Group Benefit Administration Overview

1. Group Benefit Administration Overview • Brought to you by: Aaron Casper, Consultant, National Insurance Services • February 25, 2016 Corporate Office: 250 South Executive Drive, Suite 300, Brookfield, WI 53005 | 800.627.3660 | www.NISBenefits.com

2. Medical Benefits (ACA, HITA, Funding, FSA, HDHP and Wellness) • Retiree Benefits (Payouts, OPEB) • Restructuring Retiree Benefits • Retirement Savings Accounts • Ancillary Benefits (Dental, Vision, Life, Disability, Other)

3. Medical Benefits

4. Medical Benefits: • Affordable Care Act (ACA) • Key concepts • Offering coverage to 95% FT employees • Affordability • Tracking hours • Key dates 2016 • March 31 – Individual forms 1095-B • May 31 – Non-electronic IRS forms 1094-B • June 30 – Electronic IRS forms 1094-B Handout: 2016 ACA Compliance Checklist Resource: ACA Watch Newsletter www.nisbenefits.com

5. Medical Benefits: • Health Insurance Transparency Act (HITA) • Bidding requirements • Data requirement • Largest bargaining unit role • Public Employee Insurance Program (PEIP) • Self-insurance and HITA Resource: See list for URL for the actual legislation

6. Medical Benefits: • Funding Options • Fully-Insured • Self-Insured • Pooled plans (Cooperatives and PEIP) Resource: Self-funding 101 Whitepaper and Video

7. Medical Benefits: • Flexible Spending Plan (FSA) • Standard vs Limited Plan • Full 213(d) • Limited Purpose (Dental and Vision)

8. Medical Benefits: • Moving to a Higher Deductible Health Plan (HDHP) • Traditional plans do not encourage consumerism • Lack of consumerism cause runaway claims that may increase premiums • Goal of HDHP is to empower employees to improve their decision-making skills • Most HDHP are combined with a health savings account that employees can use to cover the higher out of pocket costs

9. Medical Benefits: • Moving to a Higher Deductible Health Plan (HDHP) Why not use a Health Savings Account (HSA)? • Early retirees cannot use HSA funds for medical premiums until they turn 65 • Not all employees are eligible. Exp: Spouse has FSA • HSA owned by employees. With HRA, employer can “take back” a portion of the funds if unused during plan year • Can ONLY be used with IRS-qualified HDHP • Most employees don’t contribute to HSAs according to studies Handout: Whitepaper: Why HRAs may Work Better than HSAs Resource: http://www.shrm.org/hrdisciplines/benefits/articles/pages/hsasvshras.aspx

10. Medical Benefits: • Moving to a Higher Deductible Health Plan (HDHP) Health Savings Account (HSA) Alternative Plan • Employer makes annual contribution to an HRA. Employee also has a Flexible Spending Account (FSA) which the employee contributes their own funds into. The combination of the two have the same tax-free benefits of an HSA plan, without the plan design restrictions and employee eligibility concerns. Integrated Health Reimbursement Arrangement (HRA) • Employer makes contributions to an HRA on behalf of active employees who are enrolled in the group-sponsored medical insurance plan. Funds can be used tax-free for qualified medical expenses.

11. Medical Benefits: • Wellness Plans • Popular • Does it work to lower premiums? • Most ineffective • Low participation under 24% • Why ineffective? • Planning • Strategy • Execution • Lack of hard metrics • Lack of relevant incentives

12. Medical Benefits: • Wellness Plans – How to get ROI • Investing in well planned, strategic programs can lower health costs by 26.5% • Plans that show the greatest return: • Health assessments/biometric screenings • Plans tailored to aggregate report from assessment • Communicate well and often – employees need to know exactly how to participate • Offer group programs: lunch and learns, weight loss contest, company race, etc. • Inclusive programs: make some

13. Medical Benefits: • Wellness Plans Tips • Create a wellness committee – invite your consultant/broker • Provide employees with wellness documents: newsletters, flyers, posters, etc. You should be able to get these from your consultant or broker at no cost. • Check to see if your medical insurance carrier provides health coaching, medical screenings, challenges or seminars at no cost • Independent wellness vendor charges for biometric screenings cost between $50-$75 per employee, add coaching and it goes to around $75 • Gold plan: Onsite or Near site Wellness Clinic Resource: A Guide to Employer-Managed Care: Onsite Clinics and Wellness Centers

14. Early Retiree Benefits

15. Early Retiree Benefits: • Tax-Advantaged Options for Retiree Payouts Options for unused sick leave, incentive pay or unused vacation • Disperse in a regular paycheck – pay FICA and all payroll taxes • Deposit funds into a Special Pay Plan (SPP) • Tax deferred, no FICA • Unlimited use • Deposit funds into an HRA • Tax-free including FICA • Use for medical premiums and expenses

