2012-05-02 Employee Benefits

Employee Benefits
Trends, Strategies
and Challenges
Raffa Financial Services, Inc.
May 2, 2012

Thrive. Grow. Achieve.

EMPLOYEE BENEFITS TRENDS,
STRATEGIES AND CHALLENGES

FOUR KEY AREAS OF EMPLOYEE BENEFITS FOR DISCUSSION TODAY:

Establishing Regional
Benefits Benefits

Benefits Benefit
Administration Strategies

Employee Benefits/ Page 2


ESTABLISHING EMPLOYEE BENEFITS

The timing of the initial startup of employee benefit
plans is critical for small employers as there are a
number of barriers for small employers.

In todays marketplace, Employers may also opt for a
Professional Employee Organization to establish
benefits. Therefore, many of these same start up
issues will apply to larger employers attempting to
establish their own independent benefit plans.



ESTABLISHING BENEFITS – GROUP HEALTH INSURANCE

• Minimum of 2 Employees Enrolled to Start

• Federal (HIPAA) and State Law

• Limited Number of Carriers

• Multiple Plan Designs

• Community Rates

• No Pre-existing Conditions



ESTABLISHING BENEFITS – GROUP HEALTH INSURANCE RATES

• Initial Group of Employees is Critical

• Rates Based on Average Age

• Rates Based on Good Health

• Individual Questionnaires Under 25 Lives

• HIPAA Rates

• Dental Is Available with Medical Carriers



ESTABLISHING ANCILLARY BENEFITS – GROUP LIFE & DISABILITY
INSURANCE

Under 10 Lives Over 10 Lives
• Large Number of Carriers
• Limited Number of Carriers
• Negotiable Marketplace
• Limited Amounts of Coverage
• Higher Benefit Limits
• Usually Individual Rates
• Low Group Rates
• Supplement with Individual
Plans • Supplemental Group Coverage



ESTABLISHING BENEFITS – SETTING UP A 401(K) OR 403(B)
RETIREMENT PLAN

• $1,000 in Plan Document Fees

• $1,350 in Annual Administration Fees

• 1.5% to 2% in Plan Asset Based Fees

• Limited Number of Funds/Providers

• Fully Compliant Plan/Advisor Services



TYPICAL EMPLOYEE STARTUP EMPLOYEE BENEFIT PLAN COSTS

• Medical Insurance - $350/Month EE and $1,200/ Month Family

• Dental Insurance - $35/Month EE and $100/ Month Family

• Vision Coverage - $7/Month EE and $22/ Month Family



REGIONAL BENEFITS

Employers establish employee benefit
plans in order to attract and retain
employees in competition with other
employers. Most employers now cover
a standard set of employee benefit
plans, however, the level of benefits can
vary geographically.

The Washington, DC and surrounding
metropolitan area is rich in employee
benefits due to competition from
Federal and State Government
employers.



TOP TWO MOTIVATORS – JOB SECURITY AND BENEFITS1

Competitive benefits package can influence employee
retention and recruiting:2

40% of employees
have stayed in a job Because of the
Benefits the
36% of employees
Employer
have taken a job
Offered

1 SHRM, “2010 Employee Job Satisfaction Investigating What Matters Most to Employees,” July 2010.
2 Employee Benefit Research Institute, Opinion Research Corporation survey, September 2010.



BENEFITS – A MUST HAVE FOR SUCCESS!

40%
At companies with
HIGHLY engaged
workers, operating
income:
INCREASED

Percent
Operating 0
19%
Income

At companies with DECREASED
LESS engaged workers,
operating income:
33%
(-40%)
Source: Towers Watson, “Employee Engagement in Practice,” June 2010,
in comparing highly engaged workers to peer companies with less-engaged
workers.



EMPLOYER SPONSORED BENEFIT PLANS IN WASHINGTON, DC METRO AREA

• Group Medical Insurance

• Group Dental Insurance

• Group Life Insurance

• Group Disability Insurance

• Retirement Plan

• Voluntary Benefits (New)



GROUP MEDICAL BENCHMARKS – MULTIPLE BENEFIT PLAN OPTIONS

• Health Maintenance Organization (HMO)

• Point of Service Plans (POS)

• Open Access HMO and POS Plans

• Preferred Provider Organization (PPO)

• HRA and HSA Plans



GROUP MEDICAL BENCHMARKS – FIRST DOLLAR BENEFITS

• No In-Network Deductible

• 100% In-Network Benefits (80% Out)

• Facility Co-Payments ($0 to $300)

