The document introduces the Alternative HealthCare Program as a small business solution to health care challenges. It notes that only 43% of small businesses currently offer group coverage. The program involves establishing a Health Reimbursement Arrangement (HRA) funded by the employer to allow employees to purchase individual policies. This provides employees more freedom of choice and lower costs compared to traditional group insurance. The employer also saves on average 11% on taxes through establishing a Section 125 Premium Only Plan.

1. Introducing…
The small business solution
to health care.
The Alternative
HealthCare® Program

2. No one is taking care of
our needs!
We desperately need a
solution!
ONLY 43% of SMALL
BUSINESSES WITH LESS
THAN 50 EMPLOYEES
ARE OFFERING GROUP
COVERAGE TODAY!
©2008 AAP, Inc.

3. Why Doesn’t Our Group
Insurance Plan Work?
If You Have One Sick Employee, EVERYONE
is Paying the Higher Price!
One or Two Elderly Employees Cause ALL of
the Employees to Pay a Higher Price!
Each Year Your Company Must Decide What
Portion of the Increase it Will Pay!
There Must Be a Better Way!
©2008 AAP, Inc.

4. Group Health Insurance Challenges
Group Health Insurance Market
has Declined by 13% 2000-2006
This is a Major Reason Why Group
Heath Insurance Is Rising with Double
Digit Increases!
©2008 AAP, Inc.

5. American Group Insurance Agen
Inc 2008
Group Health Insurance
The Insurance Company Mandates Minimum
(usually 50% of employee cost) Employer Must Pay
Employer Must Maintain 75% of Eligible Employees or
50% of Employees on Plan or Risk Termination
Company Owns Policy and Mandates Coverage
1. Employer may terminate policy or change the terms without
employee consent
2. Insurance carrier may terminate policy due to lack of
participation
Group Insurance is Very High Cost Due to the Guaranteed
Issue of the Insurance Regardless of Health

6. The Myth of Group Insurance
That Insurance Companies
Don’t Want You To Know
Group insurance always costs less
Carrier and/or Employer can change
YOUR plan without your approval
The Carrier can terminate your
insurance
You have greater protection with
group insurance versus individual
©2008 AAP, Inc.

7. What Is Individual Insurance?
An Individual Major Medical Insurance Plan is a personal
policy which is owned by you and covers you and your
family. About 85% of individuals will qualify.
The Policy is Guaranteed to be renewed to age 65 when you
are eligible for Medicare.
The Renewal rates are generally from 5% to 15% and the
individual may shop any carrier to find a better lower cost
policy.
©2008 AAP, Inc.

8. What About the Sick Employees?
 Beginning in 2006, HIPAA required all
states to offer state-guaranteed personal
health policies. HIPAA eligible individuals
who go into these plans are not subject to
pre-existing conditions.
 Each state MUST provide coverage.
 There generally is no waiting period and
coverage begins once the application is
received by the State.
©2008 AAP, Inc.

9. The Advantages of Individual
Insurance Plans
 Costs are reduced by 30 – 50%
 Individual OWNS the policy
 The employer and/or insurance
carrier cannot change the terms
of the policy
©2008 AAP, Inc.

10. What The Employee GAINS…
 Lower costs
 Freedom of choice
 Complete portability
 The ability to acquire the
coverage that fits your
needs and your budget with
any insurance company.
©2008 AAP, Inc.

11. What is A Health
Reimbursement Arrangement?
A Health Reimbursement Arrangement is a Tax
Favored Health Plan Offered by the Employer
IRS Publication 969
©2008 AAP, Inc.

12. What Medical Expenses Are
Eligible for Reimbursement?
Qualified medical expenses from your HRA include the
following:
· Amounts paid for health insurance premiums.
· Amounts paid for long-term care coverage.
· Amounts that are not covered under another health accident
and health plans. IRS Publication 969
©2008 AAP, Inc.

13. Power of the Health
Reimbursement Arrangement
 The HRA allows the employer to deduct
100% of the contributions to the HRA.
 Non Taxable to the Employee
 A WIN WIN for the employer and
employee!
©2008 AAP, Inc.

14. The Process:
Start Saving
Health
Reimbursement
Arrangement
Established
HRA Benefit
Decide on
& dollar
Payroll amount
Processing available for
employees
Employees Pre-Tax 125
Purchase Plan
Individual Established
Policies
©2008 AAP, Inc.

15. Employer Savings
 Employer Dictates what Dollar
Amount is put in HRA
 Employees’ Rights are based on HRA
Plan Design
 Employer Savings Through POP 125:
Avg. 11%
©2008 AAP, Inc.

