Wake Up and Smell The Benefits ! Kevin McFadden

Share my 20 years of benefits industry experience and teach how to properly: Design Pay For Communicate Employee Benefit Plans Objective

National Consultants Regional Consultants Brokers/Agents Compensation & Disclosure Where to get advice - Benefits Advisors Where to get advice - Benefits Advisors

Objective of the Plan Attract / Retain / Lead / Follow / Protect “Culture” Cost Sharing Protection and Reimbursement Leading Edge / Average / Economy Design

2-3x Life Insurance & Dependent Life Short Term & Long Term Disability Drug Card with % Reimbursement Extended Health Dental % Basic, 50% Restorative & Orthodontic Vision care - $200 Healthcare Spending Account $200 - $500 EAP Flex options Pension – Matching up to 6% 70% -100% Employer Funded Leading Edge - Steak

1-2x Life Insurance & Dependent Life Long Term Disability Drug Card with 80% Reimbursement Extended Health Dental 90-80% Basic, 50% Restorative & Orthodontic Healthcare Spending Account $200 - $500 EAP Pension – Matching up to 3% % Employer Funded Median - Burger

1x Life Insurance and Dependent Life Long Term Disability Drugs 80% Extended Health Care Dental 80% Basic No Pension No EAP 50% Employer Paid Economy - Beans

Employer pays all costs of Life and Disability Drug Coverage with a card Health Care Spending Account E.g.) 80% Managed Drug Card – Dispensing Fee Deductible Health Spending Account for other Medical and Dental expenses (e.g.. $500 single - $1000 family) Inflation Proof Plan

Affinity Plans Group Home and Auto Group Mortgage Program Payroll deductions for RRSP/RESP/TFSA Pet Insurance Fitness Subsidies Employee Fitness Facilities Employee Assistance Programs (EAP) Best Doctors Weight Loss Programs / Quit Smoking Other Value Added Benefits

1.Pooled 2.Reimbursement 2 Types of Benefits

Pooled Benefits Life, AD&D, Dependent Life, Long Term Disability Carriers price based on estimated risk Most claims are fully pooled Usually account for approximately 1/3 of the total cost of a benefits plan

Reimbursement Drugs, Hospital, paramedical practitioners, hospital, etc. Dental Eyeglasses

Types of Contracts Fully Insured Refund ASO (Administrative Services Only) aka – “Self Insurance”

Fully Insured vs. Self Insured (ASO) Health and Dental Premiums over 3 years for Company XYZ = $300,000 COST =$300,000 Health and Dental Claims over 3 years for Company XYZ = $225,000 (75% of premiums)

The Math $225,000 claims x 10% (admin fee) = $ 22,500 $225,000 claims + $22,500 (admin)= $ 247,500 +Pooling Costs (stop loss & travel) = $ 10,000 Total Cost =$ 257,500

Savings Premiums = $ 300,000 less (Claims + ASO Expenses) = $(257,500) Savings to Company XYZ = $42,500

Who Supplies ASO? Main Line Carriers e.g. GWL, Sun, Manu, etc. Third Party Administrators Maximum Benefit RWAM Health Source Plus Sirius Benefits

Mechanics of ASO Set up a stand alone bank account Health and dental rates are set by company Deposit employee premiums into account Deposit employer premiums into account Carrier pays claims from bank account Any surplus easily identified by viewing bank balance

Eliminating the Risks 1. Stop Loss Protection “Ceiling” 2. Out of Country Protection Amount can be set at any level e.g. $10,000, $7,500, $5,000 per year. Designed to eliminate the risk of a very expensive drug claim Insurance premium charged for stop loss protection Protects the plan against an expensive out of country claim Insurance premium charged for out of country protection Typically 100% insured

Pros and Cons of ASO Pros Pay only for what is claimed Administrative charges are lower Admin charges on claims not premiums Surpluses are kept by the company not the carrier Cons Without Stop Loss provision exposure on large drug claims Without travel coverage exposure of out of country claims Can be more costly in short term

What to do with a Surplus Reduce health and dental rates Enhance benefits Leave in account to reduce possible future deficit Give employees a “premium vacation”

Corporate Sponsored Retirement Plans (Pension)

Pension Types – DB, DC, DPSP, RRSP Why important? How to set up? Investment choice CAP Guidelines

Pension Investing

Executive/Management Benefits Higher amounts of Life Insurance Specialty Long Term Disability Critical Illness Insurance Health Care Spending Accounts (HSA) Pension – 5-10% non contributory Medical Access Insurance Executive Medicals Best Doctors 100% paid by employer

Critical Illness Insurance (CI) What is it? What does it protect against? Heart Attack, Stroke, Cancer CI as an employee benefit Taxability

Health Care Spending Accounts (HSA) What are they? How does it work? What expenses are covered? What does it cost?

Best Doctors What is it? What is the purpose? How does it work? What does it cost?

EAP – Employee Assistance Plan What is it? What is the purpose? Who supplies them? What do they cost?

Marketing Benefits to Employees

Proven Marketing Techniques The Employee Meeting The One Page Summary Newsletters Website Content Surveys Committee

Objective Protection Value/Efficiency Employee Appreciation Market Competitive ROI !!

References For more information: Kevin McFadden (204)