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VEBA / HRA Administration Services An innovative new alternative from BPAS

VEBA / HRA Administration Services An innovative new alternative from BPAS. Why would employers adopt a VEBA / HRA program?. To help employees prepare for their financial needs in retirement (post-retirement health care costs)

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VEBA / HRA Administration Services An innovative new alternative from BPAS

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  1. VEBA / HRA Administration Services An innovative new alternative from BPAS

  2. Why would employers adopt a VEBA / HRA program? • To help employees prepare for their financial needs in retirement (post-retirement health care costs) • A vehicle into which unused sick or vacation pay can be deposited -- providing future benefits to employees while encouraging maximum work attendance • To round out an overall benefits package (consistent with the cafeteria plan philosophy, providing employee choice) • A valuable offset when benefit, compensation or other corporate programs are being modified • Reinforces the notion that preparing for retirement is a shared undertaking

  3. What is the traditional approach to VEBA / HRA Administration ? • Most firms who vie in this space are traditional cafeteria plan administrators • Monthly valuations and monthly trading • Weekly HRA claim payment processing, manual process for incoming data • Limited web access for participants and plan sponsor • Most involve multiple firms to provide complete solution • “Not using technology built for the 2013 marketplace” • Why is this an issue? • Client needs and expectations have changed • Demand for state-of-the-art features and technology • Experience from daily valued DC plans has raised the bar (daily valuation / real time account access) • Desire to automate activity, use “do it yourself” technology • Interest in participant direction of investments • With coming changes to health care landscape, we expect more employers to adopt VEBA / HRA programs

  4. How is BPAS uniquely qualified to fill this void? • Broad expertise covering all facets of retirement plans and employee benefits (established business in both cafeteria benefit plan and DC/ DB retirement plans) • Proven track record in Flexible Benefit Plan administration • Vertically integrated model is perfect solution for the VEBA / HRA model • BPAS acts as daily valuation recordkeeper, administrator, clearing firm and custodian within a single organization (extremely rare in the industry) • BPAS has in-house investment advisory group

  5. BPAS – Firm overview • National provider of employee benefit plan administration and consulting services • Wholly-owned subsidiary of Community Bank System, Inc. (NYSE: CBU) • Solution for all types of participant account engagements • Servicing over 2,500 accounts and 250,000 participants in total • Engagements from 10 to over 10,000 total employees • Approximately 230 employees in total (parent company has 2,200) • Annualized revenues approximately $32 million • BPAS offices located in Manhattan, Houston, Philadelphia, Pittsburgh, Chicago, Syracuse and Utica

  6. BPAS’ corporate structure Community Bank System, Inc. (NYSE: CBU) Benefit Plans Administrative Services, Inc. (BPAS) Community Bank, N.A. - Regional Bank BPA HB&T Harbridge FlexCorp Institutional Trust Company (Member NSCC) Co-Fiduciary Services Manchester Advisors Hand Securities (BD) DC Plan Administration Actuarial and Benefit Consulting Practice (formerly PWC) Section 125HRA

  7. Program Highlights

  8. The big picture – How does the program work? BPAS Flex Corp Employer Participants 24 hour web access Incoming data files Quarterly statements Contribution funds BPA 24 hour web access Online claims submission Daily interaction with service team Claims payments HB&T Mutual fund Families

  9. How accounts are established • BPAS: recordkeeper, NSCC clearing firm and trustee / custodian within a single organization (vertical integration) • We use Sungard OmniPlus as a recordkeeping system and as a trust / custodial system • We use Bemas PayDirect for HRA claims adjudication and claim payments • We establish a single “plan” on Omni for the VEBA / HRA • This plan holds individual participant records -- leveraging the technology that was created for DC plans, including omnibus trading, income / dividends, and reconcilement • 24 hour web access for clients and the trustee, same day trading across funds, all funds trade no load

  10. What it means for a participant • Amounts are deposited to the VEBA / HRA account on periodic basis (initially to a default fund) • Ability to monitor and manage account on 24-hour basis through website • Investments are participant-directed among a range of no-load funds • Quarterly statements • Customer Service Center support for participants

