This Stuff is Complicated!

The number one question being asked by business today… Is my company best served by keeping our health plan in tact…or… is the best choice to drop the plan and allow employees to buy Obamacare?

This stuff is complicated, there is no easy answer. 2,400 pages of legislation 19,000 pages of regulations The Benefit Plan Alternatives ACA Decision Tool: Considers 32 factors Makes over 60 calculations and comparisons for each employee in a group Objective: drill down to a single number, which provides a path forward for each Client

In Obamacare, premium doesn’t matter...huh? Earning $20,000 per year Earning $30,000 per year Employee only: $999 per year Employee and Spouse: $400 per year Emply, Spouse, and 3 Children: $0 per year Employee only: $2,480 per year Employee and Spouse: $1,762 per year Emply, Spouse, and 3 Children: $600 per year The premium could be $1,000,000, Obamacare pays the difference The “Premium” of Obamacare doesn’t matter for many of your employees

The premium doesn’t matter, but taxes do… Today, premiums are paid with Pre-tax dollars Obamacare is paid Post-tax Pre-tax vs Post-tax at a 28% marginal tax rate: Gross Earnings $174.36 Less 28% Federal Income tax $48.82 Less 7.65% FICA and Medicare $13.34 Less 5% State Income Tax $8.72 Less 2% City or School Tax $3.48 Post-Tax Earnings $100.00 Pre-tax Amount Post-tax Amount The Obamacare costs and subsidies need to be evaluated with this major difference in mind

Three Companies Compared Drop the Plan Funding ABC Co. DEF Co. GHI Co. Today's Insurance Costs $623,000 Drop The Plan…Employees are on their own Obamacare $2,000 Penalty $206,000 Employee Additional Cost of Obamacare $445,000 $227,000 $395,000 Overall Cost to Drop the Plan $651,000 $433,000 $604,000 Drop the Plan Savings (Loss) -$28,000 $210,000 $19,000 Percentage Savings to Drop the Plan -4.5% 33.7% 3% 97 employees, 69 covered by Heath Plan, 35% marginal tax rate, different levels of income

Cost of Neutral Funding ABC Co. DEF Co. GHI Co. Today's Insurance Costs $623,000 Cost Neutral for those Hurt by Dropping Plan: Obamacare $2,000 Penalty $206,000 Payroll expense to Gross up Employees $545,000 $316,000 $489,000 Overall cost to Implement "Cost Neutral" $751,000 $522,000 $695,000 Cost Neutral Savings (Loss) ($128,000) $101,000 ($72,000) Cost Neutral Savings Percentage -20.50% 16.20% -11.60%

What Happens If… ABC Co. DEF Co. GHI Co. What happens if employees helped by Obamacare use it, but those hurt by it remain in the employer plan? ABC Co. DEF Co. GHI Co. Number of employees helped by the Obamacare Exchange 21 31 Premium saved moving helped employees to the Exchange $187,000 $286,000 $199,000 Penalty incurred to move employees to Exchange $96,000 $143,000 $103,000 Saving realized by moving employees to Exchange $91,000 Percentage of Premium Saved 14.6% 23.0% 16.5%

Can your company profit with Obamacare?