The AGC Alternative: A Strategic Solution for Employer-Sponsored

Health Care

What we’ll cover • Current Situation • Current Choices • The Private Exchange Solution • How Defined Contribution Works • The AGC Alternative • Real Case Study • The Future of Private Exchanges • Questions

The AGC Alternative

Current Situation Health care costs have outpaced GDP growth since the

1970s and continue to rise

Cost of benefits as a percentage of compensation have increased from 5% in 1950 to 30-40% today

Employers are offering more insurance than many employees need

Employers are overloaded with compliance

Tight job market – benefits have to be competitive

Current Situation Limited plan choices that may or may not fit each

employee’s needs, including ancillary coverages

Employees have little to no understanding or appreciation of the employer costs to provide benefits

Few employers incentivize employees to take more ownership of their health through preventative care

Why are these the only choices year after year?

The Solution - Private Exchanges Private Exchange

A dynamic, interactive online store Robust technology includes strong decision support

tools Personal recommendations based on individual needs Greater offering of ancillary products

Defined Contribution Model Employer makes available a fund to employees Employees choose their own plans based on

individual needs Increased cost predictability Greater control over costs

What a Private Insurance Exchange IS NOT

The Solution – Defined Contribution

Sample Defined Contribution DesignEmployer currently pays 70% of the plan cost

Medical Plan 70% 30%Enrollment Tier Enrollment Rate Employer EmployeeEE 61 435.65$ 304.96$ 130.70$ EE + 1 15 871.27$ 609.89$ 261.38$ Family 29 1,394.04$ 975.83$ 418.21$

Monthly Totals 105 80,070.86$ 56,049.60$ 24,021.26$

672,595.22$

6,405.67$

6,085.39$

Employer Annual Cost Savings 33,629.76$

Current Annual Employer Cost

Average Annual Contribution Amount per Employee at Current Employer Cost

Defined Annual Contribution Amount per Employee at 5% Savings

Defined Contribution and the Impact of the Buy-Down Principle

Defined Benefit Employer offers 2 basic health plans and one dental plan Employer covers 70% of plan Employer costs can vary depending on how many employees enroll in each plan Employee has no idea of employer’s actual costs Employee always selects the top PPO plan because it’s the best available

Defined Contribution Employer now offers 5 health plans, dental and vision Employer now provides a flat amount per employee regardless of the plan they choose Employee knows exactly what each plan costs and now has plan options that scale better to their lifestyle When given choice and control to spend “their” money, employee chooses a plan below the top PPO

The AGC Alternative • Exclusively available for AGC Members

• Currently available in these states for groups with less than 100 employees:

• Available in all states for groups with more than 100 employees

• Must have at least 10 eligible employees

• AZ • CT • FL • GA

• IL • MD • ME • MN

• NC • NJ • NY • OH

• PA • SC • TN • TX

• VA • WI

The AGC Alternative The Carriers/Partners Liazon - Technology Platform

Willis – Broker of record

Aetna – Medical

MetLife – Dental, Life and Disability

Group Vision Services (Eyemed) – Vision

Viverie – Wellness

Innotech – Call Center

Benefits of The AGC Alternative For You Increased cost predictability Robust technology platform with

administrative support and carrier connectivity – No cost to member firms

A more attractive plan offering for

your employees Consultation on ACA compliance

and general compliance issues

Call center to take work off of your desk – No cost to member firms

For Your Employees A personalized employee

experience with more plan options Robust decision support tools An insurance program designed

for each employee Wellness education that’s tailored

to individual needs

Online and “live” customer service

Higher satisfaction with their benefits

AGC Program Case Study AGC Group - 65 employees

Pre-Exchange Situation Facing medical plan increase of 18.2%, and

dental plan increase of 33.9% Offering 3 medical plans and 1 dental plan A number of employees buying richest medical

plan offered Employees did not fully understand the value of

the benefits being provided

Exchange Solution Implemented Liazon Private

Exchange Increase number of plans offered

for all coverages Added a vision plan and additional

dental options Developed a defined contribution

strategy based on tier (e.g. Single, Family, etc.)

Provided a waiver benefit for employees that declined coverage

Created an easy to understand employee education campaign

AGC Program Case Study Results Projected 4% decrease from 2014

plan costs

Premiums 10% under 2015 initial budget

Avg. employee payroll deduction for medical/dental decreased over 48% - an annual savings of ~$900 for each employee

Employees reported that the enrollment and decision support platform was easy to use

Healthcare Benefit Insights

Employees want a greater variety of benefits and are

prepared to pull their weight

Education is essential

(MetLife’s 12th Annual U.S. Employee Benefit Trends Study)

Healthcare Benefit Insights

Interest in private exchanges remains strong

– 47% have implemented or are considering implementing a

private exchange by 2018

In considering a private exchange, employers say the

consumer experience matters

– 96% say experience and track record are key consideration

when choosing exchange vendor

– 85% of 2014 respondents said it is very important that the

exchange offers sound support in decision making (Private Exchange Evaluation Collaborative 2014 Employer Study)

Healthcare Benefit Insights

Source Private Exchange: Accenture analysis, based on data from; U.S. Census, Bureau of Labor Statistics, Kaiser Employer Health Benefits 2012 Annual Survey.

Questions?

www.agc.org/exchange 1-800-210-5290