PRIVATE EXCHANGES: Are they right for you?. Small Group Premiums Increasing Copyright 2013, Health Partners America. All Rights Reserved. No duplication,

PRIVATE EXCHANGES:Are they right for you?

Small Group Premiums Increasing

Copyright 2013, Health Partners America. All Rights Reserved. No duplication, in whole or in part, permitted without expressed written consent.

3 types of cost sharing limits:• Actuarial value requirements (metallic levels)

• Out-of-pocket limits

• Under the ACA, out-of-pocket limits for health plans are subject to the limit that currently applies to health savings account qualified health plans, which is $6,250 for single coverage and $12,500 for family coverage in 2013, and we estimate it to be $6,350 for single coverage and $12,700 for family coverage in 2014.

• Deductible limits• $2,000 single / $4,000 family deductible maximum

• Applies to small group market only

Small Group Premiums Increasing


Other contributing factors:• Minimum Essential Benefits

• Modified Adjusted Community Rating

– Premium variations only allowed for:

• Age (3 to 1)

• Tobacco use (1.5 to 1)

• Family composition

• Geographic regions

• Wellness discounts are allowed for groups in specific circumstances

Add it up…" Well you can take a swag at it by adding up the values: • 4% premium taxes• 4-11% product increase• 25% rating rules increase for healthiest groups• Add another 12% for just the regular trend increase

So you get 25-50% rate increase in the small group market."

- Anonymous Carrier Executive


Regulatory Burden on Employers


THINGS ARE CHANGING

Offering group health benefits could soon repel employees.


The poles are shifting

ACA’S IMPACT ON INDIVIDUALSCopyright 2013, Health Partners America. All Rights Reserved. No duplication, in whole or in part, permitted without expressed written consent.

Example: Family of 4 making $55k a year premium of $14,556. Single premium $5,400

Employer Contribution

Employee Contribution

Government Contribution

Minimum contribution from

ER (9.5% AGI) $175 $14,381 $0







ER (9.5% AGI) $175 $14,381 $0

50% of single $2,700 $11,856 $0







ER (9.5% AGI) $175 $14,381 $0

50% of single $2,700 $11,856 $0

100% of single $5,400 $9,156 $0







ER (9.5% AGI) $175 $14,381 $0

50% of single $2,700 $11,856 $0

100% of single $5,400 $9,156 $0

50% of family $7,278 $7,278 $0







ER (9.5% AGI) $175 $14,381 $0

50% of single $2,700 $11,856 $0

100% of single $5,400 $9,156 $0

50% of family $7,278 $7,278 $0

Offer no coverage $0/2k $4,135 $10,421


Bottom Line1. Small group is getting more expensive

– Cost sharing increased– Essential Benefits– Rating changing

2. Regulations are burdensome3. Value to employees is decreasing

– Subsidies cannot be accessed if employer offers insurance


CHANGEWAVES OF

Shifting Roles - Employer

• Health plan important component in attracting and retaining employees

• Selecting plan for employees

• Collecting money and paying carrier

• Concern over funding and participation requirements

• No plan or Defined Contribution platform important component in attracting and retaining employees

• Choosing contribution and platform to offer

• Reimbursing premiums in coordination with payroll

• No minimum contribution or participation requirements



Shifting Roles - Employee

• No say in Employer plan – take it or leave it

• Employer deducts premium contributions and pays carrier

• Few Consumer Driven options

• Health plan not always paired with ancillary and supplemental for optimal planning

• Choice of any plan from any carrier available in state

• Pay the carrier directly – Employer reimburses

• Education and guidance on HDHPs

• Complete insurance planning to maximize every dollar


• Majority of time spent on product specific issues: Quoting, Comparing, Communicating, Servicing

• Commissions from one product make up majority of revenue

• Limit to how many clients before capacity is reached

• Focus can be shifted to sharpening sales and relational skills, bring new strategies to attract and retain employees

• Multiple revenue sources from every case

• Scalability achieved through efficiencies in system remove all limits to what you can handle

Shifting Roles - Broker


EXCHANGES

101


Private Exchanges Aren’t New


Different Exchange Types

Less Complex More Complex

Consumer-based and Funded Employer-based and Funded (at least partially)

Single Carrier Multiple Carriers

Health Insurance Only Multiple Benefits (i.e., Dental/Vision, Life, Accident, Critical Illness, DI, LTC)

