The Employee Benefits Advantage of a Healthy Workforce

 Insurance and Risk Management Consulting Firm  65 employees with locations in Waterloo, Cedar Rapids, LaPorte City and Independence  Celebrating 100 years  Evolved focus from covering claims to reducing risk

 Individual BC/BS Plans January 2016 = 18-29%  Individual BC/BS Plans Proposed 2017 = 38-43%  Current Trend Rate Mid-Size Employer’s = 15.9%

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 Effective 2014, medical risk and claims experience is no longer allowed as a factor in determining a health plan premium for employers with 50 employees or less. (Delayed twice, currently put in place for first renewal after )  Two employers with similar age group, gender ratio, family composition, and geographic region will have the same premium regardless of medical risk or claims experience 6 Rating and Pooling

Unhealthy High Rates Healthy Low Rates New Rating Factors: 1)Age 2)Location 3)Tobacco User? Equilibrium

EMPLOYER A: SMITH’S PLUMBING  40 Employees  Average Age = 35  50% Male / 50% Female  Average contract size = 2.5  Location = Waterloo  Annual Medical Claims = $420,000 Annual Insurance Premium = $380,000  40 Employees  Average Age = 35  50% Male / 50% Female  Average contract size = 2.5  Location = Waterloo  Annual Medical Claims = $120,000  Annual Insurance Premium = $220,000 EMPLOYER B: JONES’ PLUMBING Rating Methodology Today 8

EMPLOYER A: SMITH’S PLUMBING  40 Employees  Average Age = 35  50% Male / 50% Female  Average contract size = 2.5  Location = Waterloo  Annual Medical Claims = $400,000  2017 Annual Insurance Premium = $320,000  40 Employees  Average Age = 35  50% Male / 50% Female  Average contract size = 2.5  Location = Waterloo  Annual Medical Claims = $120,000  2017 Annual Insurance Premium = $320,000 EMPLOYER B: JONES’ PLUMBING 2016 Modified Rating Methodology 9

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 United Healthcare, BC/BS and Coventry began offering level premium Self Funded healthplans to Small Employers in  Employers with better than average health risk have the ability to “safely” enable themselves to become self-funded.

EMPLOYER A: SMITH’S PLUMBING  Annual Medical Claims = $1.2 Million  2014 Insurance Premium = $320,000  Annual Medical Claims = $120,000  Self-Funded Cost -includes fixed fees = $260,000 (Worst Case W/Reinsurance EMPLOYER B: JONES’ PLUMBING FUTURE PLAN COST SNOWBALL S FUTURE PLAN COST (5% ASSUMED): 2017 = $360, = $430, = $500, = $190, = $200, = $210,000 12

 Increased insurance costs have caused your employees’ health risks to become the employees’ and the employers’ financial risks.  THE GOOD NEWS: Fortunately, 75% of healthcare costs are lifestyle related and can be prevented/reduced!  Design a benefit policy to reward employees you want, NOT the employees you have It is time to EMPower!

Wellness Integration into your Health Plan  Employees participation and results from the biometric screenings (BMI, Cholesterol, Blood Pressure, Tobacco/Nicotine use, etc.) are tied to their monthly premiums  Essentially, healthier employees pay less for health insurance and employees with more risk factors pay more  Keep in mind that all the “results” are lifestyle/behavior based – we can control them

Gold Level Participant must complete biometric screening, health risk assessment AND score ≥ 91 Silver Level Participant must complete biometric screening, health risk assessment AND score Bronze Level Participant must complete biometric screening, health risk assessment AND score ≤ 79 Example of Wellness Points Health plan Contribution paid by the employee Gold$ Silver$$ Bronze$$$ Non-Participant-$$$ Monthly Tobacco/Nicotine Surcharge : $$$

Department of Labor Regulations:  DOL regulations also allow: 30%-50% of premium can be used for incentive structure Progress Goals Prescription utilization Spouses to be screened  Programs must be “reasonable designed”: ▪ Tools and resources must be provided by the employer in order to help employees achieve plan goals ( LIKE US!!!)

Department of Labor Regulations:  Third party administrator is needed to implement programming like this for compliance reasons  DOL regulations allows employees to appeal their results and receive an alternative standard if the criteria is medically inadvisable or unreasonably difficult for them to reach (based upon their physicians recommendations).

 Thanks so much,Liz. I was checking my wellness papers from last year and I was at 261. If I keep moving forward I should be able to make that 10%. I’m so excited. I feel like a whole new person. I’m so glad I have made this change. I appreciate the support that you have given me. Amy  Just wanted to say Thank you! For all your encouragement this year. I was so excited last night I ordered some new pants (size 10) and they fit with room to move. I am now down 24 pounds and 2 sizes Thank you!!!!! Patricia  I made my final call today!!!! In one years time I will have saved $1,253.78!!!! That is my plane ticket to visit my niece, who is stationed in Italy. I am so excited!!!! Thank you so much for your support and encouragement!!! Thanks again!!! Gail

15 clients are in our EMPower Program in 2016 Over 4500 employees in the program Client A: Manufacturing (3 rd year)  Obesity rate has fallen from 40% to 28% over the past two years  14 people lost weight in the past year, for a total of 78 pounds!  90% of all participants are at low risk for diabetes, and ZERO participants are in the diabetes range  Opportunity Area: 20% of participants were in the hypertension range for blood pressure

Client B: Manufacturing (3 rd year)  Since year 1, there has been a 17% increase in participants with 0 high risks  As a group, the client has lost 1,504 pounds  53 participants lost at least 10 pounds!  Opportunity Area: 41% of participants test/report nicotine and tobacco use Client C: Nursing Home Facility (2 nd year)  Participants with zero high risks increased 5% in the last year  The percentage of participants in the normal blood pressure category increased by 20% in the last year  Opportunity Area: BMI category – only slight improvement

QUESTIONS?