HEALTH SALES FOR AGENTS!A FUTURE OUTLOOK Clay Peek of Peek Performance, With Mark Peacock & Josh Hilgers of HPA present:

CONTACT INFO: “INSURANCE EXCHANGE LINK” PERFORMANCE-INSURANCE/ OUR WEBSITE: OFFICE PERFORMANCE-INSURANCE/ Clay Peek of Peek Performance,

Guest Speaker Josh Hilgers President, Health Partners America As seen in: Employee Benefits Adviser Benefits Selling Magazine CDHC Solutions

Things to watch for the next few months  HHS Regulations  Exchange Rules  Essential Benefits  ER Rules  Medicaid Expansion  Exchanges and Subsidies  Running behind  MLR  Commissions

How American’s Get Health Insurance Now 1.Group Employer – 145 million (incl. dependents) 2.Personal Policies – 40 million (up from 12 million in 2002) 3.Medicare – 47 million (incl. 12 million in MA) 4.Medicaid – 45 million (incl. 8 million over 65 or disabled) 5.Uninsured – 40 million (PC #, closer to 10 million)

Shifting Roles - Employer Health plan important component in attracting and retaining employees Selecting plan for employees Collecting money and paying carrier Concern over funding and participation requirements No plan or Defined Contribution platform important component in attracting and retaining employees Choosing contribution and platform to offer Reimbursing premiums in coordination with payroll No minimum contribution or participation requirements

New law could shift employee health benefits to private market The Supreme Court's endorsement of the federal healthcare law this week could spur more employers across the nation to relinquish their long-standing role as chief healthcare buyer for their workers. This shift has already begun among some big employers shedding their role in providing retiree health benefits, and experts say the court's decision this week could eventually lead companies to pursue a similar approach with current workers. With the Affordable Care Act still on track to offer numerous new benefits, such as guaranteed coverage for all adults starting in 2014, some companies may want to stop providing health coverage and instead give workers money to buy their own…. Chad Terhune 6/30/12

Shifting Roles - Employee No say in Employer plan – take it or leave it Employer deducts premium contributions and pays carrier Few Consumer Driven options Health plan not always paired with ancillary and supplemental for optimal planning Choice of any plan from any carrier available in state Pay the carrier directly – Employer reimburses Education and guidance on HDHPs Complete insurance planning to maximize every dollar

Shifting Roles - Broker Majority of time spent on product specific issues: Quoting, Comparing, Communicating, Servicing Commissions from one product make up majority of revenue Limit to how many clients before capacity is reached Focus can be shifted to sharpening sales and relational skills, bring new strategies to attract and retain employees Multiple revenue sources from every case Scalability achieved through efficiencies in system remove all limits to what you can handle

How American’s Will Get Health Insurance Personal Policies – 185 million (more with GOP plans) 3.Medicare – 47 million (incl. 12 million in MA) 4.Medicaid – 45 million (less with GOP plans) 1.Group Employer – 20 million (incl. dependents) Lose 125M here 5.Uninsured –20 million Lose 20m

How American’s Will Get Health Insurance Group Employer – 20 million (incl. dependents) 2.Personal Policies – 185 million (more with GOP plans) 3.Medicare – 47 million (incl. 12 million in MA) 4.Medicaid – 45 million (less with GOP plans) 5.Uninsured –20 million From 28 million 1 to 125 million 2 consumers will change how and where they get their insurance in 2014 Sources: 1 Congressional Budget Office, 2 McKinsey Consulting

We Have Seen This Trend Before Increased Cost Sharing HDHP/Consumer Driven Individual Purchase Defined Contribution Pension Plan 401 K Defined Contribution years to happen 3-5 years to happen

ACA’s Impact on Individuals

New law could shift employee health benefits to private market The Supreme Court's endorsement of the federal healthcare law this week could spur more employers across the nation to relinquish their long-standing role as chief healthcare buyer for their workers. This shift has already begun among some big employers shedding their role in providing retiree health benefits, and experts say the court's decision this week could eventually lead companies to pursue a similar approach with current workers. With the Affordable Care Act still on track to offer numerous new benefits, such as guaranteed coverage for all adults starting in 2014, some companies may want to stop providing health coverage and instead give workers money to buy their own…. Chad Terhune 6/30/12

How are employers reacting? 1.Reducing work force 2.Reducing hours to < 28hrs/week 3.Dropping Coverage

Big Question for 2014 Do I offer group insurance or not? Factors will be: 1.Size of group 2.Average income of employees 3.Costs – group premium vs. penalty etc…

