Allied™ Pay or Play Solutions Cost-effective options for the Employer Shared Responsibility provisions of the Affordable Care Act 11367s0814 Edt

Allied Pay or Play Solutions Employer Shared Responsibility (Pay or Play) Impacts, Requirements & Penalties Product Solutions for Large Employers Sample Cases Submissions and Underwriting

3 Allied National Home Office - Overland Park, Ks. 2 nd generation family-owned business Founded 1970 Proprietary systems Company Culture Innovation Stability Service

Allied National Operational Profile Underwriting Claims Administration Policy Service Actuarial Compliance Product Development Case Management Sales & Marketing Legal 4

What you need to know and learn to understand Pay or Play ACA Pay or Play Regulations and Language: What is an applicable large employer? What is an FTE? How to count FTEs? How do the penalties work? PMEC/Skinny Plans/MVP/Narrow Plans Affordability 2015 rules vs 2016 rules – group size, penalties Transition relief rules - All employee test/All FT employee test These are the high points -THIS IS NOT ALL!!!! Expect the rules to change 5

For the Individual - Employee What does ACA mean for an individual? 1.Individual Mandate says individuals must have health insurance or pay a penalty. Penalty starts at $95 for 2014 then in 2016 escalates to $695 or 2.5% of taxable income (which ever is greater). 2.Insurance can be employer provided or an individual plan. Must be qualifying Minimum Essential Coverage. 6

For a Business – Employer What you need to know about ACA for businesses... 7

Do I have to offer health insurance to my employees on January 1, 2015? less than 100 more than 100 Based on full-time equivalent employee counts. Part-timers count! In 2016, the employer size drops to 50! 8

What type of coverage must I offer? Employer coverage must meet TWO levels of tests under Section 4980H “A” test – “The Sledgehammer” Must provide Minimum Essential Coverage to 95% of full-time eligible employees (70% in 2015) The Penalty? $2,000 per full-time eligible employee less the first 30 (80 in 2015) Penalty triggered by employee going to the Exchange and receiving subsidy 9

What type of coverage must I offer? Employer coverage must meet TWO levels of test under Section 4980h “B” test – “The Tackhammer” Must provide Minimum Value Coverage to 95% of employees Coverage must be Affordable (no more than 9.5% of household income). The Penalty? $3,000 per employee who receives subsidized coverage on the Exchange 10

What If I don’t Play? PENALTY EXAMPLES Employer with 180 full-time eligible employees (A) Failure to provide MEC: $2,000 ( *) = $200,000 non tax deductible penalty ($300,000 in 2016!) (B) Failure to provide Minimum Value affordable coverage: $3,000 per employee with subsidized coverage * less 80 is 2015….less 30 in

What are an Employer’s Options? 1. Pay the penalty? 2. Find the cheapest way to avoid penalties? 3. Provide a major medical health plan to everyone? 4. Provide an affordable alternative in the middle? 12

Allied Pay or Play Solutions Creative suite of products to meet any employer’s needs Uses a mix of self-funded and fully insured options Low-cost Alternatives Meets Current Minimum Essential Coverage (MEC) and Minimum Value standards Four plan levels 13

Allied Pay or Play Solutions Offering four plan levels to manage the expense of this mandate:

Plan Level 1 – Self Funded PMEC Preventive Services Only Minimum Essential Coverage (PMEC) Meets MEC requirement and avoids the employer sledgehammer penalty Meets individual mandate and covered employees avoid that individual penalty Lowest cost way to avoid penalties 15 Allied Pay or Play Solutions

Plan Level 2 – Fully Insured Limited Benefit Plans Fixed Indemnity plan on top of PMEC Allows employer to provide additional benefits on top of a PMEC plan Employer paid or voluntary Benefits for hospitalization, office visits, Rx drugs Gap Plan Supplement for high deductible plans Employer paid or voluntary Allied Pay or Play Solutions 16