  11. Servicing the plan sponsor’s needs • Single point of contact – the Client Consultant • Education – BPAS maintains several affiliations such as ASPPA, IFEBP, NIPA, and EBIA that provide continuing education , regulatory and compliance updates that we communicate to our plan sponsors • Annual plan survey – Provides a key feedback loop for plan sponsors to evaluate our services as a whole and performance of key personnel assigned to their account

  12. The workflow for new contributions Client logs onto CensusPro, reviews / approves ACH verification If approved by 3:30 PM EST, BPA initiates mutual fund purchases at that evening’s prices. If after 3:30 PM EST, purchasesmade on next business day. Plan sponsor logs onto CensusPro, reviews / approves ACH verification Plan sponsor logs onto CensusPro, reviews / approves ACH verification Plan sponsor logs onto CensusPro, reviews / approves ACH verification 3 3 3 4 Trustee Plan Sponsor Plan Sponsor Plan Sponsor 1 Plan sponsor uploads file intoCensusPro The next morning, clients see tradesreflected in their account. BPAS ‘ACH pulls’required funds from Trustee the next business day. 2 2 5 BPA reviews file, sends email to client instructing them to log onto CensusProand approve ACHverification.

  13. Program flowchart

  14. Account inquiry Investment elections/ Reallocate account balance Interactive banner messaging Fund fact sheets and prospectuses Online statements Statement on demand capabilities Plan level branding On-line claim submission Claims history – status of claims and claim history Plan documents Pertinent forms Educational material Legislative information Various website features

  15. Excerpts from client website. Site provides banner messaging capabilities for the plan sponsor and much more.

  16. Assisting participants through our Call Center CSR Team Manager • instant management reports • real-time reporting of: • incoming call volume • number of calls on hold • average hold time • call abandonment rate • individual CSR performance • can add additional CSRs to queue at any time based on volume • ideal system for managing, training individual CSRs CSR CSR CSR CSR CSR CSR CSR CSR • All calls recorded and archived • ‘Next available routing’ across multiple offices • If queue exists, approximate hold time is provided • Option to hang up, receive immediate callback when next CSR becomes available • Translator line covers approximately 100 additional languages • Current team hours: 8:30 AM – 6:30 PM EST • Email and voicemail available 24 / 365

  17. The workflow for claims / disbursements • Claim submission options • Online / Fax / Mail • To ensure IRS compliance, 100% of claim requests are substantiated • Claim reimbursement options • Direct deposit / manual check • Daily claims adjudication and processing of claim payments • All funds fully invested until claims are processed

  18. The investment platform • We will help each client develop an investment menu, similar to a 401(k) plan (money market, fixed income, equity, etc) • Broad universe of fund families available on BPAS open architecture platform (over 230 fund families presently) • All funds operate no-load with same day trading • Institutional share classes • Equitable handling of fees

  19. Investment Advisory Services – Manchester Advisors • Creation, review and maintenance of an Investment Policy Statement (IPS) to outline the plan’s overall investment goals and monitor standards • Quarterly investment performance monitoring • Investment reporting services • Quarterly monitoring report measuring investment options against IPS • Annual formal review process that highlights recommendations for additions, deletions and replacements • Able to serve in a 3(21) fiduciary capacity

  20. Summary of Benefits

  21. Summary of Benefits • Vertically integrated “total solution” offers the greatest level of accountability, which is a major advantage versus competitor programs where as many as three or four firms may be involved in basic service delivery • Use of technology to streamline administration, eliminate paperwork, reduce work for Human Resources • True open architecture on investments – This eliminates any conflicts of interest in fund review, fund monitoring and participant education process (a key focus of proposed fee disclosure regulations) • BPAS brings state-of-the-art features to the VEBA / HRA space To obtain a proposal or additional information, please contact: James Goodwin 713-979-4974 jgoodwin@bpas.com

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