A Guide to the Future of Health Insurance for Small Business.

•  HEALTH INSURANCE: PAST AND PRESENT

•  DEFINED CONTRIBUTION VS. GROUP HEALTH

•  ZANE BENEFITS DEFINED CONTRIBUTION OVERVIEW

•  PROBLEMS DCHB CAN SOLVE

•  FUTURE OF EMPLOYER INSURANCE

•  MCKINSEY STUDY

Less Than 50% of Small Businesses Offer Group Health. Why?

Cost

Other

Too Small

Turnover

That’s 3,000,000 Small Businesses without Group Health

6%

13%

20%

61%

PRE-WWII POST-WWII ¨  Limited Employer Involvement ¨  Catastrophic Health Insurance ¨  Local BC/BS ¨  Individual / Family Driven

¨  Wage & Price Controls (1941-1947)

¨  Employer-Sponsored Health Care Exempt from Income

Taxes

“CREATION OF “MODERN” HEALTH CARE OCCURRED AFTER WORLD WAR II

World War II

HUGE Cost Advantage to Employer System

TAX ADVANTAGES FOR GROUP VS. INDIVIDUAL COVERAGE

Group policies enjoyed enormous tax advantages over individual plans:

1.  Employers allowed to pay for group health insurance “off the books”

2.  Employees allowed to pay (via salary reduction) for group health insurance “off the books”

2002: HRAS 2009: PRAS Health Reimbursement

Arrangements for Employer Tax-Free Contributions

Premium Reimbursement Arrangements for Employee

Tax-Free Contributions

FEDERAL GOVERNMENT GIVES TAX PARITY TO INDIVIDUAL POLICIES

DEFINED CONTRIBUTION HEALTH BENEFITS

DEFINED CONTRIBUTION GROUP INSURANCE

No Minimum Contribution business determines its own contribution strategy

Requires Minimum Contribution employers must contribute 50%-75% of premium

No Minimum Participation business sets its own eligibility requirements

No Administrative Hassle spend less than 5 minutes per month

Requires Minimum Participation 50%-75% of employees must participate in the plan

Requires Additional Admin requires paperwork & annual renewals

THE EMPLOYER… THE EMPLOYEES… 1.  Determines Contributions 2.  Sets Eligibility 3.  Picks Start Date 4.  Reimburses Employees

1.  Purchase Individual Policies 2.  Get an Explanation of Benefits from

the Insurance Company (nothing paid out of pocket)

3.  Submit Claims & Get Reimbursed

BEFORE 2014 AFTER 2014 ¨  Medical Underwriting ¨  No Federal Subsidies for

Individual Policies ¨  Employer-Driven

¨  No Medical Underwriting

¨  Federal Subsidies for Individual Policies

¨  Individual/Family Driven

“HEALTHCARE REFORM FAVORS DEFINED CONTRIBUTION

2014 REFORM

HUGE Cost Advantage for Individual System

"U.S. health care reform sets in motion the largest change in the post World War II era” 60% of educated employers plan to pursue alternatives to offering health insurance including "defined contribution” Parallels shift to 401ks

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THE FUTURE OF HEALTH BENEFITS IS NOW.

DISCLAIMER The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.ZaneBenefits.com