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

CERTAINTIES The population Is aging. Health care costs will continue to outpace most economic indices* Employers will continue to cost shift Social Security and Medicare are no longer sure bets Americans haven’t saved nearly enough for retirement.** Technology will drive new delivery possibilities. Funding retirement is going to be an even bigger issue. Consumerism in some form is here to stay. The competition for talent is increasing across all employer sectors.

EMPLOYER EMPLOYEE RISK FUNDING Human Capital Personal Responsibility ROI / Value Employee Choice THE EIGHT CONVERSATIONS ABOUT BENEFITS

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

Finding the right balance between expense and value is the new benefits equation that must be solved. The answer is different for every employer.

We agreed to drive efficiencies and value in everything that we do. Are we really driving efficiencies and value in benefits? When it comes to benefits I know we’ve got to pay to play. But we have to drive more value without spending more.

Other benefits may offer better value for the dollar. The challenge is to stretch the dollar as far as we can. With 5 years of health cost inflation my dollar buys less.

In spite of the huge increases we face in costs and challenges... …we still do annual benefits planning on an incremental change basis. What business value do we get from our benefits spend beyond just meeting historic obligations?.

ROI / Value What business value do I get from offering benefits?

Benefits have the attention of the C-Suite. Fifth Annual MetLife Employee Benefits Trend Study, 2007

In aggregate, retaining employees surpassed benefit cost control for the first time. Fifth Annual MetLife Employee Benefits Trend Study, 2007

Competition for talent will be fiercer than ever. Fifth Annual MetLife Employee Benefits Trend Study, 2007

What will it take to get your employee 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 important business driver in the future. Medical benefits are a given. My benefits package needs to differentiate me from my competition. It’s not just about richness of benefits. It’s about breadth of portfolio.

FUNDING How can non-medical benefits enhance the value we get from offering health insurance?

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 take their 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 Institute’s ninth annual Health Confidence Survey shows that most Americans rate the health care system as fair (28%) or care system as fair (28%) or poor (51%).

Healthinsurance is financial protection in the event of a significant medical event or situation. The value of a benefitspackage addresses this protection on behalf of employees and 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 Choice Why should I consider more than just my standard core benefits set?

Systemstechnology and other innovations will enable employers to offer…. UNPRECEDENTEDCUSTOMIZATION Single Young Families Baby Boomers Pre-Retirees

Employees may value certain voluntary advantages more than employers realize. Fifth Annual MetLife Employee Benefits Trend Study, 2007

Fourth Annual MetLife Employee Benefits Trend Study, 2006 Benefits should give us what we want and what we need. Help us better understand what we need. Give us more options and choices.

RISK Not only am I shifting cost, I’m shifting risk. What do I need to be thinking about to 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 is increasing. Recognition of that risk will increase. The value of risk protection will grow.

Fifth Annual MetLife Employee Benefits Trend Study, 2007 Financial concerns are significant across all employee segments.

I’m starting to get the fact that my family is facing greater risk. My employer has been cost shifting for several years. Risk protection is something that I’m starting to appreciate more. It’s not just about medical costs. It’s about protection around 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 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 pollsters asked the samequestions in 2006, 53% said it would be fair to chargepeople more; with 32% saying it would be unfair.

Do your employees recognize these assets? Do they think about health as much as they do income? Diet, exercise and a healthy lifestyle lay the foundation lay the foundation for healthy longevity. Smart, responsible financial planning lays the foundation for a wealthy longevity.

Medical Protection Income Planning HealthCoverage PreventingDisease HealthToday HealthyLifestyle Smart planning for the future depends on an informed personal approach to health and wealth. How much further would benefits dollars go if everyone made the connection between HEALTH and WEALTH ?

Your health impacts your wealth. Health decisions today may have an impact on future finances. When employees take responsibility for their own health and wealth…...everyone gets better value from the resources invested.

EMPLOYEE Why is employee satisfaction and job loyalty more important than ever?

Strong correlation. Fifth Annual MetLife Employee Benefits Trend Study, 2007

Benefits drive both attraction and retention. Fifth Annual MetLife Employee Benefits Trend Study, 2007

Fourth Annual MetLife Employee Benefits Trend Study, 2006 SATISFACTION? Let me make informed decisions on my own behalf. With the money you’re contributing to my benefits…...define less of it. Let me decide how to spend more of it.

Competition for talent appears to loom greater than ever. Benefits satisfaction is driven not only by depth, but by breadth of portfolio. A rich and diverse portfolio of core and voluntary benefits is a good business strategy.

Human Capital Given 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.*

Born between 1946 and million strong. OLDER BOOMER MIDDLE BOOMER YOUNGER BOOMER

The average life expectancy is increasing and many people may not understand how long they will really live.

SOURCE: US Census Bureau, 2004, : there were 10 Million Americans over 60. The average 60 year old lived to age : 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 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, **Fifth Annual MetLife Employee Benefits Trend Study, 2007 DELAYED RETIREMENT 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 Generation Employee Benefit News, 12/10/06 Generation 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 and foreign-born employees will 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 new demands and new solutions regarding what benefits to provide and how they should be delivered.

Ronald S. Leopold, MD, MBA, MPH National Medical Director, Vice President METLIFE EMPLOYER SPONSORED BENEFITS Retention Benefits Satisfaction One size does not fit all Not health care only Breadth > Depth THE EIGHT CONVERSATIONS ABOUT BENEFITS