Defined Benefits (employer choice) Defined Contribution (employee choice)

One-time Upfront Purchase Only Year-round, Ongoing Administration


Private Exchange

Public Exchange

Single Carrier Group

Multi Carrier Group,

employer chooses carrier


consumer chooses carrier

Small Group SHOP Exchange


Group Major Medical

Single Carrier


ABC Health Plan 1

ABC Health Plan 2

ABC Health Plan 3

ABC Health Plan 4

ABC Health Plan 5

ABC Health Plan 6

ABC Health Plan 7

ABC Health Plan 8


Group Major Medical

Multiple Carriers


Multi Carrier Group,employer chooses carrier

ABC Health Plan 1

ABC Health Plan 2

XYZ Health Plan 1

XYZ Health Plan 2

XYZ Health Plan 3

ACME Health Plan 1

ACME Health Plan 2

Vandalay Health Plan 8


Group Major Medical

Multiple Carriers


Multi Carrier Group,employer chooses carrier

ABC Health Plan 1

ABC Health Plan 2

XYZ Health Plan 1

XYZ Health Plan 2

XYZ Health Plan 3

ACME Health Plan 1

ACME Health Plan 2


Multi Carrier Group,consumer chooses carrier


Private Exchange

Public Exchange






Single Carrier Individual

Multi Carrier Individual


Individual State/Federal Exchange

(FFE in SC)


Individual Major Medical

Single Carrier

Single Carrier, based on zip code

ABC Health Plan 1

ABC Health Plan 2

ABC Health Plan 3

ABC Health Plan 4

ABC Health Plan 5

ABC Health Plan 6

ABC Health Plan 7

ABC Health Plan 8



Multiple Carriers


Multi Carrier,Based on zip code

ABC Health Plan 1

ABC Health Plan 2

XYZ Health Plan 1

XYZ Health Plan 2

XYZ Health Plan 3

ACME Health Plan 1

ACME Health Plan 2




Pending state-level guidance regarding Web

Based Entities (WBE)


Multi Carrier,Based on zip code

Qualified Health Plans (QHP)for that state


Private Exchange

Public Exchange








Web

Bas

ed E

ntitie

s (W

BE)



(FFE in SC)


Exchange Solutions

Description

Drivers

Keys toSuccess

Limited and targeted plan designs

Expanding Market

Simplification, Great servicing

Comprehensive suite of group plans

from one carrieror a few carriers

Health Plans, Large Brokers

Health Plan Success

Regional individualHealth plansbased on the

consumer’s location

Reform, GI individual plans

WBE status

Large inventory, DC/PRA,

Employers leaving group

Limited products(health + dental)

Reform, Subsidies

Default foruninformed

GovernmentRetiree

Exchanges

Group PlanPrivate

Exchange

Individual PlanPrivate

Exchange


THE MULTI BILLION DOLLAREXCHANGE OPPORTUNITY



Private Exchange

Public Exchange








Web

Bas

ed E

ntitie

s (W

BE)



(FFE in SC)




Source: http://healthaffairs.org/blog/2012/06/08/little-noted-provision-on-agents-and-brokers-could-mean-big-changes-for-exchanges/


http://healthaffairs.org/blog/2012/06/08/little-noted-provision-on-agents-and-brokers-could-mean-big-changes-for-exchanges/

Government Subsidies through Private Exchanges

Cindy Gillespie, a former advisor to Mitt Romney:

"the bottom line of this new model is that consumers never have to go near the state or federally-facilitated

exchange website to buy a product and access the refundable tax credit. All of the information transfers

between the private broker site and the ACA exchange and the insurance carriers are invisible to the

consumer."Copyright 2013, Health Partners America. All Rights Reserved. No duplication, in whole or in part, permitted without expressed written consent.

HPA’s Private Exchange Broker Blueprint

An Exchange is not just a website – it is the whole fulfillment process

2 ways to facilitate government subsidies

1. Qualify as a WBE

2. Have subsidy calculator on exchange site, when prospect enters information call center expert makes call and walks them through the enrollment process on the appropriate government exchange (state or federal)


TypeBroker Sells?

