OPTION #1 OFFER GROUP COVERAGE FROM PRIVATE CARRIERS DIRECTLY  Pacific Brokers can review all available private carrier options  Fully insured  High deductible / high Out of Pocket maximum coverage(HRA or HSA)  Self-funded with Aggregate and Specific Stop Loss insurance  Enhances employee retention/recruitment  Deductions are pre-tax OPTION #2 OFFER GROUP COVERAGE THAT IS “UNAFFORDABLE” FOR LOWER PAID EE’S  EE’s required contribution will allow lower paid EE’s to seek coverage through the subsidized exchange (enrollment assistance can be provided by Pacific Brokers).  Lower paid EE’s more likely to afford family coverage through the exchange  No penalties to employer

OPTION #3 BUY GROUP COVERAGE FROM GOVERNMENT RAN S.H.O.P. EXCHANGE  Offers Private Carrier Options (can be purchased with Pacific Brokers assistance)  Receive a federal tax credit of up to 50% of employer costs (Scaled based on EE count and average annual wages) OPTION #4 DROP GROUP COVERAGE  Sends all employees to the individual exchange  Federal subsidies available for employees earning up to 4 times the federal poverty level ($46,000 for individuals and $94,200 for a family of four)  No employer penalty Payality’s Role Provide reporting that calculates the number of full-time equivalents to help employers stay below the 50 employee threshold Report aggregate cost of employer sponsored health insurance on EE’s W-2’s if required Payality will assist with calculating the employee's share of any premium rebates Cap Flexible Spending Account contributions at $2500/year Withhold the additional Medicare tax for highly compensated employees

OPTION #1 OFFER GROUP COVERAGE FROM PRIVATE CARRIERS DIRECTLY  Must meet “minimum value” standards (covers 60% of costs)  Must be affordable (Employee’s contribution to cover themselves is no more than 9.5% of 2013 W-2 earnings)  Pacific Brokers can review all available private carrier options  Fully insured  High deductible / high Out of Pocket maximum coverage(HRA or HSA)  Self-funded with Aggregate and Specific Stop Loss insurance  Enhances employee retention/recruitment  Deductions are pre-tax OPTION #2 OFFER COVERAGE THAT IS ONLY AFFORDABLE FOR, OR ONLY ELIGIBLE TO, HIGHER COMPENSATED  Lower paid employee’s can buy subsidized coverage through the individual exchanges  Federal subsidies available for employees earning up to 4 times the federal poverty level ($46,000 for individuals and $94,200 for a family of four)  Employer will pay a $250/month penalty (some caps apply)for each employee purchasing subsidized coverage through the exchange

OPTION #3 OFFER GROUP COVERAGE REDUCE HOURS TO LESS THAN 30 PER WEEK FOR LOWER PAID EE’S  EE’s working less than 30 hours per week are not subject to penalty  Maintains coverage for EE’s working more than 30 hours per week OPTION #4 DROP GROUP COVERAGE  Employer penalty of $166/month times the # of full-time equivalent EE’s minus the first 30 EE’s (i.e. 80 eligible minus 30 = 50 net EE’s times $166/month or $8300 per month. Not a tax deductible business expense) Payality’s Role Provide reporting that calculates the number of full-time EE’s and potential penalty exposure Provide reporting to determine if the EE is contributing more than 9.5% of wages Report aggregate cost of employer sponsored health insurance on EE’s W-2’s if required Payality will assist with calculating the employee's share of any premium rebates Cap Flexible Spending Account contributions at $2500/year Withhold the additional Medicare tax for highly compensated employees Provide IRS reporting listing full time EE health coverage and cost of benefits provided.

About Pacific Brokers Greg Albin, Principal  A graduate of the University of California at Berkeley, Greg has spent his entire career in the insurance and securities industries.  Firm Expertise- Over 60 years of collective experience with employee benefits “The tenure, expertise, vision, negotiating ability, systems and services to get the job done” About Payality  Payality provides effective and imaginative solutions for every phase of the employment lifecycle.  From Time & Attendance, Payroll and Human Resources, Employee Benefits, Worker’s Compensation, and Retirement Solutions, Payality’s comprehensive solutions are used by companies of all sizes to pay more than 3 million people every month. Now that you know your options, the only other thing you need to know is what does each option cost my company. Pacific Brokers is providing this financial analysis to all of our clients…and can prepare one for you too…simply to get