• $20 Doctor Copayment

• $15/$30/$60 Prescription Drug Card



GROUP MEDICAL BENCHMARKS – EMPLOYER PREMIUM FUNDING

• 75% of Employee Costs
For Profit Employers
• 50% of Dependent Costs

• 75% of Employee Costs
Non Profit Employers
• 75% of Dependent Costs



GROUP DENTAL INSURANCE – THE MOST DESIRED EMPLOYEE BENEFIT

• In-Network 100%/90%/60%

• Out-of-Network 100%/80%/50%

• $1,500 Annual Maximum

• Limited Optional Orthodontia Benefits

• National Dental Providers/Networks



EMPLOYER SPONSORED GROUP LIFE AND AD&D INSURANCE

• 1x Salary to $50,000

• Professional Services Firms 2x or 3x Salary

• Accidental Death Coverage (AD&D)

• Fully Employer Paid

• Employee Paid Voluntary Group Term Life



GROUP SHORT TERM DISABILITY INSURANCE

• Benefits Equal to 60% of Gross Pay

• Available On 1st Day Accident/8th Day Sickness

• $2,000 Per Week Benefit Maximum

• 13 Week Benefit Period

• Fully Employer Paid Coverage

• Taxable Benefits



GROUP LONG TERM DISABILITY INSURANCE

• Benefits Equal to 60% of Gross Pay

• Available After 90 Day Waiting Period

• $10,000 Maximum Monthly Benefit

• Benefits to Age 65 or SSNRA

• Fully Employer Paid Coverage

• Taxable Benefits



VOLUNTARY BENEFITS – SUPPLEMENT EMPLOYER SPONSORED BENEFIT PLANS

• Supplemental Permanent Life Insurance

• Critical Illness or Cancer Insurance

• Accident Coverage

• Long Term Care Insurance Rider

• AFLAC & Colonial vs. Group Carriers



RETIREMENT PLANS – UNDER IMPORTANT NEW REGULATIONS FOR 2012.
(408(B)(2))

• 401(k) or 403(b) Plans

• 50% Matching Contribution to 6% of Pay

• Nonprofit Discretionary Contributions

• Multiple Fund Families

• Bundled Platforms & Payroll Integration



OTHER EMPLOYER SPONSORED BENEFIT PLANS

• Supplemental LTD Coverage

• Vision Coverage

• Flexible Spending Accounts

• Parking and Metro



BENEFITS ADMINISTRATION

The complexities of Employee Benefit plans
lead to significant commitments from
employers for both Administration of Benefits
and ongoing Compliance.

In fact, competition among providers in the
Employee Benefits Marketplace now centers
on Value Added Services offered by Benefit
Brokers and Consultants to support small
employers.



MORE EMPLOYERS WANT TIME-SAVING HELP

53% SURVEYED IMPLEMENTED A
BENEFITS ADMINISTRATION
AND/OR ENROLLMENT SYSTEM —
UP 11% OVER THE PREVIOUS
YEAR.1
53%
• Electronic enrollments offer
42%
added value
• Accurate documentation
2009 2010
• Effective education Added benefits
• Data cleansing administration
and/or
• Eligibility verification enrollment
systems

1 Unum research, survey of 480 human resources professionals at the Society for Human
Resource Management (SHRM) 62nd Annual Conference held in San Diego from June 27–
June 30, 2010.



CONNECTING HUMAN RESOURCES…TO PAYROLL…TO BENEFITS

The ideal arrangement for many Payroll
Processing
employers would be a robust
Human Resource Information Management Employee
Reporting Benefits
System that connects everything
associated with the employee.
HRIS
The connected HRIS platform
Employee COBRA/
streamlines administration through Self-Serve FSA
a single entry, single password and
paperless system. 401(k)
Plan



THIRD PARTY ADMINISTRATORS AND BENEFIT ADMINISTRATION PLATFORMS

HRIS Systems usually connect to
Vision
multiple insurance companies to
transmit data. The use of a Third Dental
Long-Term
Disability

Party Administrator can simplify
BENEFIT
carrier connections down to a MALL

single (one time only) connection Medical
Short-
Term
Disability
and allow for more frequent data
transmission and lower connection Life

costs. Payroll
Processing

Management
TPA
Reporting

HRIS
Employee COBRA/
Self-Serve FSA

401(k)
Contributions



HRIS AND BENEFIT ADMINISTRATION PLATFORMS INITIAL SET UP

• Input All Company Benefit Information

• Create Benefit Report Templates

• Establish Employee Self Serve Website

• Manage Online Open Enrollment

• Establish Electronic Carrier Connections



ADMINISTRATION SERVICES – RE-DEFINE THE EMPLOYERS BROKER SELECTION
CRITERIA

• Consolidated Billing & Bill Reconciliation

• COBRA Administration

• HRIS Set Up and Online Administration

• Employee Value Statements & Dependent Audits

• Form 5500 Preparation

• Human Resources & ERISA Attorney Support



BENEFIT STRATEGIES

There are numerous strategies in the
marketplace that are designed to improve
the employee experience and to shift or
lower costs.

Every employer should consider the long
term implications of their strategies and
have a plan in place that will hopefully
effect the future costs of healthcare and
other employee benefits.



