Defined Contribution andIndividual Health Insurance -The Next Benefits Trend
Zane Benefits is the online alternative to group health insuranceThe ZaneHRA Software provides a 100% paperless administra...
Agenda1. The Core Problem with Group Health Insurance2. The Solution - "PURE Defined Contribution Healthcare"3. What is PU...
The Core Problem with Group Health Insurance
Group Health Insurance Costs Too Much! To understand solution,we must answer thequestion:Why do employers offerhealth insu...
Whats the Solution?Why does employer offer health insurance?...Recruiting and Retention:1. It is tax deductible to the bus...
The Solution -PURE Defined Contribution Healthcare
The Solution is "PURE Defined Contribution"Employer should:1. Cancel the group health insuranceplan2. Define a budget and ...
What is PURE Defined Contribution?
"PURE Defined Contribution" is a Stand-Alone HRA● Stand-alone HRA is "purest"form of Defined Contribution.● HRA stands for...
HRA Compliance Requirements1. HIPAA: Employee medical privacy law2. ERISA: Federal law3. IRS: Section 1054. PPACA: Health ...
HRA Software Overview - Simple1. Determines contributions2. Sets eligibility3. Picks start dateThe Employees....4. Enrolls...
Defined Contribution + Health Insurance Marketplace Link to HealthInsuranceMarketplace
How Defined Contribution Addresses ProblemWhy does employer offer health insurance?...Recruiting and Retention:1. It is ta...
What is the Health Insurance Marketplace?
What is the Individual Health Insurance Marketplace?Earlier this year, the government re-branded health insurance exchange...
Understanding How the Health Insurance Marketplace WorksStep 1: Individual goes to his or her states Individual Health Ins...
Advantages of the Individual Health Insurance MarketplaceThe Individual Health Insurance Marketplace willhave the followin...
#1 ChoiceIndividuals will be able to choose the health insurance plan that best fits their familiesneeds based on standard...
#2 PortabilityIndividual health insurance is not tied to employment, meaning they will be able to taketheir health insuran...
#3 One Stop Shop / ConvenienceOne Website and One Application gets individual access to:● All available plan options● Prem...
#4 Tax CreditsSPECIAL INCENTIVE:Massive tax credits* will be available forhouseholds earning up to 400% of the FPL(majorit...
Household Income & Size are Key Variables for IndividualsTax credit calculator coming soon athttp://navigator.zanebenefits...
Individual Health Insurance Costs in 2014Actual individual healthinsurance premiums areTBD.BUT, you can estimateyour costs...
Accessing the Individual Health Insurance MarketplaceYou can only access coverage during designated EnrollmentPeriods● Ini...
Pros and Cons for Employers and Employees
Pros and Cons for EmployersPROS:1. Recruiting and Retention - tax-freehealth benefits remains intact via HRA2. Flexibility...
Pros and Cons for EmployeesPROS:1. Choice - any plan, any carrier, anydeductible, any coverage options2. Portability - sec...
Opportunities for Health Insurance Professionals
The Benefits Shift - B2B to B2CHealthcare is shifting from a business-to-business (B2B)to a business-to-consumer (B2C) mar...
How Brokers Benefit from Defined Contribution1. Purchase individual policies● Relationship with employer and employees○ Tw...
Whats in it for the Broker?1. Recurring compensation on defined contribution administration fees(need partner)2. One-time ...
How Do I Seize The Opportunity?In order to seize the opportunity, broker needs to:1) Create Efficient Individual Sales Pro...
Summary / Next Steps
Summary/Next StepsSummary● The core problem is that group health insurance costs too much.● The ideal solution must provid...
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Defined contribution and individual health insurance – the next benefits trend

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Overview of why defined contribution is the new trend for small businesses: http://www.zanebenefits.com/defined_contribution_and_individual_health_insurance

Defined contribution with individual health insurance is the next big benefits trend. With this concept, employers fix their health benefits costs while employees obtain less expensive policies from an insurer of their choice.

Will health care reform erode employer-sponsored health benefits? Probably not. Will health care reform erode employer-sponsored health insurance? Absolutely.

The vast majority (94%) of U.S. companies say they will continue to offer health benefits to their employees in the next three to five years. However, nearly two-thirds (67%) plan to move toward defined contribution health care.

Health insurance professionals should attend this webinar to learn how to offer, and profit from, defined contribution plans and individual policies.

