How To Offer Custom Defined Contribution Solutions

The ZaneHRA Software provides a 100% paperless administration experience to employers and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, check out our Software.

Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plan completely online, electronically enroll participants and print welcome kits, and monitor expenses and reimbursements in real-time.

Employees obtain their own individual health policies from a designated health insurance broker (see below), submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check, payroll addition, or direct deposit. Zane Benefits does not sell health insurance.

Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-saving health benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the health insurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies, brokers, and accountants.

DISCLAIMERThe 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

For additional resources on Health Care Reform, visit

www.zanebenefits.com/blog

Agenda

1. What is Pure Defined Contribution?

2. How to Offer a Custom Defined Contribution Plan

3. 2014 Reform and the Future of U.S. Health Insurance

4. Defined Contribution and Health Insurance Exchanges

5. Summary

Zane Benefits is the national leader in HRAs and Defined Contribution Healthcare.

Who is Zane Benefits?

UnitedHealth is encouraging 100s of its independent agents to take an online course offered by Zane Benefits to learn how to market individual plans at companies

Even if Berneche carries out his plan to nearly double the size of his company, he still expects to save at least $360,000 this year with the new [Zane Benefits] program

Zane Benefits works with companies to help them give employees a tax-free allowance to purchase individual policies

Zane Benefits' Founder Paul Zane Pilzer writes that employer sponsored group health insurance will be “mostly eliminated” in the next 20 years.

Zane Benefits' Paul Zane Pilzer speaks on HRAs, Individual Health Policies, and Defined Contribution Health Benefits

Forbes.com on "Getting Better Health Insurance" featuring Zane Benefits' Founder Paul Zane Pilzer

● Founded in 2006● Clients in all 50 States● Distributed nationally by top Insurance Companies, Brokers and

Payroll Cos since 2009

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What is Pure Defined Contribution?

What is Pure Defined Contribution?

● HRA is "purest" form of Defined Contribution.

● HRA stands for “health reimbursement arrangement”.

● It's an “arrangement” for tax-free medical expense reimbursement.

● HRAs function like business expense accounts.

HRAs are NOT health insurance

Health Reimbursement Arrangement Overview - Simple

1. Determines contributions

2. Sets eligibility

3. Picks start date

The Employees....

4. Enrolls employees

9. Reimburses employees for "expenses"

The Employer...

6. Purchase individual policies

7. Submit "expenses" for reimbursement

5. Sends welcome kits

Like Auto Insurance

Third Party Claims Processor

8. Adjudicates employees "expenses"

Like Business Expense

Reimbursements

Sample HRA Ledger

HRA Compliance Requirements

1. HIPAA - employee medical privacy law2. ERISA - federal law3. IRS - Section 1054. PPACA - health reform

An HRA is an employer-sponsored, self-funded health plan governed by:

Need Compliant HRA Administration Software

How to Offer a Custom Defined Contribution Plan

Plan Design Feature #1 - Employee Eligibility Based on Job Classifications

Businesses can set HRA eligibility and allowance amounts based on bona-fide business differences such as:

● Job category● Geographic location● Part-time or full-time● Date of hire, etc.

Plan Design Feature #2 - Capping Annual Rollover of Unused Funds

Businesses have full control over what happens to employees' unused HRA funds at the end of the plan year.

Plan Design Feature #3 - Deductibles

Businesses can design their HRA to require that employees pay out-of-pocket for medical expenses (up to the deductible amount) before having access to their HRA allowance.

Plan Design Feature #4 - Coinsurance

Coinsurance can be applied to the whole HRA plan, or to specific categories of expenses.

Plan Design Feature #5 - Expense Specific Exclusions

Businesses can design their HRA to have specific exclusions or requirements based on the type of health care expense.

Plan Design Feature #6 - Expense Specific Annual Limits

Businesses can design their HRA to limit the amount reimbursed for certain categories of health care expenses

Plan Design Feature #7 - Expense Specific Coinsurance Overrides

Businesses can choose to override the coinsurance for a specific category of expense.

