The information contained in this training is confidential and intended for the training and education of Colonial Life & Accident Insurance Company and

The information contained in this training is confidential and intended for the training and education of Colonial Life & Accident Insurance Company and The Paul Revere Life Insurance Company employees and sales representatives (insurance producers in WA) only. Any other use of this information is not authorized. Do not give or show it to prospective insureds, employers of prospective insureds, other insurance carrier representatives, worksite marketing competitors, or anyone else not employed by or contracted with Colonial Life & Accident Insurance Company, The Paul Revere Life Insurance Company or other Unum Group business units.

Lesson 2: Positioning Premium Only Plans to the EmployerLesson 3: Positioning Premium Only Plans to the Employee

Lesson 1: Introduction to FBP with a focus on Premium Only Plans

Basic Flexible Benefits Plans (FBP)The Basic Flexible Benefits Plans training modules consists of three lessons. Each lesson can be found on Propr.

Version 05/2013

Positioning Premium Only Plans to the Employer

By the end of this lesson you will be able to:• Communicate the concept of pre-taxing• Understand the trade-offs of Section 125• Determine how we can help an employer manage costs

through tax savings• Determine how to set up a new Premium Only Plan or

amend an existing Premium Only Plan • Demonstrate how to apply what you learned during your

conversation with the employer

Lesson Objectives


• We specialize in providing voluntary employee benefits, benefits communication and education options, including enrollment in Premium Only Plans.

• We provide streamlined communication and enrollment procedures.

• We can provide Premium Only Plans at no charge to qualified accounts.

• We provide all Premium Only Plan enrollment materials.

Our Market Advantage

Please see the “Know your Competition” training for more information.


Flexible Benefits Plan Overview


• Enhances their current benefits program.• More affordable benefits for their

employees.• Reduces their payroll taxes. Tax savings!

Employer Benefits

• Potential cost considerations• Implementing payroll deductions• Eligibility

Employer Trade-offs


Communicating the Concept of Pre-taxing Payroll Taxes – What taxes are taken out for the employer and employee

Employer Employee

FICA 7.65% 7.65%

Federal Income Tax Varies by Employee

State Income Tax

Varies by State and Employee

FUTA Varies by Employer

SUTA Varies by State


Communicating the Concept of Pre-taxingBenefiting the Employer

Employee’s Insurance Cost (deducted from payroll), pretaxMonths

Employee’s Payroll Deduction per Year Employer FICA Taxes

Estimated Annual Employer Savings per Employee

$500x12

$6,000X 7.65%

$459

Company Size Estimated Tax Savings

5 Employees $2,295

10 Employees $4,590

15 Employees $6,885

20 Employees $9,180

35 Employees $16,065

50 Employees $22,950

For illustrative purposes only — actual costs and savings may vary.

Not a One Time Savings!


Communicating the Concept of Pre-taxingBenefiting the Employer

Without POP With POP

Annual payroll $500,000 $500,000

Pretax Benefits $0 $150,000

Taxable Payroll $500,000 $350,000

7.65% FICA $38,250 $26,775

Savings $0 $11,475

25 Employees$500 for Benefits

$500 x 25 = $150,000

Savings to the employer!

This is a sample table for example purposes only using 2011 South Carolina Tax Tables. Taxes may vary by state.

Without a POP With a POPSalary (Gross Pay based

on 24 pay periods) $1,000 $1,000

Taxes -$176.71 -

Insurance - -$180

$823.29 $820

Taxes - -$132.34

Insurance -$180 -

Spendable Income $643.29 $687.66


Communicating the Concept of Pre-taxingBenefiting the Employee

+$44.37

This is a sample table for example purposes only using 2011 South Carolina Tax Tables. Taxes may vary by state.


Who is Eligible?

Sole Proprietorship•Owners•Spouses & Legal Dependents (not employees)•Spouses & Legal Dependents (if employees)•All Employees

Partnership•All Partners•Spouses & Legal Dependents (not employees)•Spouses & Legal Dependents (if employees)•All Employees

Self-employed and 1099

•Self-employed/1099 Employee


Who is Eligible?

Subchapter-S Corporations

• 2% or More for Stockholders, Spouse, Legal Dependents, and Owners

• All Employees

Corporation

• Shareholders (if employees)

• All Employees• Spouses &

Legal Dependents (if employees)

LLC

• Members/ Owners

• Employees


• Reviewing the plan documents.• Conducting initial and annual enrollments.• Ensuring that benefits offered under the plan qualify.• Determining whether election changes are permissible.• Performing nondiscrimination testing required by the IRC.• Filing an annual Form 5500 return for each qualified benefit

under the POP, as needed.• Retaining documentation relating to plan operations.

