Leveraging Relationships With Payroll Vendors To Solve ACA Challenges Bob Radecki President, Benefit Comply Rick Chouteau SVP, Paycor

FOUR POTENTIAL SCENARIOS: Industry Insight Payroll, Benefit Administration and Clients FOUR POTENTIAL SCENARIOS: Payroll Vendor provides a Benefit Administration Platform within their offering Payroll Vendor provides an integrated, 3rd Party Benefit Administration Platform Payroll Vendor Interface with 3rd Party Clients don’t use a Benefit Administration platform

Payroll Vendor Provides a Benefit Administration Platform Within Their Offering SSO, Single entry of data Increased Data integrity Cost effective Consistent UX Advantages Less sophistication Responsiveness to market changes and consumer demands Disadvantages Investment $’s to compete with larger Benefit Admin applications Historical data Industry Challenges

Payroll Vendor Provides an Integrated, 3rd Party Benefit Administration Platform Sophisticated offering Defined Contribution Decision Support tools Increased consumerization of healthcare offerings Responsive to consumer demands and market changes Better visibility to employer/employee cost data SSO can still be accomplished Highly customizable Improved Carrier Connections Employee engagement Advantages More costly Inconsistent UX Customization brings costs and time challenges for implementation Disadvantages Product control Lower margins Historical data Industry Challenges

Payroll Vendor Interface with 3rd Party No change for client or their employees Lower costs (sunk costs) Leverage current technology and value Advantages Integrations come with potential data integrity concerns Timing of updates can make one system show a different result than the other Changes in 3rd party platform may affect the import file Challenges/increased cost to provide a SSO experience Disadvantages There are many new horses in this race making it difficult to pick the winners Industry Challenges

Clients Don’t Use a Benefit Administration Platform No integration worries No need to change Let’s just keep doing what we’ve always done Advantages Manual = Errors and Costs Poor user experience Lack of employee engagement Regulatory changes can challenge the clients ability to keep up Disadvantages Data availability to support regulatory changes Historical data Industry Challenges

Benefit Administration and ACA Filing Clients Have 4 Choices for ACA Filing: Contract with the Payroll and HCM provider Utilize the technology of the Ben Admin systems Outsource to a 3rd party provider Manual entry

Contract with the Payroll and HCM provider Advantages Payroll data is a big component (hours/deduction) IRS filing is done as a normal course of business More product usage = less effort and review Visibility to ALL employees No one size fits all Plan details are not readily available (unless using Ben Admin) Disadvantages Client education Consistent product usage Data import Industry Challenges

Utilize the Technology of the Ben Admin Systems Advantages Benefit Costs, employee election and plan details are more apparent and consistent Disadvantages Lack of visibility to all employees Lack of IRS filing process/experience Determining employee eligibility Industry Challenges Access to all employees, records and hours worked

Outsource to 3rd Party Provider Advantages All they do is ACA = Consistent knowledge Good option for employers processing payroll in-house Disadvantages Focused on the largest employers Lack source data from benefits or payroll Industry Challenges Data collection Data import Data validation

Manual Entry It just sucks!

Looking Ahead

ACA Reporting Readiness 5000+ EEs 1000-5000 EEs <1000 EEs Not yet considered/Don’t know Plan to outsource but haven’t started considerations Currently considering an outsourced solution Committed to an outsourced vendor Already implemented an outsourced solution This data was reported in May of 2015 – shows the current state of ACA planning and readiness in the market. Produced by PriceWaterhouseCooper and Equifax. 26% of employers under 1K are still undecided regarding whether they will implement a solution in-house or an outsourced solution to facilitate reporting. 37% of large employers reported that they are in discussions with outsourced vendors while 12% are still unsure what their ACA strategy will be. 27% of employers in the 1k-5k space reported in equal numbers that they would either implement an in-house solution or an outsourced solution – but another 15% still don’t have a plan as of May 2015. 5 10 15 20 25 30 35 40 SOURCE: Affordable Care Act Reporting Survey Results May 2015, Equifax

ACA Vendor Type Breakdown < 1000 EE 1000-5000 EE > 5000 EE Benefits Administrator 10% 19% 29% Tax/accounting provider 5% 2% 0% Tax information reporting firm 7% Payroll vendor 48% 25% HRS provider Dedicated ACA compliance vendor 13% 24% 35% Do not know/undecided 8% 18% 14% SOURCE: Affordable Care Act Reporting Survey Results May 2015, Equifax

70% 46% Delivering IRS Forms 30% of employers under 1000 EEs cite understanding their reporting options as their biggest ACA concern. 70% 46% of employers are still undecided about how they are going to deliver the forms to the IRS and employees. of employers plan to use a vendor. 30% SOURCE: Affordable Care Act Reporting Survey Results May 2015, Equifax

Will Ben Admin Systems File with the IRS? My prediction….yes! ACA is a challenge for all Changes will subside and normalcy will take its’ place Education amongst all will improve Technology and the market will catch up 1095-C’s will become just like W2 filing …commonplace.

ACA Filing Just like W2’s? …Close. W2 Wages end December 31 1095-C ends when the employer completes December’s review Printing is not in-line with W2’s Packaging and distribution is very consistent

Broker Involvement What is your value proposition? Does it include Benefit Administration? Enrollment? Carrier Communication? Employee Support? Are you giving ACA advice and support? What level of education are you providing? Are you coaching on ALE status? Are you ensuring MEC? Coaching them on ‘Affordability’?

Broker To Do’s Educate yourself…Meet Bob Radecki! Ask your clients about the steps they’ve taken to prepare It’s important they start now This is your opportunity to educate and provide ‘partner’ intros Provide webinar and educational opportunities for your staff and clients You don’t have to do it yourself! Leverage partner materials and webinars Be clear on your value proposition Are you guiding or doing? i.e. Carrier Connection Be clear on ALE, Affordability and Eligibility Calc Set deadlines for your clients to act and follow up

Questions?