Plan Design Feature #8 - Expense Specific Deductible Overrides

Businesses can choose to override the deductible for certain categories of expensed

Plan Design Feature #9 - Expense Specific First Dollar Coverage

Businesses can design their HRA to provide first dollar coverage before an HRA deductible sets in

Plan Design Feature #10 - EOB-only Override Restrictions

A business can design their HRA to reimburse for medical expenses only covered under an employee's health insurance plan

Summary - How to Design a Custom Defined Contribution Solution

Businesses Determine How to Structure and Offer an HRA to Employees

With an HRA, the businesses:

● Determine employee eligibility● Set employee allowances● Enable cost-sharing rules● Decide on rollover cap● Apply expense restrictions● Launch the plan● Enroll employees

2014 Reform and the Future of U.S. Health Insurance

Individual Health Insurance Tax Subsidies

Income Actual Family Cost Total Premium Gov’t Premium Subsidy

$20,000 $0 (Medicaid) Medicaid Medicaid$40,000 $1,982 (5%) $12,130 $10,148

$80,000 $7,600 (9.5%) $12,130 $4,530

● Who is eligible for premium tax subsidies?○ Households with income between 100% and 400% of Federal Poverty

Line (FPL)

● Where are the premiums tax subsidies available?○ ONLY available on individual health insurance market○ ONLY available on exchanges

If businesses DO NOT offer qualified, affordable group health coverage their employees may qualify for federal subsidies

FAMILY OF 4 Examples:

Key Tax Issues and Potential Penalties for Employers

The Key Employer Tax Issues Include:

● Employer Mandate○ Business may be required to provide "qualified, affordable" coverage to

employees○ Based on Full Time Equivalent Employees

● Employer Tax Penalty for Not Offering "Qualified" Group Health○ Not applicable for employers with less than 50 FTEs○ $2,000 penalty per FTE (minus 30 FTE credit)****

● Employer Tax Penalty for Offering "Qualified" That is Not "Affordable"○ Not applicable for employers with less than 50 FTEs○ $3000 per employee receiving subsidy

● Businesses Subject to the Mandate will need to determine if:○ Cost of group health insurance > cost of HRA + penalties

● Federal Subsidies are ONLY AVAILABLE for Individual Health Insurance

Defined Contribution and Health Insurance Exchanges

HRAs and the Employer Mandate

Health Insurance Exchanges Effective January 1st, 2014

○ ACA requires every state to create health insurance exchanges for businesses, employees and individual.

○ If a state fails to set up the exchanges in time, the federal government will step in.

○ Small businesses can only access the small business healthcare tax credits through the public SHOP exchange

HRAs Do Not Qualify as "eligible employer-sponsored plan" ...

● An HRA will not exempt an applicable business from penalties○ Cost of group health insurance > cost of HRA + penalties

● Federal Subsidies are ONLY AVAILABLE for Individual Health Insurance

Tax-Free Reimbursement of Exchange Policies

HRAs may reimburse non-subsidized portion of individual premium

● Special Rule for Section 125 Plans: Exchanged-based policies not eligible

● Benefits of HRAs for Employees○ May be receiving federal subsidies for health insurance purchase○ HRA reimbursement could result in no out of pocket insurance costs

● Benefits of HRAs for Employers○ Recruiting and retention○ Tax-deductions○ No group health administration

HRAs and Health Reforms

The following ACA (federal health reform) pieces apply to HRAs in certain cases:

● Dependent Coverage for Adult Children up to Age 26● Coverage of Preventative Care Without Cost-Sharing● Annual and Lifetime Limit Rules● Over-the-Counter Medicines and Drugs Require Prescription● Form 720: Fees to Fund Research on Patient-Centered Outcomes● Summary of Benefits and Coverage (SBC)● 60-day Material Modifications● Form W-2 Reporting of Employer-Sponsored Health Coverage● Internal and External Claims and Appeals Processes for Health Claims

Summary

Webinar Summary - Q&A

1. An HRA is "purest" form of Defined Contribution Plan.

2. Plan design options allow businesses to fully customize the Defined Contribution Plan.

3. Health reform favors the individual (exchanged-based) health insurance market.

4. Under existing regulations, HRAs may reimburse non-subsidized portion of exchange policies

The ZaneHRA Software provides a 100% paperless administration experience to employers and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, check out our Software.

Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plan completely online, electronically enroll participants and print welcome kits, and monitor expenses and reimbursements in real-time.

Employees obtain their own individual health policies from a designated health insurance broker (see below), submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check, payroll addition, or direct deposit. Zane Benefits does not sell health insurance.

Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-saving health benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the health insurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies, brokers, and accountants.

DISCLAIMERThe 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

For additional resources on Health Care Reform, visit

www.zanebenefits.com/blog