During this 60-minute webinar you will learn:

The core problem with small business insurance today

The three options for small businesses post-2014

Advantages of defined contribution for the employer

Advantages of individual health insurance for the employees

New opportunities for health insurance professionals

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Defined contribution and individual health insurance – the next benefits trend

  1. 1. Defined Contribution andIndividual Health Insurance -The Next Benefits Trend
  2. 2. Zane Benefits is the online alternative to group health insuranceThe ZaneHRA Software provides a 100% paperless administration experience to employers and insuranceprofessionals that want to offer better health benefits without a traditional group health insurance plan at lower costs.For more information about ZaneHRA, check out our Software.Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plancompletely online, electronically enroll participants and print welcome kits, and monitor expenses andreimbursements in real-time.Employees obtain their own individual health policies from a designated health insurance broker (see below),submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check,payroll addition, or direct deposit. Zane Benefits does not sell health insurance.Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-savinghealth benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the healthinsurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies,brokers, and accountants.DISCLAIMERThe information provided herein by Zane Benefits is general in nature and should not be relied on forcommercial decisions without conducting independent review and analysis and discussingalternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulationsdiffer in each state; information provided does not apply to any specific U.S. state except wherenoted. See a licensed agent for detailed information on your state. www.ZaneBenefits.comFor additional resources onHealth Care Reform, visitwww.zanebenefits.com/blog
  3. 3. Agenda1. The Core Problem with Group Health Insurance2. The Solution - "PURE Defined Contribution Healthcare"3. What is PURE Defined Contribution?4. What is the Health Insurance Marketplace?5. Pros and Cons for Employers and Employees6. Opportunities for Health Insurance Professionals
  4. 4. The Core Problem with Group Health Insurance
  5. 5. Group Health Insurance Costs Too Much! To understand solution,we must answer thequestion:Why do employers offerhealth insurance?
  6. 6. Whats the Solution?Why does employer offer health insurance?...Recruiting and Retention:1. It is tax deductible to the business2. Employees get the benefit 100% tax-free3. It is guaranteed-issue for sick employees(i.e. Moral Obligation)So.... the solution must provide 1, 2 & 3and reduce or fix the employers cost
  7. 7. The Solution -PURE Defined Contribution Healthcare
  8. 8. The Solution is "PURE Defined Contribution"Employer should:1. Cancel the group health insuranceplan2. Define a budget and create a definedcontribution plan3. Select an insurance professional tohelp employees "navigate" the HealthInsurance Marketplace (optional)4. Reimburse employees for out-of-pocket medical/premium expenses
  9. 9. What is PURE Defined Contribution?
  10. 10. "PURE Defined Contribution" is a Stand-Alone HRA● Stand-alone HRA is "purest"form of Defined Contribution.● HRA stands for “healthreimbursement arrangement."● Its an “arrangement” for tax-free medical expensereimbursement.● HRAs function like businessexpense accounts. HRAs are NOT health insurance
  11. 11. HRA Compliance Requirements1. HIPAA: Employee medical privacy law2. ERISA: Federal law3. IRS: Section 1054. PPACA: Health reformAn HRA is an employer-sponsored, self-funded health plan governed by:Need Compliant HRA Administration Software
  12. 12. HRA Software Overview - Simple1. Determines contributions2. Sets eligibility3. Picks start dateThe Employees....4. Enrolls employees9. Reimburses employees for"expenses"The Employer...6. Purchase individual policies7. Submit "expenses" for reimbursement5. Sends welcome kitsLike AutoInsuranceHRA Claims Processing...8. Adjudicates employees "expenses"Like BusinessExpenseReimbursements
  13. 13. Defined Contribution + Health Insurance Marketplace Link to HealthInsuranceMarketplace
  14. 14. How Defined Contribution Addresses ProblemWhy does employer offer health insurance?...Recruiting and Retention:1. It is tax deductible to the business.2. Employees get the benefit 100% tax-free.3. It is guaranteed-issue for sick employees.(i.e. Moral Obligation)Defined Contribution addresses #1 and #2+Health Insurance Marketplace addresses #3
  15. 15. What is the Health Insurance Marketplace?
  16. 16. What is the Individual Health Insurance Marketplace?Earlier this year, the government re-branded health insurance exchanges as HealthInsurance Marketplaces.The Individual Health Insurance Marketplace is the ACAs health insuranceexchange ("AHBE") for individuals, which provides:1. Individual Plan Standardization (standardizes individual health insuranceproducts within specific metal tiers)2. "Unbiased" Individual Plan Comparison (allows individuals to compare allplans in one "unbiased" place)3. Tax Credit Administration (determines tax credit eligibility/amount andfacilitates advanced payment)"Helping individuals compare standard individual health insurance options"
  17. 17. Understanding How the Health Insurance Marketplace WorksStep 1: Individual goes to his or her states Individual Health Insurance Marketplacewebsite (e.g. www.coveredca.com).Step 2: Individual completes 1 of 2 applications:i. Application for Insurance with Tax Credit (e.g. sample).ii. Application for Insurance without Tax Credit (e.g. sample).Step 3: Individual health insurance marketplace displays all available plan optionswithin metallic tiers and displayed cost will factor in tax credit.Step 4: Individual selects plan.Step 5: Individual health insurance marketplace bills individual for his or her portion ofpremium (i.e. the total premium minus tax credit) and forwards payment to the carrier.
