Why Your Small Business Clients Will Cancel Group Health Insurance in 2014 Webinar

Why Your Small Business Clients Will Cancel Group Health Insurance in 2014... And how to retain them with a defined contribution and individual policy solution

Zane Benefits is the online alternative to group health insurance

The ZaneHRA Software provides a 100% paperless administration experience to employers and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, check out our Software.

Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plan completely online, electronically enroll participants and print welcome kits, and monitor expenses and reimbursements in real-time.

Employees obtain their own individual health policies from a designated health insurance broker (see below), submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check, payroll addition, or direct deposit. Zane Benefits does not sell health insurance.

Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-saving health benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the health insurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies, brokers, and accountants.

DISCLAIMERThe information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.ZaneBenefits.com

For additional resources on Health Care Reform, visit

www.zanebenefits.com/blog

Agenda

1. Why Small Businesses are Canceling Group Health Insurance

2. The Impact of Health Care Reform on Small Business Health Insurance

3. How Health Insurance Marketplaces work with Defined Contribution Plans

4. How to Retain Small Business Clients with "Individual-Based" Defined Contribution Plans

5. New Opportunities for Health Insurance Professionals

6. Summary

Small Businesses, Group Health Insurance, and Defined Contribution

Group Health Insurance Costs Too Much!

After payroll, group health insurance is the most significant cost to an employer.

Unsustainable conditions for small businesses:

1. 156% increase in cost of single coverage

2. 172% increase in cost of family coverage

3. Minimum contribution & participation requirements

Why Group Health Insurance in the First Place?

Businesses offer group health insurance to recruit and retain employees...since World War II!

Small business benefits of offering group health insurance include:

1. Contributions are tax-deductible for the business

2. Employee contributions are pre-tax

3. Guaranteed issue health insurance (i.e. employer moral obligation)

Small Businesses are Canceling Group Health Coverage Now Because of a Benefits Shift...

The Benefits Shift - B2B to B2C

Healthcare is shifting from a business-to-business (B2B) to a business-to-consumer (B2C) marketplace.

PURE Defined Contribution expedites this shift.

Are you prepared to help employees choose an individual health plan?

If not, you may miss the opportunity...

The Impact of Health Reform on Small Businesses

Health Reform Provides the Incentive to Drop Group Health

Employer Mandate - only "applicable large employers" need to comply

A company is NOT an applicable large employer if the company:

■ Employed less than 50 full-time equivalent employees on average during the previous calendar year, or

■ Employed more than 50 full-time equivalent employees no more than 120 days during the previous calendar year due to a seasonal workforce.

What are your small business clients' options?

1. Continue the status quo and offer group health insurance2. Drop group health insurance and do not offer employee health benefits3. Drop group health insurance and offer a defined contribution plan

Health Reform does not solve the core problem for small businesses!

Individual Health Insurance Marketplace Advantages

The Individual Health Insurance Marketplace (ACA's health insurance exchange ["AHBE"] for individuals) will have the following key advantages for small businesses:

1. Choice - choice of co-pays, deductibles, coinsurance, networks within each metallic level

2. Portability - health insurance policies are portable and not tied to employment (lose access to insurance with group health)

3. 1-Stop Shop / Convenience - all plans, options, and tax subsidies available in one experience

4. Tax Credits/Administration - determines tax credit eligibility/amount and facilitates advanced payment

Tax Credits for Employees of Small Businesses

Who is eligible for premium tax subsidies?

● Households with income between 100% and 400% of Federal Poverty Line (FPL)

Where are the premium tax subsidies available?

● ONLY available on individual health insurance market● ONLY available on exchanges

If businesses DO NOT offer qualified, affordable group health coverage their employees may qualify for federal subsidies

Household Income & Size are Key Variables for Individuals

Tax credit calculator coming soon at http://navigator.zanebenefits.com

Household Size 100% of FPL 400% of FPL Premium Cap Range

1 $11,490 $45,960 $0 - $363.85 / mo

2 $15,510 $62,040 $0 - $491.15 / mo

3 $19,530 $78,120 $0 - $618.45 / mo

4 $23,550 $94,200 $0 - $745.75 / mo

5 $27,570 $110,280 $0 - $873.05 / mo

6 $31,590 $126,360 $0 - $1,000.35 / mo

7 $35,610 $142,440 $0 - $1,127.65 / mo

8 $39,630 $158,520 $0 - $1,254.95 / mo

2013 FPL Guidelines

Average Group Single Premium in 2012 was:

$468

Average Group Family of 4 Premium in 2012 was:

$1312

Understanding the Role of Defined Contribution and the Health Insurance Marketplaces

The Gift of Defined Contribution to Employees

Your client's decision to NOT offer group health insurance is a gift to their employees because:

1. All insurance is guaranteed issue in 20142. NO PENALTIES apply3. Employee tax subsidies are only available to

employees if your client does not offer group health insurance

But what about recruiting/retention?

But what about tax savings?

But what about moral obligation?

Defined Contribution is the Solution for Every Small Business

Advantages of Defined Contribution for Small Businesses

○ Recruiting and Retention - ■ Employee classes■ Turn your client's health benefit plan into a

recruiting tool

○ Cost Savings -■ Your client defines maximum budget■ No prefunding■ Client only spends what employees

actually use

○ Ease of Use / Payroll Integration -■ Health benefits becomes a payroll function■ Your client focuses on their businesses, not

the business of health insurance

○ Compliance -■ ERISA, IRS, HIPAA, ACA

Health Insurance Marketplaces and Defined Contribution

How does "pure" defined contribution work in 2014?

Step 1: Small business offers employees a tax-free monthly allowance. Employees visit with the assigned health insurance professional.

Step 2: Employee completes 1 of 2 applications:i. Application for Insurance with Tax Credit (12-pages).ii. Application for Insurance without Tax Credit (3-pages).

Step 3: Health insurance professional/marketplace provides all available plan options within metallic tiers (displayed cost will factor in tax credit).

Step 4: Employee selects plan.

Step 5: Individual health insurance marketplace bills individual for his or her portion of premium (i.e. the total premium minus tax credit) and forwards payment to the carrier

Step 6: Employee provides proof of payment and is reimbursed tax-free for non-subsidized portion of marketplace premium by defined contribution plan

How to Retain Small Business Clients with Defined Contribution

Present All Options to the Small Business

● Group health insurance brokers - if you don't tell your client...a competing broker will

○ Most small business owners only know the status quo - this is changing rapidly

● Individual health insurance brokers - massive boost to your core business

○ Opportunity to work with businesses (mass volume) if you aren't already

● Private health insurance exchanges / quoting tools

Customized by Insurance Professional

The Health Reform Opportunity for Insurance Professionals

● Be the solution expert for small businesses○ Defined contribution for the employer, ongoing health insurance

sales for employees

● Guaranteed issue health insurance...seriously○ Write policies in mass volume

● 3-12 page health insurance application ○ No health questions ○ Quicker completion○ More policies

● Broker commissions paid directly from carrier in many states○ New York, Washington

Summary / Conclusion

The Opportunity is Now...and the Solution is Already Here

1. Your Clients Will Cancel their group health insurance

2. Defined contribution accomplishes your clients' goals without the cost or hassle of group health insurance

3. Small businesses should select an insurance professional to help employees

4. Your clients can focus on their business

Webinar Summary - Q&A

1. Small Businesses are Canceling Group Health Coverage Now

2. Health Reform Provides Incentive for Small Businesses to Drop Group Health Insurance in 2014

3. Dropping Group Health Insurance is a Gift to Employees

4. Insurance Professionals are Primed to Take Advantage of the Opportunity

5. The Opportunity to Increase Health Insurance Sales is Now

Zane Benefits is the online alternative to group health insurance

The ZaneHRA Software provides a 100% paperless administration experience to employers and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, check out our Software.

Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plan completely online, electronically enroll participants and print welcome kits, and monitor expenses and reimbursements in real-time.

Employees obtain their own individual health policies from a designated health insurance broker (see below), submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check, payroll addition, or direct deposit. Zane Benefits does not sell health insurance.

Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-saving health benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the health insurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies, brokers, and accountants.

DISCLAIMERThe information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.ZaneBenefits.com

For additional resources on Health Care Reform, visit

www.zanebenefits.com/blog