Cafeteria Plan ACA

Self funded Yes OOP accounts Fewer design requirements. If meets <9.5% req. no penalty

Traditional group Yes OOP accounts Design requirements. If meets <9.5% req. no penalty

DC group Yes OOP accounts, HRA,PRA Design requirements. If meets <9.5% req. no penalty

DC individual (MM, LBM, STM, Subsidized plans) Yes OOP accounts, HRA,PRA ER would plan to pay penalty where applicable

Individual (MM, LBM, STM, Subsidized plans) Yes No ER would plan to pay penalty where applicable

Subsidized individual Yes OOP accounts ER would plan to pay penalty where applicable

Medicaid (SC not expanding) No OOP accounts ER would plan to pay penalty where applicable

Medicare/Med Supp Yes OOP accounts ER would plan to pay penalty where applicable

All Products Will Be Available Through An Exchange In 2014 – And YOU Can Sell Them


Private Exchange Meets Employers Needs

Attract and retain good employees

Offer flexible and affordable benefit plans that all of your employees will qualify for

Maximize on tax savings without administrative headaches


Private Exchange Meets Employees Needs

Make the most of their money

Easy and informative shopping experience

Live support by professional, licensed consultants


How a Private Exchange works


THE DOUBLE THREAT:

PRIVATEEXCHANGES

ANDDEFINED

CONTRIBUTIONPLANS


Defined Contribution Health Plans

Defined Contribution =» Tax Savings for Employers» Tax savings for Employees

Defined contribution plans» Group and Individual plan designs» Relationship to exchanges



How to use a private exchange

HOW TO OFFER BENEFITS IN 2014


Employer InvolvementLOW HIGH

Employer Plan ->

Government subsidies

Exchange Involvement

Reimbursement/Spending Accounts

Employer Sponsored Plan

Options

Offer nothing

ACA Implications

Private Exchange with Individual

Products

Private Exchange with Individual Products and Cafeteria Plan

Private Exchange with Individual Products and

Group Products


Products,Group Products, and

Cafeteria Plan

Available to EEs making less than 400% FPL



Available to EEs making less than 400% FPL – if group

health doesn’t meet requirements

Not offered Not offeredCafeteria plan

ER contributions an option

Employer sponsored products: health, dental,

vision, life, DI, accident, CI

Cafeteria planEmployer sponsored products: health, dental, vision, life, DI,

accident, CI

< 50 FTE -No penalty > 50 FTE Penalty of $2k per full time EE

minus first 30

Government exchangeHPA exchange branded

for ER, Agency or Organization

HPA exchange branded for ER, Agency or Organization.Specific instructions, forms,

links for TPA offerings

HPA exchange branded for ER, Agency or Organization.

Links to Bswift for group offerings

HPA exchange branded for ER, Agency or Organization.Specific instructions, forms, links for TPA offerings. Links to Bswift for group offerings

None None

Ind. MM premium reimbursement – HRA/PRA

OOP med expenses – FSA/HSA/DCA


OOP med expenses – HRA/FSA/HSA/DCA

None

Available to EEs making less than 400% FPL – if group health

doesn’t meet requirements

< 50 FTE -No penalty > 50 FTE Penalty of $2k

per full time EE minus first 30

< 50 FTE -No penalty > 50 FTE Penalty of $2k per full time EE minus first 30

If group health is option no penalty applies if it meets

requirements< 50 FTE -No penalty

> 50 FTE Penalty of $2k per full time EE minus first 30





Employer Plan ->





Options

Offer nothing

ACA Implications


Products



Group Products



Cafeteria Plan











accident, CI


minus first 30

Government exchangePrivate exchange

branded for ER, Agency or Organization

HPA exchange branded for ER, Agency or Organization.Specific instructions, forms,





None None





None













Employer Plan ->





Options

Offer nothing

ACA Implications


Products



Group Products



Cafeteria Plan











accident, CI


minus first 30



Private exchange branded for ER, Agency or Organization.Specific instructions, forms,





None None





None













Employer Plan ->





Options

Offer nothing

ACA Implications


Products



Group Products



Cafeteria Plan











accident, CI


minus first 30





Private exchange branded for ER, Agency or

Organization.Links to Bswift for group

offerings


None None





None













Employer Plan ->





Options

Offer nothing

ACA Implications


Products



Group Products



Cafeteria Plan











accident, CI


minus first 30





Private exchange branded for ER, Agency or

Organization.Links to Bswift for group

offerings

Private exchange branded for ER, Agency or Organization.Specific instructions, forms, links for TPA offerings. Links to Bswift for group offerings

None None





None












Marketplace Analogy


Customer Service

Group Products

Individual Products

Account Based Products


INDIVIDUAL PRODUCTS

No additional fees for standard customizations. Revenue share on leads sent to call center based on subscription level. You keep 100% of commissions

for leads you handle yourself.