RISING PREMIUMS REMAIN A TOP CHALLENGE

• Health insurance premiums expected to increase by double
digits for the third consecutive year.1
•Average health care premium cost per employee is above
$10,000 a year.2

11.6%
2011 11.1% 11.1%
premiums

2010 11% 11% 11%
premiums

2009 2009 2010 2011
premiums

Premium growth for traditional PPO coverage3

1,3 Buck Consultants, “22nd National Health Care Trend Survey,” October 2010.
2 Towers Watson, "2010 Health Care Cost Survey 2010:New Deal, New Dividend,
21st Annual U.S. Results Report," 2010.



HOW COMPANIES ARE RESPONDING?

Actions taken by employers

1/3
Half

Many offered health
management
50% increased One-third raised incentives to
employee deductibles2 encourage healthy
contributions1 choices3



DC METRO EMPLOYERS – HEALTH INSURANCE COST CONTROL STRATEGIES

• Reduced Benefits

• Increase Employee Contributions

• Regional vs. National Plans

• HRA, HSA Plans & Medical Bridge Plans

• Partial Self-Funding



STRATEGY #1 EFFECT THE FUTURE COST OF HEALTHCARE THROUGH WELLNESS

• Identify Health Risks

• Modify Behavior

• Reduce Healthcare Costs

• Create Measureable Results

• Improve Productivity, Enhance Employee Lives



WHAT IS “COMPREHENSIVE” WELLNESS?

• Health Risk Assessment

• Biometric Screening

• Health Coaching

• Smoking Cessation, Weight & Stress Management

• Promote Employee Assistance (EAP)



ADOPT THE “FORTUNE 100 STRATEGY”

• Offer Comprehensive Wellness

• Provide Tangible Incentives to Participate

• Establish Central Effective Communications

• Provide Ongoing Support & Encouragement

• Trends Target at 4% Increases Annually



STRATEGY #2 STREAMLINE BENEFIT ADMINISTRATION

• Online Administration

• Consolidated Billing

• Bill Reconciliation

• Online Open Enrollment

• HRIS Integration



STRATEGY #3 EDUCATE AND EMPOWER YOUR EMPLOYEE THROUGH VOLUNTARY
BENEFITS

• Supplement Employer Sponsored Plans

• Personalize the Enrollment Process

• Increase Employee Appreciation of Benefits

• Offset Administration Expenses

• Enhance Employees Financial Future



STRATEGY #4 IMPROVE EMPLOYEE OUTCOMES THROUGH TAX CHOICE

• Offer Tax Choice Disability Plans

• Add a Roth 401(k) or 403(b) Election

• Offer a Flexible Spending Account

• Offer Dependent Accounts

• Offer Metro and Parking



STRATEGY #5 OUTSOURCE EMPLOYEE SERVICES

• Onboarding of Employees

• HRIS Management and Maintenance

• Employee Communications

• Employee Medical/Dental Claims Adjudication



STRATEGY #6 ASSURE COMPLIANCE WITH THE NEWEST RETIREMENT PLAN
RULES

• Fiduciary Benchmarking Review

• Co-Fiduciary Arrangement

• Investment Policy Statement

• Third Party Investment Analysis, Reporting & Fee Disclosures

• Document a Prudent Fiduciary Process



CREATE A PLAN FOR THE FUTURE…

Which is health Reform-savvy Optimize ROI of
and Partner relationships
pairs a consumer-directed with value added
focus with financial protection services

Partners with a provider Saves HR time with
experienced in both employer- technology to
funded and voluntary benefits streamline
administration

Boosts employee engagement Offers choices to
with education on benefits meet the needs of a
value and proven service and diverse workforce
claims support



QUESTIONS?



Raffa Financial Services, Inc. has
one Chartered Life Underwriter
(CLU), three (3) Certified Financial
Planners (CFP), one Certified
Financial Analyst (CFA) and all
staff members are fully licensed.



RAFFA FINANCIAL SERVICES, INC. – PRIMARY MARKETS

• 2 to 50 Employees (Small Groups)

• 50 to 500 Employees

• Nonprofit Organizations

• Technology Firms

• Government Contractors

• Retail, Manufacturers, Professional Firms



MAKING A DIFFERENCE IS PART OF THE JOB

• Pro Bono Services

• A Leader in Volunteer Hours

• Incubating Nonprofit Charities

• Board Service/Special Events

• “Companies for Causes”



OTHER KEY RAFFA FINANCIAL SERVICES BROKERS AND STAFF

• Andrea Dykes, CFP – Financial Advisor

• Jon Zeisler – Director, Group Benefits

• Christy Bonnewell – Account Manager

• Faith Hites, RHU –Account Manager

• Eddie Owen – Account Manager, Retirement Services



THANK YOU!


2012-05-02 Employee Benefits

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