Top 3 Disruptions in Employee Benefits

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1 Top 3 Disruptions in Employee Benefits October 2015

2 Shopping Enrollment Billing Compliance

3 8,000 employers 3.5M consumers 14 insurance carriers 400 brokers

4 Connect With Me Ryan

5 Good marketing makes the company look smart. Great marketing makes the customer feel smart. - Joe Chernov

6 A market problem that is a valid business opportunity is Urgent Pervasive And buyers need to be Willing to Pay

7 The US Healthcare Market is Huge But Changing Outside-In New Legislation Inside-Out Technology

8 Disruption #1 The Employer Mandate

9 The Affordable Care Act Signed into law in Upheld by the Supremes in 2012 & 2015 Increase the quality and affordability of health insurance Lower the uninsured rate by expanding public and private insurance coverage Reduce the costs of healthcare for individuals and the government

10 The Employer Mandate ALEs need to offer healthcare to FTEs or face substantial penalties FTEs are anyone that work an average of 30 hours of more a week

11 The Employer Mandate Affects A Lot of Employers 3,000 2,500 Companies 1, Employers with 50+ employees is 5% of employers but that s still 251,000 employers! 1 to 4 5 to 9 10 to to to to to to Employees

12 How to Measure Full-Time Status Monthly Measurement Identifies full-time employees based on the hours of service for each calendar month Look Back Measurement Identifies full-time employees using a system of measurement and stability periods to determine, in advance of a coverage period, which employees qualify as full time

13 The ACA provides the option to use a system of measurement and stability periods, in advance of a cover period, to determine which employees qualify as full time. MEASUREMENT ADMIN STABILITY The employee s status as full-time or part-time is based on the measurement period and won t change during the stability period, regardless of the employee s actual hours worked during the stability period.

14 Employers Need to Report to the IRS Insurers and Self-Insured Employers Self-Insured and Full-Insured Employers Section 6055 Section 6056 Form 1095-C Form 1094-C Employee level Organizational level Due to Employees January 31 Electronically due to IRS March 31

15 Meet The Two New IRS Forms Form 1095-C: Employer-Provided Health Insurance Offer and Coverage Form 1094-C: Employer-Provided Health Insurance Offer and Coverage

16 Disruption #1 Urgency The Employer Mandate Pervasive Willingness to Pay

17 Disruption #2 The Cadillac Tax

18 What is the Cadillac Tax? The Cadillac Tax is a 40 percent excise tax on costly health insurance plans that employers provide to their workers.

19 Why Was The Cadillac Tax Created? Reduce tax preferred treatment of employer provided health care Reduce excess healthcare spending by employees and employers Help finance the expansion of health coverage under the ACA

20 The Future is Foggy And Political Republicans Democrats vs If repealed, it would mean a $91 billion budget hole over 10 years

21 The Cadillac Tax Encourages Lower Costs Cadillac Tax Cost Reduction CDHP (Consumer Driven Health Plans) 23% of all employees are enrolled in CDHPs (~Mercer) HDHP (High Deductible Health Plans) 81% of large employers will have added an HDHP plan as an option (~NBGH) Private Exchanges (High Deductible Health Plans) 40 million enrollees by 2018 (-Accenture)

22 A Catalyst Toward Private Exchanges? Private exchanges are marketplaces to which employers can direct their employees to purchase a benefits from a fixed menu of health insurance, wellness and other healthcare products.

23 Private Exchanges Offer Many Benefits Positively impact total cost of care Lower spending Simplify employer administration Offer more choice for employees Improve cost-consciousness among employees

24 Growth in Private Exchanges Overview Enrollment (millions) Estimated Actual Projected (Source: Accenture)

25 Disruption #2 Urgency The Cadillac Tax Pervasive Willingness to Pay

26 Disruption #3 Technology

27 The Employer Benefits Market is Growing $7B $21B

28 Enterprise SaaS is Growing by Leaps and Bounds Enterprise Software Market Enterprise SaaS Market Size $106B $620B $ Billions $43 $56 $72 $87 $ SaaS Total

29 Consumers Want Mobile Self Service 90% of Americans own a cell phone 64% of those own a smartphone 67% of cell owners find themselves checking their phone for messages, alerts, or calls even when they don t notice their phone ringing or vibrating. 29% of cell owners describe their cell phone as something they can t imagine living without. 44% of cell owners have slept with their phone next to their bed because they wanted to make sure they didn t miss any calls, text messages, or other updates during the night. 7% of U.S. adults say they are smartphone-dependent

30 Markets are coming under widespread disruption

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35 No industry is immune, including healthcare

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40 Benefits is a Popular Space ERP Systems Payroll Systems Benefits Talent Management

41 Zenefits is a Disruptor Carriers Brokers Employers

42 Disruption #3 Urgency Technology Pervasive Willingness to Pay

43 The Future is Bright for Employee Benefits Employer Mandate Cadillac Tax Technology Administrative Work Lower Costs Process Automation

44 One Source. Many Benefits.