TemplateQuote EngineCall center fulfillmentCRM tracking of leads sent to call centerEducation and decision support tools

CustomIncorporate enrollment links/forms/brochures from your own carrier relationships

Back Office

InventoryTemplateHealth (MM, LBM, STM)Medicare SuppLife, Dental, Vision, Accident, Critical Illness, P& CGovernment Subsidies

CustomIncorporate enrollment links/forms/brochures from your own carrier relationships


ACCOUNT BASED PRODUCTS(including section 125 and 105 plans)

No additional fees for site integration. Set up and monthly fees to Employer based on TPA. Set up and

Admin fees may be shared.

TemplateEvolution 1 IntegrationEvolution 1 partner relationships

CustomIncorporate enrollment links/forms from your own TPA or Admin platform relationships

Back Office

Premium Reimbursement : PRA, HRAOOP Expenses: H.S.A., Health FSA, Limited Health FSA, Integrated

HRA, Dependent Care, Transit

Inventory


GROUP PRODUCTS

Leads for group products can be generate through Agency/Association template.

PEPM fee for group enrollment and admin platform applies- can be paid by broker Employer, or carrier

TemplateBswift reseller partnershipOur service experts support the system for you

CustomIncorporate your own group enrollment/admin relationship

Back Office

InventoryTemplate140+ Product templates-Medical, Dental, Vision, Life100+ Carrier (Electronic Data Integration) EDIs established*Can add any needed

CustomIncorporate your own group enrollment/admin relationship


CUSTOMER SERVICE

Service for products can be handled by the carrier, the producer or the

fulfillment center depending on how leads were routed.

Service for the website and online tools managed by our team of onshore

exchange specialists.


Customer Service

Group Products

Individual Products

Account Based Products


STORE MARKETING PRIVATE EXCHANGE ADVERTISING

• In-store• Coupon Packs• Flyers• Billboards• Radio/TV

• Flyers for Employers• General flyers• Forms• Press Release• Prospecting Letters• Call Scripts


SIMPLE PROCESS

1. Build your marketplace

2. Choose your inventory

3. Grand opening



Key Take-Aways

• Huge Shift to individual coverage driven by PPACA• Roll of HRA, PRA and OOP spending accounts will

increase• Group products still offer advantages• Exchanges will be crucial for communicating and

enrolling all of these types of benefits• Talk to us after the meeting to see how HPA’s Private

Exchange Broker Blueprint gives you a turnkey solution that pulls it all together


CopyrightNo part of this presentation may be reproduced or transmitted in any form without the written permission of the author. DisclaimerThis presentation was diligently researched and compiled with the intent to provide information for persons wishing to learn about the landscape of health insurance reform and the opportunities they present. Throughout the making of this consumer presentation , every effort has been made to ensure the highest amount of accuracy and effectiveness for the techniques suggested by the author. The presentation may contain contextual as well as typographical mistakes. No information provided in this presentation constitutes a warranty of any kind; nor shall readers of this presentation rely solely on any such information or advice. All content, products, and services are not to be considered as legal, medical, or professional advice and are to be used for personal use and information purposes only. This presentation makes no warranties or guarantees express or implied, as to the results provided by the strategies, techniques, and advice presented in this presentation. The publishers of this presentation expressly disclaim any liability arising from any strategies, techniques, and advice presented in this presentation. The purpose of this consumer presentation is to educate and guide. Neither the publisher nor the author warrant that the information contained within this consumer presentation is free of omissions or errors and is fully complete. Furthermore, neither the publisher nor the author shall have responsibility or liability to any entity or person as a result of any damage or loss alleged to be caused or caused indirectly or directly by this presentation. Safe Harbor NoticeCertain statements in this presentation relate to future results that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. This presentation contains statements involving risks and uncertainties, including statements relating market opportunity and future business prospects. Actual results may differ materially and presentation results should not be considered as an indication of future performance. Factors that could cause actual results to differ are not included.


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PRIVATE EXCHANGES: Are they right for you?. Small Group Premiums Increasing Copyright 2013, Health Partners America. All Rights Reserved. No duplication,