1. Wellness for Small and
Mid-Size Businesses
Lee Dukes
President, Principal Wellness Company
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2. Learning Objectives
1. Recognize and establish the value of wellness
programs for small and mid-size employers.
2. Identify resources for implementing and
maintaining a successful wellness program.
2

3. Overview
• Info about the SMB market
• Challenges for the SMB employer
• Advantages for the SMB employer
• Action steps for SMB employers
• Resources for SMB employers
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4. SMB Industry Profile – Firm Size
U.S. Employers
Number of Businesses by Firm Size
(Firms with more than four employees)
• Businesses with 5 to 99
employees… # of Businesses
• Number 2.1mm; 95% of 1,000+
these have less than 50 9k
employees
100 to 999 94k
• Employ 55mm people, or
nearly 50% of the total
U.S. workforce 50 - 99 123k
• Will see a CAGR of their
employee base of 2.1%
between ‟10 and „16 2 mm
5 to 49
• Firms with 4 or fewer
employees represent 60% of
all U.S. businesses, but only
6% of the workforce # of employees in firm
According to the U.S. census bureau, the new business survival rate is 70% after 2
years, 50% after 5 years, and only 33% after 10 years. In 2010, new business births
outnumbered deaths 1.8 to 1
Source: Moody‟s Forecast, July 2010; U.S. Dept of Commerce, Census Bureau, December 2010 4

5. SMB Industry Profile – Growth Segments
• The 5 to 99 employee SMB segment is expected to steadily grow in the
next five years
• While most industries project some growth, the Professional and Business
Services and Health Care / Social Assistance industries will see
exceptional increases in employment, with projected growth rates of 52%
and 43% respectively from ‟08 to ‟18
• Certain segments with small bases, such as minority owned businesses,
are seeing strong growth rates (% owned by and % growth rate since
2002): Hispanic 8%, 44%; African American 7%, 61%; and Asian 6%,
41%
64 Employment 2,350
Employment in 2,300
62
firms with 5 to 99 The number of firms
Firm's (000's)
Firms
2,250
Employment (mm)
employees is 60 with 5 to 99
projected to grow 2,200 employees is
58
by 6.5mm people 2,150 projected to grow by
from 2011 to 2016 56
2,100
180k from 2011 to
54
2016
2,050
52 2,000
2011 2012 2013 2014 2015 2016
Source: Moody‟s Forecast, July 2010, Dun and Bradstreet 5

6. SMB Industry Profile – Employee Benefits Plan Funding
How Benefits Plans are Anticipation for Funding
Funded Today New Benefits
(firms with 2 to 49 employees) (firms with 2 to 49 employees)
Medical 70% 26% 4%
Presciption 70% 26% 4%
Vision 67% 24% 9%
Medical 11% 88% 1%
Dental 66% 23% 11%
LTC 57% 31% 12%
Supplemental Med 53% 22% 25% Presciption 11% 79% 5% 5%
Critical Illness 52% 33% 15%
AD&D 48% 44% 8%
LTD 48% 40% 12% Dental 15% 76% 7% 2%
STD 48% 38% 14%
Accident 48% 34% 18%
Life 47% 43% 10%
Vision 20% 66% 11% 3%
Cancer Insurance 35% 24% 41%
Company Pays All Company Pays Part Employee Pays All Don't Know
Company Pays Part Company Pays All Employee Pays All
The percentage of companies willing to pay the entire cost for benefits plans (green
bar segments in both charts) is anticipated to shrink
Source: LIMRA, 2010; Eastbridge 2009.; Employer Council on Profit Sharing, 2010; Note - Voluntary defined at Principal as plans
where employees fund more than 50% of cost; where Eastbridge defines it as 100% 6

7. SMB Industry Profile – SMB’s Benefits Spend
Breakdown of Employee
Costs for Employers
Legally Required
Retirement and Benefits, 8.2% According to a study
Savings, 3.5% by ADP/ Price
Waterhouse
Coopers, mid-size
Insurance, 8.0%
employers spend an
average of $348 per
Supplemental Pay,
employee per year
2.7%
on benefits
administration
Paid Leave, 6.8% Wages and
Salaries, 70.8%
Source: Bureau of Labor Statistics – Dec. 2010, mid-size businesses, private industry; ADP, PWC 7

