Health Reimbursement Arrangements (HRA) Corporate Office: 250 South Executive Drive, Suite 300 Brookfield, WI

Overview The Crisis of Rising Healthcare Costs The Solution – Tax-Free HRA A Strategy for a Winning HRA Solution Why HRAs Work Better than HSAs for Public Sector Employers 2

The Crisis of Rising Healthcare Costs 3

Healthcare costs are rising at unsustainable levels, especially for seniors. Costs Spiraling Out of Control Seniors spend 3 times more 65 year olds need $250,000 to pay for medical expenses 4

5 Between 1999 and 2011, Costs Rose 160 Percent! Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,

Something Has to Give Employee Rising out-of-pocket health care expenses that are no longer covered by employer Employer Reduced revenues Unsustainable increases in healthcare costs Employers forced to reduce benefits, pre- and post- employment 6

The Solution: Tax-Free HRA 7

HRA Solves Problems for Both Employer and Employee Employer deposits funds tax-free Employees take control of their own funds Account earns interest tax-free 8

Insurance premiums, deductibles and co-payments Prescription drugs, eyeglasses Hospital and doctor procedures Other unreimbursed medical expenses, IRS section 213(d) for employees, their spouses and eligible dependents The HRA Pays for Medical Expenses no Longer Covered by the Employer Plan…. 9

FICA Tax-Free Federal Income Tax-Free State Income Tax-Free 10

Strategy for a Winning HRA Solution 11

Employer WinParticipant Win Save FICA MatchingSaves ALL taxes Provides needed cash for out-of- pocket medical expenses Win/Win HRA Scenario: Exchange an HRA for Special Payments Made to Retirees 12

Separation Payment $25,000 assuming a combined 37% federal, state and FICA tax ($9,250) $15,750 Separation Payment $25,000 Tax ($0) $25,000 Without an HRA: With an HRA: Which would you rather have? $15,750 without an HRA or $25,000 with an HRA? 13

14 Why HRAs Work Better than HSAs for Public Sector Employers

Why an HRA Works Better than the HSA for Public Sector Organizations 1.Can be used for Health Insurance Premiums 2.Less restrictive 3.Open to all employees and retirees 4.More carry-over flexibility 5.No conflict of interest 6.Local plan control 7.No employee contributions 15

More Key Wins 16

More “Wins” for Participants HRA can be used by the employee, spouse and eligible dependents Funds are invested and professionally managed Individual accounts are established with 24-hour online access and 800# customer support 17

More “Wins” for Employers Enhanced recruiting and retention Flexible funding options No admin headache - all servicing done by Third-Party Administrator (TPA) Turnkey TPA system provides all necessary documents and forms 18

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Things to Remember: Public employers and employees are facing financial challenges of unprecedented proportions An HRA can provide creative solutions where both employer and participant win HRA solutions work better than an HSA for public sector employers and participants Administering your HRA is a breeze with our TPA 20

Important Notice The general information contained in this presentation is provided to assist entities that are considering a Health Reimbursement Arrangement (HRA) as an option for their employee and/or retiree’s health coverage. It is not intended as legal or tax advice from Retirement Plan Services of America, Inc. or any other company. Entities considering an HRA should seek the advice of their independent legal counsel to determine the application of this information to their specific circumstances. To ensure compliance with requirements imposed by the IRS, we inform you that any discussion of U.S. federal or state tax consequences contained in this communication (including any hand outs) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. 21

For More Information, Contact: National Insurance Services, Inc. Aaron A. Casper AIF© Retirement Plan Services of America, Inc. Larry Stein