUNGER YOUNGER BOOMERBOOMER

The average life expectancy is increasing andmany people may not understand how longthey will really live.

SOURCE: US Census Bureau, 2004, 2006

1935: there were 10 Million Americans over 60.The average 60 year old lived to age 70.

1965: there were 20 Million Americans over 60.The average 60 year old lived to age 75.

Today there are 40 Million Americans over 60.The average 60 year old lives to at least 80.

2015 there will be 80 Million Americans over 60.The average 60 year old will live past 85.

*US Bureau of Labor Statistics in Public Policy and Aging Report, 2004.**Fifth Annual MetLife Employee Benefits Trend Study, 2007

DELAYEDRETIREMENT

A dwindling labor force*

Boomers aren’t saving enough**

Social Security may decline

Medicare financing concerns

Fewer employers offer retiree health

Health care costs continue to rise

Boomers want to work past 65

Changing pension rules

Flexible work options

Life-Stage Benefits: Wooing the MTV and Internet GenerationEmployee Benefit News, 12/10/06

Generation X,Y,ZGeneration X,Y,Z

“By 2050, the American workforce will be heavily populated with three generations: Gen Xers, Gen Yers and Millennials (Z). In preparation, far-sighted employers, insurers and financial services providers are tossing out the traditional concept that one benefit size fits all and, instead, are offering plans and policies that are more meaningful to an individual based on where he or she is in life.

SOURCE: US Census Bureau, Bureau of Labor Statistics 2006

In the next decade, older workers In the next decade, older workers and foreign-born employees will and foreign-born employees will be a larger part of the work force.*be a larger part of the work force.*

Understanding work place demographics will be more critical than ever for benefits success.

The new workforce will drive newThe new workforce will drive newdemands and new solutions demands and new solutions regarding what benefits to provide regarding what benefits to provide and how they should be delivered.and how they should be delivered.

Ronald S. Leopold, MD, MBA, MPHNational Medical Director,

Vice PresidentMETLIFE

EMPLOYER SPONSORED BENEFITS

Retention

Benefits Satisfaction

One size does not fit all

Not health care only

Breadth > Depth

THE

EIGHTCONVERSATIONS

ABOUTBENEFITS