CAP Cypress Advantage Plan

1. Nor Cal Community Insurance Services The Cypress Advantage Plan is an Employment Tax Advantage Program which is offered through Cypress Associates Inc. The purpose of this presentation is to explain the plan conceptually and in such a way that anyone might be able to understand how it works. Though tax codes are referenced and explained conceptually it is beyond the scope of this presentation to explain in detail how the plan is compliant with all existing tax code. CAP Cypress Advantage Plan

2. In business since 1986. Nor Cal Community Insurance Services The Cypress Advantage Plan works by using tax savings to completely pay for additional employees' benefits, no additional cost to the employee or employer. Now working with to bring the Cypress Advantage Plan to your community. CAP Cypress Advantage Plan

3. The Cypress Advantage Plan Our plan was designed using existing tax code that has been in place since 1987. But, prior to September 23, 2010 the benefits provided by this employment tax advantage program were only available to very large companies. Now almost all companies can provide benefits to their workforce at no additional cost. CAP Cypress Advantage Plan

4. What Changed September 23, 2010 Lifetime maximums are lifted removing a financial barrier that prevented smaller companies from participating. What was previously only available to large companies with the financial ability to self insure is now available to any company with two or more employees. CAP Cypress Advantage Plan

5. How Does it Work Long story short, it creates a benefit bank with pre-tax funds using section 105, 125, and 162 of the IRS tax code. This allows employers to offer no cost benefits to their workforce without reducing the employee’s take home pay. The CAP Advantage

6. With the rising cost of insurance employers are having to… • Switch to Higher Deductible Plans • Offer Limited Benefits • Reduce Work Force • Abandon Benefits Completely • And So On… Challenges Today The CAP Advantage

7. The Solution For years, companies have been taking advantage of cafeteria plans to reduce payroll taxes. The Cypress Advantage Plan (CAP) is the latest innovation in this commonly-used platform. It is a Self-Funded* Cafeteria Plan sponsored by your company. Realizing an average participation rate of 92%. *Self-Funded – Unlike all other cafeteria type plans, CAP uses tax savings to completely pay for additional benefits to employees. Because additional benefits come with no additional cost, participation is close to 100%! The CAP Advantage

8. The Solution By allowing contributions on a pre-tax basis, CAP reduces your payroll taxes. These savings are then used to purchase additional coverage that can replace lost wages, pay out-of-pocket expenses and other expenses not covered by your major medical plan. The CAP Advantage

9. The Solution • Due to the CAP plan’s unique design, this can all be accomplished without affecting the employees net take home pay. • Finally a benefit plan that can save the employer money. Improve the employees benefit package and moral, all without affecting the employees net take home pay! The CAP Advantage

10. There are many different types of supplemental insurance you can select to cover you and your eligible dependents. • Accident Plan • Cancer Plan • Critical Illness • Short Tem Disability Coverage • Deductible GAP Coverage • Health Insurance • Life Insurance Dental and Vision plans are also available from Cypress Associates. The Benefits The CAP Advantage

11. Accident Insurance (on or off-the-job accident-only insurance) Accident Plans are ideal for anyone with an active lifestyle or active children. The plan pays benefits directly to you if you or a covered family member are injured in an accident. • Accidental Death & Dismemberment • Accidental Hospital & ICU Income Rider • Wellness Benefit Rider • Accident-Only Disability Income Rider • Illness-Only Disability Income Rider • Spouse Off-The-Job Accident-Only Disability Income Rider Benefits Continued The CAP Advantage

12. Hospital Confinement Surgery Anesthesia Private-Duty Nurse Radiation and Chemotherapy Experimental cancer treatment Travel and lodging when treatment is far from home Child care and household help Normal living expenses, such as your car payment, mortgage/rent and utility bills Family coverage is also available Benefits Continued • Cancer Survivor Plan (group cancer-only and critical illness insurance) According to a recent American Journal of Medicine survey, nearly 63% of the costs associated with cancer treatment are not covered by your major medical plan. • Benefits The CAP Advantage

13. Benefits Continued • Critical Illness Insurance (lump sum catastrophic coverage) Being diagnosed with a critical illness • Accidental Death & Dismemberment • Accidental Hospital & ICU Income Rider • Wellness Benefit Rider • Accident-Only Disability Income Rider • Illness-Only Disability Income Rider • Spouse Off-The-Job Accident-Only Disability Income Rider The CAP Advantage

