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The Benefits Life Cycle

The Benefits Life Cycle. Presented by: Paul F. Love, CLU, ChFC, CLTC Foster, Soltoff & Love, Ltd. 6550 Rock Spring Drive Suite 190 Bethesda, Md. 20817 (301) 564-2966 x1107 pflove@fslbene.com. Phase I (0- 2 years). 2-9 Employees. Basic Medical Coverage. HMO. Point of Service.

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The Benefits Life Cycle

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  1. The Benefits Life Cycle Presented by: Paul F. Love, CLU, ChFC, CLTC Foster, Soltoff & Love, Ltd. 6550 Rock Spring Drive Suite 190 Bethesda, Md. 20817 (301) 564-2966 x1107 pflove@fslbene.com Foster Soltoff & Love, Ltd.

  2. Phase I (0- 2 years) 2-9 Employees Basic Medical Coverage • HMO • Point of Service • Preferred Provider Organization • COBRA Foster Soltoff & Love, Ltd.

  3. Phase II (2-5 years) 10 – 25 Employees Core Benefits: Comprehensive Medical • HMO • Point of Service • Preferred Provider Organization • Follow the Platinum Rule Dental Benefits Vision Benefits Foster Soltoff & Love, Ltd.

  4. Phase II Core Benefits (Cont’d): • Group Life Insurance • Group Short Term Disability • Group Long Term Disability Foster Soltoff & Love, Ltd.

  5. Phase II Core Benefits (Cont’d): Qualified Retirement Plans • SINGLE K • SEP/IRA • SIMPLE IRA • Money Purchase Plans • 401(k) / Profit Sharing Plan • Non Matching • Safe Harbor Section 125 Plan • Premium Only Foster Soltoff & Love, Ltd.

  6. Phase III (5+ Years) 26 - 99 Employees Section 125 • Medical Expense Reimbursement Plans • Dependent Care Executive Benefit Plans Voluntary Payroll Deduction Plans • Supplemental Life • Short Term Disability/Critical Illness • Prepaid Legal • Pet Insurance Foster Soltoff & Love, Ltd.

  7. Phase III (5+ Years) 26 - 99 Employees Employee Assistance Programs • Confidential 24 hour access to personal problem solving resources, consultation and referrals • Issues include: • Childcare • Eldercare • Crisis Management • Educational Issues • Consumer Information • Financial Issues • Worksite Issues • Estimated 3-4% Payroll savings through reduced absenteeism Foster Soltoff & Love, Ltd.

  8. Phase IV (5 + Years) > 100 Employees • Partial Self-funding of Health Benefits • Defined Contribution Medical Plans • Section 529 Educational Savings Plans • Supplemental Disability Insurance • Pension Disability Benefit • Long Term Care Insurance Foster Soltoff & Love, Ltd.

  9. Methods of Restructuring Benefit Plans for Affordability Foster Soltoff & Love, Ltd.

  10. THE PROBLEM Foster Soltoff & Love, Ltd. 9.7% Average Annual Premium Increases Between 2002 and 2012 in Fully Insured Plans Avg. Premiums- $5,615 Single $15,745 Family Less than 50% of firms with 3-9 employees offer coverage Since 2002, Health Costs have Increased 97% vs. Inflation at 28% and Wage Growth at 33% Source: 2012 Summary of Findings -Kaiser Family Foundation

  11. Some Solutions • Higher Co-payments, Deductibles, Out-of-Pocket Maximums • Prescription Drug Benefits • Alternative Funding Methods • Partial Self Insurance 1. Medical 2. Prescription Drug Benefit 3. Short Term Disability Foster Soltoff & Love, Ltd.

  12. Some Solutions Health Savings Accounts • Created by the 2003 Prescription Drug Act PL No. 108-173 as amended by the Tax Relief and Health Care Act of 2006 • Creates savings accounts with maximums coupled with high deductible major medical plans • Employee/employer contribution (2013 $3,250 single, $6,450 family) • Lesser of 100% of annual deductible or Individual-min. $1,250-max $3,250 Family- min. $2,500-max. $6,450 • Catch-up contribution ages 55 or over (2013 $1,000) • Amounts grow income tax free and are withdrawn income tax free for qualifying expenses. • Can be rolled over year to year • Accounts are portable on termination or retirement Foster Soltoff & Love, Ltd.

  13. Some Solutions Health Savings Accounts Issues: • Providers do not understand how the plan works • Set up and maintenance fees • Must be coordinated with spouse’s health plan Foster Soltoff & Love, Ltd.

  14. Some Solutions • Defined Contribution Medical Plans • Health Reimbursement Accounts (HRA) • Review Money Purchase Plans versus 401(k)/Profit Sharing Plans Foster Soltoff & Love, Ltd.

  15. FINALLY….. Foster Soltoff & Love, Ltd. Review plans annually Benchmark against competition When costs increase, make incremental changes in benefits and, employee contributions Choose a consultant who can work with you as you grow.

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