This is a presentation I prepared and presented to the HRMA New Orleans in August 2008

1. Healthcare Trends What You NEED to Know! Presented By: Tom Daly, II Managing Principal Hartwig Moss Benefits

3. Who are we? Hartwig Moss Benefits at a Glance. “ We are who we are, even if we sometimes forget.” Men in Black 2 - 2002

4. Hartwig Moss Benefits at a Glance 2001 Year founded. 58 Number of group clients. 6,269 Total employees of group clients 108 Average number of employees for each group client 79 % of clients with high deductible plans 83 % of clients with multiple option plans 73 % of clients with both multi-option and high deductible plans.

5. What is going on? Latest trends and benchmarking. Consumerism? “ If we don't change direction soon, we'll end up where we're going.” Professor Irwin Corey

7. What has been the national average % premium increase over the last 5 years? 9.62%

12. What % of companies offer health insurance? Is that increasing or decreasing? 99% large, 59% mid, 45% small Large - same , Mid – down 9% , Small – down 13%

14. What % of companies offering healthcare offer an HDHP?

15. What % of companies offering healthcare offer an FSA?

16. noun 1: the theory that an increasing consumption of goods is economically beneficial. 2: a movement advocating greater protection of the interests of consumers. for us 3: using choice of high deductible plans and tax advantaged accounts to engage employees in the healthcare purchasing process – with the goal to curb escalating health costs! con·sum·er·ism con·sum·er·ism

19. Sample HDHP Analysis Plan PPO HDHP Coverage In Network In Network Office Visit Copay (PC/SP): $25 Deductible Annual Deductible: $250 $1,700 Coinsurance: 80% 100% Maximum Out of Pocket: $1,500 $1,700 Prescription Drugs: $10 / $30 / $50/ 50% Deductible Fixed Costs Monthly Premium EE Monthly Monthly Premium EE Monthly Employee Only: 70 $386.50 $59.75 $322.42 $43.50 Employee + Spouse: 5 $773.00 $200.98 $644.84 $167.66 Employee + Child: 5 $715.03 $185.91 $596.48 $155.08 Full Family: 20 $1,036.92 $269.67 $891.08 $238.00 100 HRA Administration Annual $0.00 $12,000.00 HRA Annual Setup $0.00 $1,000.00 Monthly Total by Plan: $55,233.53 $47,680.92 Monthly Total for ABC Company by Plan: $43,723.26 $38,262.21 Variable Costs Employer Annual Funding Employer Annual Funding Employee Only: 70 $0.00 $500.00 Employee + Spouse: 5 $0.00 $1,000.00 Employee + Child: 5 $0.00 $1,000.00 Full Family: 20 $0.00 $1,000.00 100 Totals by Plan: $0.00 $65,000.00 Annual Costs Total Costs Total Costs @ 100% utilization $524,679.11 $524,146.47 @ 75% utilization $524,679.11 $507,896.47 @ 50% utilization $524,679.11 $491,646.47 Current Costs Proposed Costs Annual Total (Assuming 75% utilization): $524,679.11 $507,896.47 Percentage Change ABC Company: -3.30%

20. What Does Medical Care Cost?

21. What Does Medical Care Cost?

22. What Does Medical Care Cost?

23. What Does Medical Care Cost?

24. What Does Medical Care Cost?

26. An HDHP Example - Employee

27. An HDHP Example - Employee

28. An HDHP Example - Employee A Low to Mid-Range User

29. An HDHP Example - Employee A Low to Mid-Range User

30. An HDHP Example - Employee A Fairly High User

31. An HDHP Example - Employee A Fairly High User

33. What are My Choices? HSAs HRAs FSAs Who owns the account? Individual/Employee Employer Individual/Employee Employee contributes from his/her own paycheck, but unused portion reverts back to employer at end of year. Employers can also contribute. New rule allows expenses to be claims until March 15 of the following year, provided employer participates in change. Eligible Individual Individuals and families covered by a qualified HDHP and no other health plan that covers the same benefits. Individuals are not eligible if they can be claimed as a dependent on another person’s tax return. Current and former employees whose employer offers such a plan. Current and former employees whose employer offers such a plan.

34. * Self-employed individuals, including partners, and more than 2% shareholders in a subchapter S-corporation cannot contribute. ** For 2009 calendar year. What are My Choices? Who may fund the account? Employer or employee; can both be in the same year. Employee can contribute pre-tax dollars through Section 125 plan. Employer * Employer/Employee * Typically the employee contributes pre-tax dollars through a Section 125 plan. What plans may be offered with the Tax-Advantage Account? An HDHP as follows: Minimum Deductible $1,100/$1,150** Individual $2,200/$2,300** Family Out-of-Pocket Maximum $5,600/$5,800** Individual $11,200/$11,600** Family Any or no health plan. Any or no health plan. Is there a limit on the amount that can be contributed per year? Yes $2,900/$3,000** – Individual $5,800/$5,950** – Family Catch-up contributions: $900 ($1,000**)/year – age 55 by end of tax year. No, there is no IRS prescribed limit. No, there is no IRS prescribed limit. Can unused funds be rolled over from year to year? Yes Yes, subject to COBRA No, but in some cases employee may elect COBRA through end of plan year. HSAs HRAs FSAs

35. What are My Choices? What expenses are eligible for reimbursement? Section 213(d) medical expenses - COBRA premiums - QLTC premiums - Health premiums while receiving unemployment benefits - If Medicare eligible due to age, health insurance premiums except medical supplement policies Section 213(d) medical expenses Health insurance premiums for current employees, retirees, and qualified beneficiaries, and QLTC premiums Employer can define “eligible medical expenses” Section 213(d) medical expenses Expenses for insurance premiums are not reimbursable Employer can define “eligible medical expenses” Must claims submitted for reimbursement be substantiated? No – however, required in event of audit. Yes Yes May account reimburse non-medical expenses? Yes, but taxed as income and 10% penalty (no penalty if distributed after death, disability, or eligible for Medicare) No No Is interest earned on the tax-advantaged account? Yes, accrues tax-free. Yes, paid to the employer. No HSAs HRAs FSAs

39. Where are We Going from Here? Side by Side Comparison of McCain and Obama Healthcare Proposals. “ One word sums up probably the responsibility of any vice president, and that one word is 'to be prepared'. “ Dan Quayle

47. Any Questions?