ACA’s Impact on Employers Some things to think about 1.ER’s with <50 FTE EE’s have no 3k/2k penalty 2.ER’s with no employee’s accessing a subsidy face no penalty 3.ER’s offering qualified and affordable coverage can actually be hurting their employees Example

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400 Employer Contribution Employee Contribution Government Contribution Minimum contribution from ER (9.5% AGI) $175$14,381$0

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400 Employer Contribution Employee Contribution Government Contribution Minimum contribution from ER (9.5% AGI) $175$14,381$0 50% of single $2,800$11,756$0

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400 Employer Contribution Employee Contribution Government Contribution Minimum contribution from ER (9.5% AGI) $175$14,381$0 50% of single $2,800$11,756$0 100% of single $5,400$9,156$0

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400 Employer Contribution Employee Contribution Government Contribution Minimum contribution from ER (9.5% AGI) $175$14,381$0 50% of single $2,800$11,756$0 100% of single $5,400$9,156$0 50% of family $7,278 $0

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5400 Employer Contribution Employee Contribution Government Contribution Minimum contribution from ER (9.5% AGI) $175$14,381$0 50% of single $2,800$11,756$0 100% of single $5,400$9,156$0 50% of family $7,278 $0 Offer no coverage $0/2k$4,135$10,421

ACA’s Impact on Employers If ER didn’t offer coverage - ER would pay $0, $3k, or $2k (depending on size of group and how many ee’s qualify for subsidy) EE would only be responsible for $4,135 and Gov. subsidy would cover the other $10,421 healthreform.kff.org/subsidycalculator

Paying the penalty -

Paying the penalty -

Paying the penalty -

MARKET TRENDS AND STUDIES

“Exchanges are going to be a permanent, significant part of the healthcare world going forward because they are a powerful, adaptable way of meeting a variety of employer needs.” Oliver Wyman

The Exchange Opportunity AON Hewitt survey of 562 U.S. Employers, Nov 2011 CHANGE Rising Costs Reform Exchanges New/Other Benefit Models Traditional Group Benefits Disruptive Solutions Dynamic Marketplace OPPORTUNITY 72% - Planning on ExchangesWhat Models? 86% - Reduce costs 45% - Improve access to quality plans 43% - Enhance wellness programs 43% - Increase healthcare choices Why?

HOW DO YOU CAPTURE ALL THIS OPPORTUNITY?

Why This Is Important To You Be the Go-to Service Provider – Become the market leader and choice service provider in this space Increase Revenue – Additional product offerings – Additional revenue opportunities from non-insurance products

Defined Contribution Health Plan or Premium Reimbursement Platform will help increase sales and Participation Defining Defined Contribution Group Individual – (most likely to grow) –ERISA concerns will be gone DC/PRA Opportunity

Defined Contribution Health Plan or Premium Reimbursement Platform will help increase sales and Participation by: Incentivizing the employer Creating tax savings for Employer to contribute or sponsor a product or plan Creating tax savings to allow Employee to afford more coverage or other products they need DC/PRA Opportunity

Questions still outstanding Will stand alone HRA qualify as “coverage” allowing groups who may be subject to penalty to avoid it? Will individuals/families purchasing coverage with help from a subsidy be able to pay for their portion of premium with HRA/PRA? Which premium payment method will carriers and employers prefer or adopt?

THE NEXT 12 MONTHS

DC / PRA – using personal policies High Level Overview of Defined Contribution Plans or Premium Reimbursement Arrangements (PRA) Selling individual products in a group setting on a pre-tax basis Marketing to groups that are underserved – No small group insurance offered 60% of employers with 50 or fewer employees offer no benefits

Keys to a Proper PRA Plan with Personal Policies Employees pay premiums out of their own checking account Employer not a part of the decision making process Employer does NOT offer small group insurance

Tax Savings Illustrations Huge Tax Savings for members and their companies

Companies with no health plan in place Companies losing group coverage due to cost or participation Companies with employees who are not eligible for the group plan Companies with employees in multiple states Many more companies will find this the ideal solution for ALL employees in 2014 but also great for non-participating and non-eligible employees now Who This Solution is For

2014 AND BEYOND

Companies shift health burden to exchanges – offer defined contribution amount for ancillary benefits Companies shift health burden to exchanges for some ee’s offer DC amount for health to others Companies shift entire workforce to DC allowance for health and all other benefits Shift to DC/PRA