14. Employees Receive Benefits Like • Guaranteed Issue Life Insurance • Guaranteed Issue Gap Coverage For Insurance Deductibles • Guaranteed Issue Supplemental Insurance Like • Cancer / Critical Illness • Accident • Disability • Maternity (Hospital Indemnity) • And Much More… All provided at no cost to the employee using the Benefit Bank created by using IRS tax Code that has been in existence since 1987. Benefit For Employees CAP Cypress Advantage Plan

15. Benefit For Employees • Consider for a moment… Often the full value of additional benefits is under-rated. Here are just two examples of what these benefits could do! • Guaranteed Issue Life Insurance of up to $300,000 with the option of $500,000 simplified issue. • Opportunity for Supplemental Retirement Income of $100,000 or more… $200 invested at 5% tax differed over 30yrs is $166,451.73 This means your supplemental retirement could be greater than your 401k.* (Money in an UL grows tax free and is available tax free as a policy loan, no repayment is required.) *The average 401k balance is now around $71,500.(according to Fidelity one of the largest 401k providers)

16. Because the plan allows for a reduction in total taxable income, employers will actually save funds in FICA & Medicare tax matching. Average Savings Per Employee Per Year $400 That means the savings on a 100 Man Group.. $40,000 every year! Benefit For Employer The CAP Advantage

17. The Short Version • The Employee Gets… • Life Insurance • Gap Coverage • Additional Benefits • No Difference In Take Home Pay • No Tax Liability On The Benefits • Lower Financial Risk & A Better All Around Benefits Package • The Employer Gets… • Reduction In Payroll Tax Matching • Savings Of Approx. $400.00 Per Year, Per Employee • Ability To Offer No Cost Benefits To Work Force • No Changes To Existing Health Carrier or Payroll Service Provider • Ability to Recruit & Retain Top Talent The CAP Advantage

18. Standardized Pre Tax Contributions $700 Employee $1,100 EE w/ Spouse $1,100 EE w/ Child $1,500 Family So for this example we will use a married man with no children and a $500 per month health insurance premium Using the CAP these standardized contributions become an above-the-line tax deduction which is the basis for our program… How it Works The CAP Advantage

19. The CAP Difference (Emp w/ Spouse) Current CAP Gross Pay $4,000 $4,000 Qualified Deductions $0 ($1,600) Taxable Income $4,000 $2,400 Taxes ($393.63) ($113.78) Net Pay $3,606.37 $2,286.22 Reimbursement $0 $1,584 Net Take-Home Pay $3,606.37 $3,606.37 Benefit Bank $0 $265.29 The CAP Advantage

20. The 125 self-funded pre-tax dollars contributed by the employee are given back in the form of flex dollars which then may be used to purchase additional coverage… Coverage Like… Guaranteed Issue Life Insurance Guaranteed Issue Gap Plans Guaranteed Issue Supplement and Cancer Plans Dental, Vision, and much, much more… All Provided With Flex Dollars Created By The CAP Program. NO COST BENEFITS!!! The Benefit Bank The CAP Advantage

21. Employer Tax Savings The CAP Advantage

22. In our example, the net monthly tax savings to the employer, after all costs to administer the program, is $29.15. This adds up to annual savings of How many employees do you have??? 25 = $8,745 per year savings 50 = $17,4908 per year savings 100 = $34,980 per year savings 500 = $174,900 per year savings $349.80 So at the very least any additional costs of implementing and administering this plan are covered by the plans savings. The Employer’s Benefit The CAP Advantage

23. Getting Started The Census Have your HR, accounting dept. or TPA fill out the census form to get an exact quote. Find out exactly what the company savings are and how much money is in your benefit bank.

24. 1) The Master Agreement When you are ready to move forward with the Employee Tax Advantage Program. 2) Group Presentation for Employees Employees need to know about the new benefit options you are providing. Information disseminated by employer to all employees. 3) Enrollment Our enrollment specialists work quickly and with minimal disruption to get your employees enrolled. Online enrollment and personal counseling work to make the process quick and effective. Getting Started(Plan can be implemented at any time during the year.) The CAP Advantage

25. This has been a brief and general explanation of the Cypress Advantage Plan. How it works and how it can benefit your company's bottom line while improving your employees benefits, with no cost to your company or to your employees. This presentation was designed as an overview of the Cypress Advantage Plan. While conceptual in nature, we have tried to be as thorough as possible. Upon execution of the Master Agreement we will work directly with you and your people to answer all your questions. Also, Cypress will pay for one call to our tax attorney to answer any technical questions that your tax experts may have. We are committed to helping you have the best possible experience. Thank You! The CAP Advantage