8. SMB – Current and Emerging Trends
1 Healthcare Reform – Misunderstanding,
Concerns, and Opportunities
• Employers will see additional burden in compliance and 45%
administration as 11 new requirement categories for of companies are
employers get phased in over the next three years unclear on what
they’ll do in
• Many companies are unclear on what they‟ll do in response to HC
reform and are
response looking to brokers
• Opportunities exist: for help
• Tax incentive for SMBs with 25 or fewer employees
• Reform offers wellness incentives or grants for
SMBs– available in 2011
60%
• Brokers eager to prove value will focus more on of companies will
consider creating
selling ancillary products (and wellness) or expanding
wellness offerings
as a result of
reform incentives
Source: Deliotte, Towers-Watson 8

9. SMB – Current and Emerging Trends
2 Economic Conditions Improving, but still weigh
heavy….Regulatory Requirements Increasingly Complex
• Overall sentiment on sales, hiring, and subsequent spending is on the
rise
• Capital spending, however, still remain low. Credit availability is not
the issue
• Only 2% of SMBs had plans in March to hire new employees, down
3% from February. This is historically low– especially in a recovery
period*
• Multiple new and proposed regulations due to the economic crisis and
healthcare reform will impact the market
Small business
optimism continues to
rise, but slowly,
according to the NFIB
index
* - seasonally adjusted
Source: NFIB Small Business
Optimism Index Survey
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10. SMB – Current and Emerging Trends
3 Accelerated Cost Shift to Employees
• Cost pressures continue to increase, driving SMB 40%
employers harder to consider pushing more costs to of SMBs will shift
employees more of the cost to
their employees in
• Increasing funding responsibility for employees will the next two years
for at least one
increase the complexity of the benefits decision making benefit
process for them
• Few employers, however, anticipate shifting current
subsidized plans to 100% voluntary or dropping plans
• For employers with 50 employees or less, those with 10
to 19 employees are most likely to consider voluntary
plans
Source: LIMRA, 2010 10

11. SMB – Current and Emerging Trends
4 Advisor Business Models Changing Have and Have Nots
Broker Anticipation from
Healthcare Reform
• Based on anticipation by brokers with average 33% 50%
client sizes of less than 100 employees,
healthcare reform will present big challenges for Will gain Will lose
clients clients
many brokers, but will create opportunities for
others
• Insurance brokers eager to prove value to Proving Value
Alternative Value Streams
clients will look to alternative products and
Consultation on
services healthcare reform
• Retirement advisors shifting to fee-based. In More focus on selling
specialty benefits
2010, 42% of retirement advisors stated their
Wellness offerings for
compensation method as fee-based compared clients to gain incentives
to 24% in 2005.
Source: LIMRA 2010, Brightworks 2010, Deloitte, 2011 11