16. Early Retiree Benefits: Retiree Health Insurance Benefits • GAP

17. Early Retiree Benefits: Retiree Health Insurance Benefits When promises were made: Health Insurance was affordable Coverage was denied for pre-existing conditions making staying on the group plan the only real option for early retirees

18. Early Retiree Benefits: GASB Shines a Spotlight on OPEB Liabilities 2004: GASB 45 required public organizations to actuarially determine the unfunded liability Required to report liability on financial statement Schools became aware of the large liabilities they were facing

19. Early Retiree Benefits: OPEB Liability Options • Fund the liability with an OPEB Trust • Restructure your post-employment benefits – move to a defined contribution plan

20. Restructuring Early Retiree Benefits

21. Restructuring Retiree Benefits: • Defined Benefit vs. Contribution Plans CONTRIBUTION BENEFIT

22. Restructuring Retiree Benefits: • Defined Benefit vs Defined Contribution

23. Restructuring Retiree Benefits: • Defined Contribution Considerations • The timing of contributions • Transitioning employees • Vesting • Funding options

24. Restructuring Retiree Benefits: • Timing of Contributions • Retirement contributions • One lump sum • Multiple payments • HRA or 403(b)/401(a) saves FICA tax • HRA is completely tax free • Active employee contributions with retirement access • Interest increases value of benefit • Vesting schedule • If employee leaves, funds revert back to employer

25. Restructuring Retiree Benefits: • Easing the Transition for Employees • Creating Employee Tiers • Grandfathered employees • New or recent hires • In between

26. Restructuring Retiree Benefits: • Encouraging Retention: Vesting Options • Lump sum at retirement = Length of credible service • Annual deposits = forfeit if they leave employment prior to vesting

27. Restructuring Retiree Benefits: • Funding Choices • Employer-sponsored 403(b)/401(a) • Defined Contribution HRA (ACA-Compliant)

28. Restructuring Retiree Benefits: • Funding Choices: Employer Benefits No FICA Tax No limits on contributions • HRA No FICA Tax • 403(b)/401(a) Limits on number of years and amount of contributions

29. Restructuring Retiree Benefits: • Funding Choices: Participant Benefits • 403(b)/401(a) • HRA No FICA Tax No FICA Tax Unrestricted use Use for premiums & expenses Tax-deferred Tax-free Surviving eligible spouse & dependents can name a beneficiary Surviving eligible spouse & dependents can continue using the funds for medical. Cannot name a beneficiary

30. Retirement Savings Accounts

31. Retiree Savings Accounts • 2009 regulations changed things for schools • Prior to regulations, employees chose their own investment provider (vendor) • Since the regulation change, schools chose to do one of the following: • Kept same number of vendors with TPA • Reduced number of vendors with TPA • Moved to a single-vendor solution • Handle compliance in-house

32. Retiree Savings Accounts: • Independent TPA • Why work with an Independent TPA? • Because they are not affiliated with an investment product, they collect fees for their administrative services only • They will assist in the review of your approved 403b providers for willingness to enter into Information Sharing Agreements • They will keep your Plan Document current by providing timely legislative updates and required Plan amendments • They will remind and assist you in the annual requirement to distribute the Universal Availability notice • They will review and approve all transactions that the Plan Document permits (i.e. loans, hardship withdrawals, Salary Reduction Agreements, transfers/exchanges, etc.)

33. Retiree Savings Accounts: • Three Plan Types • 403(b) • 457 • 403(b) Roth

34. Ancillary Benefits Ancillary Benefits

35. Ancillary Benefits: • Dental and Vision • Primarily discount programs • Dental is the most requested benefit after Health • Dental can be fully insured or self-insured • It’s all about the network: • Are they taking advantage of savings? • Staying in-network keeps rates under control

36. Ancillary Benefits: • Life Insurance Benefits • Beneficiary horror stories • Dependent spouse and child coverage increases benefit at low cost • Upon retirement: Notify employees about conversion • Advice: Check with carrier before offering benefit outside of the plan – may not be allowed Handout: Beneficiary Reminder Handout: Conversion Reminder

37. Ancillary Benefits: • Disability Insurance Benefits • Long-Term Disability (LTD) is income protection • Complicated product – need expert • Not a “should” but a “must” • 3 in 10 chance you will need disability insurance • As new contracts are settled, LTD maximums need to be reviewed annually to ensure proper coverage • Advice: Check with carrier before offering benefit outside of the plan – may not be allowed Handout: 46 - LTD Education Video: http://www.brainshark.com/NationalInsuranceServices/vu?pi=zFEzxD2K0z3ANRz0

38. Ancillary Benefits: • Other Benefit Plans • ID Theft • EAP • Cancer • Accident

40. Medical Benefits (ACA, HITA, Funding, FSA, HDHP and Wellness) • Retiree Benefits (Payouts, OPEB) • Restructuring Retiree Benefits • Retirement Savings Accounts • Ancillary Benefits (Dental, Vision, Life, Disability, Other)