  18. 18. Advantages of the Individual Health Insurance MarketplaceThe Individual Health Insurance Marketplace willhave the following 4 key advantages:1. Choice2. Portability3. One Stop Shop / Convenience4. Tax Credits
  19. 19. #1 ChoiceIndividuals will be able to choose the health insurance plan that best fits their familiesneeds based on standard metallic levels:Within each metallic level, individuals will be able to choose different combinations of:● co-pays● deductibles● co-insurance● networks
  20. 20. #2 PortabilityIndividual health insurance is not tied to employment, meaning they will be able to taketheir health insurance with them when they switch jobs.This is a major advantage over traditional employer-sponsored health insurance.Portable Memory Analogy
  21. 21. #3 One Stop Shop / ConvenienceOne Website and One Application gets individual access to:● All available plan options● Premium tax creditsBest of all, it will be "unbiased" (unlike sites like ehealthinsurance.com).
  22. 22. #4 Tax CreditsSPECIAL INCENTIVE:Massive tax credits* will be available forhouseholds earning up to 400% of the FPL(majority of Americans).Individuals can only access the premium taxcredits through the INDIVIDUAL healthinsurance marketplace.(*Requires Employer to Drop Coverage)
  23. 23. Household Income & Size are Key Variables for IndividualsTax credit calculator coming soon athttp://navigator.zanebenefits.comHousehold Size 100% of FPL 400% of FPL Premium Cap Range1 $11,490 $45,960 $0 - $363.85 / mo2 $15,510 $62,040 $0 - $491.15 / mo3 $19,530 $78,120 $0 - $618.45 / mo4 $23,550 $94,200 $0 - $745.75 / mo5 $27,570 $110,280 $0 - $873.05 / mo6 $31,590 $126,360 $0 - $1,000.35 / mo7 $35,610 $142,440 $0 - $1,127.65 / mo8 $39,630 $158,520 $0 - $1,254.95 / mo2013 FPL GuidelinesAverage Group SinglePremium in 2011 was:$435.17Average Employee +1Premium in 2011 was:$860.75Average Group Familyof 4 Premium in 2011was:$1251.83
  24. 24. Individual Health Insurance Costs in 2014Actual individual healthinsurance premiums areTBD.BUT, you can estimateyour costs using a taxcredit calculator.For example, see CoverCalifornia Cost Estimator
  25. 25. Accessing the Individual Health Insurance MarketplaceYou can only access coverage during designated EnrollmentPeriods● Initial Enrollment Period, October 1st, 2013 - March 31st,2014● Annual Enrollment Periods, October 15th - December 7th● Special Enrollment Periods, similar to cafeteria plan rulesWhy Enrollment Periods?Annual enrollment periods ensure that individuals and familiesdon’t wait until they get sick to enroll in coverage.
  26. 26. Pros and Cons for Employers and Employees
  27. 27. Pros and Cons for EmployersPROS:1. Recruiting and Retention - tax-freehealth benefits remains intact via HRA2. Flexibility - full control over HRAdesign/cost of benefits3. Savings - individual health plans (withtax credits) < group health insurance4. Time - employer is out of healthinsurance businessCONS:1. Change - its hard2. Employee perception- it might be negative
  28. 28. Pros and Cons for EmployeesPROS:1. Choice - any plan, any carrier, anydeductible, any coverage options2. Portability - secure coverageregardless of employment status3. Tax Credit Eligibility - eligible for taxcredit4. Savings - individual health plans (withtax credits) < group health insuranceCONS:1. Change - its hard2. New Responsibility- increased initial timeinvestment
  29. 29. Opportunities for Health Insurance Professionals
  30. 30. The Benefits Shift - B2B to B2CHealthcare is shifting from a business-to-business (B2B)to a business-to-consumer (B2C) marketplace.PURE Defined Contribution expedites this shift.Are you prepared to help employeeschoose an individual health plan?If not, you may miss the opportunity...
  31. 31. How Brokers Benefit from Defined Contribution1. Purchase individual policies● Relationship with employer and employees○ Two Sales - 1) Employer and 2) Employee● Employer = lead generator○ Average annual turnover = 50% for small businesses● New role - help employees choose vs sell○ Like investment advisor helps employee choose best401(k) investmentsHUGEOpportunity
  32. 32. Whats in it for the Broker?1. Recurring compensation on defined contribution administration fees(need partner)2. One-time and/or recurring compensation on individual policy sales3. Up/Cross-selling opportunity for voluntary/auto/life/etc4. Loyal employer client that turns over 50% of employees (on average)annually5. Ability to charge employers one-time and/or recurring consulting fees(flat fee per employer or pepm) for "Employee Services"
  33. 33. How Do I Seize The Opportunity?In order to seize the opportunity, broker needs to:1) Create Efficient Individual Sales Process● Expertise of Individual Marketplace● Quote Engine2) Find Defined Contribution Partner:● Sales / On-boarding / On-going Support● Branding / Welcome Packet Customization● Insurance / Quote Engine Integration
  34. 34. Summary / Next Steps
  35. 35. Summary/Next StepsSummary● The core problem is that group health insurance costs too much.● The ideal solution must provide tax preference, guaranteed issue andcost savings.● PURE Defined Contribution provides tax preference. Individual HealthInsurance Marketplace provides guaranteed issue and savings.● Healthcare is shifting from a business-to-business (B2B) to a business-to-consumer (B2C) marketplace.Next Steps1. Create Efficient Individual Sales Process.2. Find Defined Contribution Partner.

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