12. SMB – Current and Emerging Trends
5
59% Technology To Play a Bigger Role
of SMBs, with 20 to • Explosive growth of digital technology in business
49 employees, would
consider purchasing and day-to-day lives presents opportunities in the
benefits online SMB benefits market
• SMBs looking to ease administration burden
Advisor Smart through additional online services, and would even
Phone Ownership
consider purchasing benefits online
BlackBerry, 40%
• Advisors rapidly embracing smart phones and web
for business, with three-fourths owning a smart
Other, 18% phone. 86% of advisors state they would place
more business with a provider that has a strong
i-phone, 16%
website
• Advisors interest in social media for business low
but growing– currently constrained by FINRA rules
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13. SMB – Current and Emerging Trends
According to Financial Wellness Gaining Traction
Workplace 6
Options study,
48% of • The financial crisis has left most employees in worse
employees
report that shape than ever, with 61% reporting that they were in
financial stress serious financial distress
is affecting their
work • Employers stand to gain from the financial well being
performance of their employees. Employees reported spending an
average of 16 work hours per month dealing with
personal financial issues
40% • Financial well being is strongly tied to health well
being. Employees reported financial concerns as
Of employers being five times more stressful than health concerns
would be
interested in a • There are numerous financial services companies with
financial well being financial literacy campaigns and programs– but little
program for their
employees evidence of success
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14. SMB – Pain Points
• Cost of doing business continues to reign as
SMB’s Top-10
the number one problem that concerns Concerns
SMBs according to a survey by the NFIB– 1. Rising Costs
and within the category, health insurance 2. Competition
costs specifically are cited as the biggest 3. Employees
4. Finance
worry 5. Information
6. Management
• Employee job satisfaction and loyalty 7. Public service
measures are declining responsibilities
8. Regulations
• SMB owners cite growing pains when they 9. Taxes
reach the size to need specialized functions 10. Technology
like larger companies, e.g. finance, H.R., but
don‟t yet have the staff in place to perform
them
Source: NFIB Survey 14

15. Challenges for SMB Employer (related to wellness)
• Limited internal resources
• Money, people, time, space, limited knowledge about
wellness
• Not many wellness vendor/partners who
service SBM employers
• Limited or no group wellness reporting
• Difficult to establish financial impact
• No significant research about SMB wellness
programs
• Employer doesn‟t know where to turn
• Many brokers have little or no wellness
experience
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16. Advantages for SMB Employer
• Management support can be very obvious
• Close-knit work group
• Awareness of coworkers needs
• Efficient communications
• Peer support
• Culture has strong impact on behaviors
• Policies and environment can more easily be changed
• Informal leaders are readily known
• Can cost less to achieve more
• Program impact is known more quickly
• Job provides a greater sense of “completed-ness”
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17. Wellness Strategy
Incentive Plan
Communications Plan
INDIVIDUAL ACTIVITIES ORGANIZATIONAL ACTIVITIES
Preventive Health Wellness Seminars Wellness Local
Challenges Campaigns
Screening Coaching Assessment Committees Events
Personal Improvement Population Improvement
Participation Tracking Outcomes Reporting

18. Action Steps
• Issue a letter of support from the CEO
• Designate a company wellness leader
• Conduct an employee health interest survey
• Provide an opportunity for health screening
• Administer an annual physical activity campaign
• Hold lunch and learns
• Establish an in-house wellness library
• Disseminate a quarterly health newsletter
• Implement health promoting policies
• Promote community health efforts
Source: WELCOA Absolute Advantage Volume 7, Number 2
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19. Do…
• Make your program inviting and fun
• Openly explain the purpose and expectations of the
program
• Address any concerns about privacy protection
• Create an identity for your program
• Listen to what your employees want
• Understand the needs of your employees
• Offer a variety of activities throughout the year
• Capture risk data at the beginning at periodically to
measure impact
• Selectively invite local resources to bring expertise to
your program
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20. Resources
• Senior leadership
• Existing channels of communications
• Knowledge and experience of employees
• Supportive environment
• Supportive policies
• Community resources – hospitals, colleges, health
organizations, home extension services, state and
county health departments, state and local wellness
councils
• Community events
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21. Resources
Centers for Disease Control and Health Promotion
www.cdc.gov/workplacehealthpromotion/model/index.html
American Heart Association
www.americanheart.org/workplacewellness
American Cancer Society
www.acsworkplacesolutions.com
List of State Agencies
www.cdc.gov/workplacehealthpromotion/organizations
Department of Health and Human Services
www.hhs.gov/safety/index.html
www.Healthfinder.gov
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22. Resources
US Office of Personnel Management
www.opm.gov/Employment_and_Benefits/WorkLife/HealthW
ellness/wellnessresources/worksitewellnessprogram.asp
Wellness Councils of America
www.WELCOA.org
National Network of Wellness Councils
www.TheNNWC.org
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23. Thank you!
Lee Dukes
President, Principal Wellness Company
Dukes.Lee@Principal.com
317-874-3800
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