Wake Up and Smell The Benefits !

1. Wake Up and Smell The Benefits! Kevin McFadden

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

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

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

5. Leading Edge - Steak • 2-3x Life Insurance & Dependent Life • Short Term & Long Term Disability • Drug Card with 90-100% Reimbursement • Extended Health • Dental 90-100% Basic, 50% Restorative & Orthodontic • Vision care - $200 • Healthcare Spending Account $200 - $500 • EAP • Flex options • Pension – Matching up to 6% • 70% -100% Employer Funded

6. Median - Burger • 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% • 50 -70% Employer Funded

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

8. Inflation Proof Plan • 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)

9. Other Value Added Benefits • 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

10. 2 Types of Benefits • Pooled • Reimbursement

11. 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

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

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

14. 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)

15. 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

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

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

18. 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

19. 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

20. Pros and Cons of ASO 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 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

21. 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”

22. Corporate Sponsored Retirement Plans (Pension)

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

24. Pension Investing

25. 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

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

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

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

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

30. Marketing Benefits to Employees

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

32. Objective • Protection • Value/Efficiency • Employee Appreciation • Market Competitive • ROI !!

33. References • www.bestdoctors.com • www.benefitsnews.com • www.sunlife.ca • www.greatwestlife.com • www.benefitscanada.com • www.wellpointhealthservices.com • www.sigurdsonmcfadden.com • www.rwam.com • www.directprotect.com • www.acurehealth.com • www.maximumbenefit.ca • www.lifescale.ca For more information: Kevin McFadden (204) 953-1602 kevin@sigurdsonmcfadden.com