16. HRA Schedule Of Benefits
Recommended Schedule Options
Option 1: All Employees The Same Amount of Reimbursement
Example: All Eligible Employees Up to $200 Per Month
Option 2: Scheduled Based on Class
Example: Emp --- Up to $150 per month
ES --- Up to $ 200 per month
EC --- Up to $250 per month
EF --- Up to $400 per month
HIPAA Compliant Election: Additional $200 Per Month
©2008 AAP,Inc.

17. The Solution:
Alternative HealthCare Program®
 Tax deductibility of the employer’s
contributions.
 Ease of payment through payroll
deduction.
 Employees are provided with reduced
costs through the government’s tax
incentives.
 POP 125 Plan Saves Employer &
Employee Tax Dollars.
©2008 AAP, Inc.

18. The Alternative
HealthCare® Program
 The employer elects the Section 125
Premium Only Plan.
 This enables the employee to pay for the
balance of his health insurance with pre-
taxed dollars.
 Net savings to employee averages 25-30%
in taxes through the POP Plan.
©2008 AAP, Inc.

19. Employer Administrative Ease
 No issues with:
 COBRA
 FAMILY LEAVE
 TERMINATIONS
 ENROLLMENT INTO PLAN
 ANNUAL RENEWAL DECISIONS
 CAN BUDGET AND CONTROL THEIR
OWN COSTS OF THE HRA PLAN
©2008 AAP, Inc.

20. Ease of Administration
 AAP does the Heavy Lifting
 Premium Insurance Accounts
Established:
 Virtual Checkless Accounts
 Multiple Carriers – Non List Bill – Fully
State Compliant
 All Payroll Deductions & Distributions
©2008 AAP, Inc.

21. AAP Payroll & Administration
Electronic Preparation and Distribution
• Emp Doc
HRA • Payment
Schedule
• Electronically
receives/signed
HRA/SPD • Reimbursements
established
• Electronically
Sec 125 signs
• Deductions set up
©2008 AAP, Inc.

22. Why Does the Administration
Include Payroll?
Payroll is the portal to all employee changes,
benefit deductions and compliance. Therefore,
through the payroll processes, new employees
are properly notified of their benefit options and
complex programs such as Health
Reimbursement Accounts (HRA), Health
Savings Accounts (HSA), Sec 125 Cafeteria,
Eligibility Rules, and Termination Rules are
properly managed.
©2008 AAP, Inc.

23. How Are The Funds Managed
Payroll
HRA Process Emp Payroll
Deductions
AAP
Mo. HRA Prem.
Reimbursement Emp 125 Prem.
Deductions Deductions
Employee Insurance
PIA Virtual® Co Draws
Account Payments
©2008 AAP, Inc.

24. Premium Insurance Account
PIA Virtual®
Company HRA
Employer HRA Funds Funds $$$$
from Payroll Account
(General Asset Account)
Employee’s Payroll direct 125 Deduction $
deposited into personal
account less sec 125
premium deductions
PIA Virtual® Account-
All premiums will be deposited to
Insurance
Companies
this account in conjunction with
ACH Funds
payroll processing.
©2008 AAP, Inc.

25. The Alternative
HealthCare® Program
How New Employees Are Managed
Notified by E-mail to offer Major Medical policy & more
Your Agent is Notified and has Back Office Access to the amount of HRA
funds financing premium.
New Employee PIA Virtual® Account set up in 24 hrs, funded by Employer in 48 hrs.
NO WORRY OF FUNDING PREMIUM OR BEING OUT OF
COMPLIENCE !
Notified by E-mail to offer Major Medical policy & more
Employee is e-mailed reminding them that they can keep their policy and
provided with instructions on how to fund their PIA. The employer’s HRA
deductions are immediately stopped. NO WORRY OF OVER PAYING.
Terminated
Employee
©2008 AAP, Inc.

26. Alternative HealthCare®
COSTS
One Time Set up Fee: $250.00
Administration Option #1Best Choice
Payroll -------------------------$10.00 Per MO Per Employee
Benefit Admin on employee with insurance only---$15 Per
Emp./Mo.
Administration Option #2
Admin of Plans Only : $15 Per Emp ./Mo.
©2008 AAP, Inc.

27. NEXT STEPS
1. PROVIDE AGENT WITH CENSUS DATA FOR QUOTE
2. PROVIDE DATA TO ESTABLISH PIA ACCOUNTS FOR
PAYMENT OF INSURANCE PERMIUMS
3. DETERMINE HRA CONTRIBUTION SCHEDULE
4. COMPLETE HRA SUBSCRIPTION & ADMINISTRTION
AGREEMENT
5. SET UP CONFERENCE CALL WITH AAP ADMINISTRATIVE
TEAM
©2008 AAP, Inc.