Health Care Reform – The Business Owner’s Best Friend?

1. Health Care Reform – The Business Owner’s Best Friend? Terry WeaverCEOChief Executive Boards International

2. Health Care – Plan “A”

3. How Insurance Works Premiums • Insurance Company • Cost of Health Care • Cost of Administration • Overhead • Profit Company CoPays Employee • Small Claims • < Deductible • Rx • Office Visits • Routine Labs • Large Claims • > Deductible • Hospital • Surgery • Chemo/Radiation • Dialysis Copays Health Care Providers

4. X How Insurance Could Work Premiums Premiums • Insurance Company • Cost of Health Care • Cost of Administration • Overhead • Profit • Insurance Company • Cost of Health Care • Cost of Administration • Overhead • Profit Company CoPays Employee Third-PartyAdministrator(TPA) • Small Claims • < Deductible • Rx • Office Visits • Routine Labs • Large Claims • > Deductible • Hospital • Surgery • Chemo/Radiation • Dialysis • Large Claims • > Deductible • Hospital • Surgery • Chemo/Radiation • Dialysis Copays Health Care Providers

5. The Result? • Lower Premiums • Insurance Carrier covering only major medical • Lower Costs Overall – 4 of 5 Companies will save money • Exceptions: • The benefits you provide are minimal and inexpensive • The company is only paying 50% or less of the insurance cost for the employee and little or nothing for the dependent • Some Additional Risk • HUGE Future opportunity – Health Care Reform could become your best friend!

6. How Can I Make Mine Work That Way? • Establish your own private Medical Expense Reimbursement Plan (MERP) • IRS Section 105 – ca. 1954 • Define your own Benefits • Purchase Stop-Loss Coverage for high-cost cases • $5,000 individual/$10,000 Family • 100% coverage above deductible • Third-Party Administrator (TPA)

7. The Mechanics Bill Premiums Payment Expl. of Benefits (EOB) Electronic Funds Transfer (EFT) to TPA Employee Submits Claim EOB (final) Third-Party Administrator (TPA) HC Provider Insurance Co.(Primary Carrier) • Covered Expense? • Exceeds Deductible? • Negotiates Allowable Cost Company CoPay

8. Key Considerations • Define your own benefit levels (mirror existing?) • Deductible & max Out-of-Pocket • Employee Copays (office visits, drugs) • Preventative (Mammogram,Pap, etc.) • Other health-related items • Dental • Vision • Stop-Loss coverage for high-cost cases • Group Insurance • Individual Coverage (now multiple sources) • Compliance with ERISA, HC Reform, etc. (not simple)

9. Employee Point of View • Similar Benefits • Deductible - $500, $1,000, etc. • Employee Copays • Office Visit = $20, $25, etc. Urgent = $35, Emergency = $100 • Drugs – “Brand” = $25, $35, etc. Generic = FREE? • Preventative (Mammogram, Pap, Annual Physical?) • Other health-related items • Dental – similar to standard Dental • Vision – Max. per family? • Similar Cost • Premium Copay – Spouse, Family, portion of Employee?? • % Covered Expenses – 80%/20%? • Additional option – Pre-Tax HSA Account? • Additional Work – Filing EOB #2

10. Benefits to the Company • Flexibility in adjusting benefits offered • Flexibility in sourcing stop-loss coverage • Group Health • Spouse’s employer (reimburse pre-tax) • Medicare, Military or other Retiree plan • Individual Policies • State High-Risk pools • Childrens’ Health Ins. (Income-based) • Income-based or HIPAA eligibility • Income-based Rx plans from Drug Companies

11. Benefits to the Company • Use your own HSA as an additional tax-deferred savings opportunity ($7,150 if 55+)

12. Case Study

13. Case Study

14. Pushback – Who Will Object? • Insurance Agent (follow the money) You’ll hear all kinds of excuses, including “it’s illegal” • Your HR Department (if they’re used to the Insurance Agent doing their work) • Employees – Until they understand they’re getting better coverage this way • Significant employee education required – can be done and has been done successfully in CEBI companies • Can be Outsourced

15. Essential Ingredients • Experienced resource to analyze your savings opportunity • Experienced resource to design your 105 plan • Qualified TPA • Enrollment assistance • CEBI has qualified a referral source for all the above:www.chiefexecutiveboards.com/105

16. Health Care Reform – The Business Owner’s Best Friend?