Plan Level 3 – Self-funded Minimum Value Plans Allied Minimum Value Plan (MVP) Low Cost Narrow MVP plan – one size fits all Guaranteed Issue – No Medical Underwriting First dollar benefits - $0 deductible with copays Eliminates In-Patient, Surgery and Specialty Drugs Adds indemnity benefits for In-Patient & Surgery Currently Satisfies Minimum Value 60% standard 17 Allied Pay or Play Solutions

Plan Level 3 – Self-funded Minimum Value Plans Allied MediPay Plan Comprehensive Major Medical - Controls costs by basing provider reimbursement on Medicare Physicians reimbursed at 125% Facilities at % as selected. Lowers monthly costs 10% to 30% below traditional PPO reimbursement Members subject to balance bill 18 Allied Pay or Play Solutions

Plan Level 4– Self Funded Traditional Plans Allied Funding Advantage Plans Premium Advantage – traditional PPO plans Provider Freedom – no network, see any provider, protection from balance bills MediPay Plan – no network, Medicare reimbursement - Employee is responsible for all balance bills under MediPay 19 Allied Pay or Play Solutions

Sample PMEC Case Assumptions Employer Contribution 100% of PMEC Plan 90% Participation combined required Type of RiskRestaurant Chain FT employees425 Management - Group Major Medical75 Penalty Exposure (After tax) $986,000 Penalty Exposure per FT employee $2,817 PMEC Cost (350 FT employees) $210,000 PMEC Cost per employee (annually) $600

Sample MVP Case Assumptions 75% participation required Type of RiskConstruction Company FT Employees130 Management - Group Major Med25 Penalty Exposure (After tax 2015) $142,857 Penalty Exposure (After tax 2016) $285,714 Penalty Exposure per FT Employee (All ) $1,099 Penalty Exposure per FT Employee (All ) $2,857 Minimum Value Plan Participants 85 Minimum Value Plan Costs (estimate) $2,400 Minimum Value Plan Annual Costs - Total $204,000

Fully Insured Structure Limited Benefit Gap Plans Self Funded Structures Funding Advantage, PMEC, MVP, MediPay contracts Plan run out period ends the last day of month 21 Refunds calculated in month 22 Refunds disbursed in month 23 Monthly accounting summary Quarterly claims reports Renewal offers on all groups Plan Structures

Provider Freedom & PPO Plans Employee IS NOT responsible for any balance bill Medipay, MVP & PMEC Employee IS responsible for all balance bills Claims Payment Balance Bill Obligations ID cards for PMEC/MVP/MediPay will show Medicare reimbursement levels. Members receive Advocacy help in balance bill situations.

Underwriting Time Frame Recommended timeline for submissions: Complete submissions should arrive in Allied National’s underwriting department not less than 15 working days prior to the desired effective date. Submissions received on or before the 10 th of the month will receive priority consideration. 24

Duration of underwriting determined by: Size of the account Quality and completeness of submission Availability and cooperation of the employer & employees Firm rates in 7-10 days From submission to case delivered – 14 to 20 days Shelf life of enrollment form is 40 days – up to 60 days with recertification 25 Time Frame: Medically Underwritten Cases

Duration of underwriting process determined by: Size of the account Accuracy of census Allied National workflow Firm rates in 3-5 days 7-10 days to complete documentation and issue contracts 26 Time Frame: PMEC - MVP

Agent’s Compensation 27 Funding Advantage & MVP Funding Advantage & MVP Default 2-6% adjustable as required Limited Benefit & Gap TBD PMEC 10%

Our Sales Team Contact Us or fax data to “Sales” Fax: Our Team Dan Meylan: National Sales Director; Bill Ringhofer: Regional Sales Manager; Randy Wehner: Sales Manager; Matthew Bryon: Account Executive; Cheryl Knight: Account Executive;

Questions? Allied Sales Support twitter.com/alliednational Fax: Allied National, Inc W. 107 th St. #100 Overland Park, KS