Employer Responsibilities for POPs

An employer should always consult their attorney or tax advisor for specific questions.


• Filling out and submitting the Flex Supplemental Form.• Filling out and submitting the AmeriFlex Online Application.

AmeriFlex ePOP link• Notifying employees of upcoming enrollment.• Delivering and reviewing the plan documents with the employer. • Reviewing the employer’s responsibilities. • Preparing all materials needed for the enrollment.

Sales Rep Responsibilities for POPsComing Up Next


The employer is provided with:• a Plan Document• an Adoption Resolution Agreement• a Summary Plan Description• Non-discrimination testing• a POP enrollment form

We will assist the employer with:• Informing all eligible employees.• Furnishing a copy of the Summary Plan Description to all eligible

employees.

We will do this all at NO CHARGE!*$1,800 in annual premium required.

POP Support Through AmeriFlex

*For qualified accounts.


First, do they already pre tax their benefits and have a POP in place?

If No, complete these steps:

Setting Up a POP with AmeriFlex

• Flex Plan Supplemental Form (See user guide on Propr for information on each point in the form).

• Submit to Account Services with the other New Account Paperwork.

Step 1

• Order the Plan Document from AmeriFlex.*• Once you complete the online application, plan documents

and further instructions will be sent to the designated email address.

Step 2

* Webinar available for step-by-step instructions

• Dr. Emmett Brown opened a pediatric practice three years ago and now has 14 employees.

• He offers health insurance to his employees on a post tax basis.

• He is interested in learning more about what Premium Only Plans entail.

How would you explain the pros and cons of Premium Only Plans to Dr. Brown?

iNeedto Protect My Business

ScenarioScen

ario

Question


Pros and

Cons

Position Premium Only Plans to Dr. Brown…


• Show Dr. Brown the example on the POP Employer Topic Sheet.• Explain to Dr. Brown he and his family (unless employees) cannot pretax

under IRS code because he is the sole proprietor of the practice.• Ensure Dr. Brown understands his responsibilities to administer a POP

plan. • Ask him if he has an attorney or tax consultant to help him with his POP

plan administration.• Explain to Dr. Brown our relationship with AmeriFlex, and that we will

pay for the administration of the POP requirements only if we receive a minimum of $1,800 in annual premium.

• Walk through the follow services AmeriFlex offers employers: Plan Document Adoption Resolution Agreement Summary Plan Description POP Enrollment Forms for products that are not ours Non-discrimination Testing

SolutionPosition Premium Only Plans to Dr. Brown…


Is Dr. Brown ready to move forward with a Premium Only

Plan?

YES!Review and complete the Flex Plan

Supplemental Form and AmeriFlex’s ePOP data requirements with him.

• Dr. Jean Williams opened a pediatric practice three years ago and now has 14 employees.

• She offers health insurance to her employees on a pretax basis with a Premium Only Plan administrator other than AmeriFlex.

How much does Dr. Williams pay to her POP administrator?

iNeedto Protect My Business

ScenarioScen

ario

Question


Pros and

Cons

Position Premium Only Plans to Dr. Williams…


• Explain to Dr. Williams that because of our relationship with Ameriflex, we will pay for the administration of the POP requirements if we receive a minimum of $1,800 in annual premium.

• Walk through the follow services AmeriFlex offers employers: Plan Document Adoption Resolution Agreement Summary Plan Description POP Enrollment Forms for products that are not ours Non-discrimination Testing

SolutionPosition Premium Only Plans to Dr. Williams…


Is Dr. Williams ready to move forward with a Premium Only

Plan?

YES!Review and complete the Flex Plan

Supplemental Form and AmeriFlex’s ePOP data requirements with her.


Premium Only Plan Tools• Get Working Conditions > Flexible Benefits Plans > Support

Materials – FPSF User Guide– AmeriFlex Implementation Guide– ePOP Ordering Webinar– Employer Topic Sheet– AmeriFlex Data Requirements Form


Effective immediately, employers that offer FSAs that don't include a grace period will have the option of allowing employees to roll over up to $500 of unused funds at the end of this plan year.

Additionally, this optional adoption:• Does not reduce the $2,500 limit on

annual salary reduction;• Must be uniformly applied (for example,

if capped at less than $500);• Is in lieu of a grace period.


If this lesson has been helpful to you, please refer to Propr to take the other lessons in this Basic Flexible Benefits Training Tutorial.

We welcome your comments and ideas, and would like to know what you think. Email us at [email protected].

Congratulations!

You’ve successfully completed Lesson 2: Positioning POP to the Employer

https://producer.coloniallife.com/ColonialCollege/CC-JIT-Sales-Training.asp

mailto:[email protected]

Documents

The information contained in this training is confidential and intended for the training and education of Colonial Life & Accident Insurance Company and