GroupDividual: Redefine Your Business and Thrive in the Age of Healthcare Reform Harness the Purchasing Power of the Individual Scott E. Mardis © 2011, National Association of Health Underwriters

Be Afraid….. Be VERY Afraid Th ey're coming for your commissions! Don’t Be Frightened by Obamacare. Protect and increase your commissions with new payment strategies that empower individuals

© 2011, National Association of Health Underwriters First Mover Advantage for Brokers – Health Care Reform Overload Small Businesses Dropping Coverage Seasonal/ Temporary Workers Retirees Spouses Unions Contractors and Consultants Individuals Indv. Declining Group Coverage Part-Timers COBRA Municipalities and Government Agencies

© 2011, National Association of Health Underwriters Source: 2013: Health Partners America. Leading Experts – Game Changer

© 2011, National Association of Health Underwriters Source: 2013: Health Partners America. Leading Experts – Game Changer

© 2011, National Association of Health Underwriters Source: 2013: Health Partners America. Leading Experts – Game Changer

© 2011, National Association of Health Underwriters Exchanges May Draw 37 Million Already-Covered Workers Millions of workers who are covered at work could instead choose insurance through state exchanges. How many millions? Roughly 37 million, according to Dr. Jay Bhattacharya of Stanford School of Medicine. “The reason is that these workers would qualify for substantial subsidies to buy exchange insurance,” In other words, the subsidized Obamacare premium will be less than what they pay for employer based insurance. Leading Experts – Game Changer

© 2011, National Association of Health Underwriters Source: 2013: Health Partners America. Leading Experts – Game Changer Here’s a prediction: By 2025, “fewer than 20 percent of workers in the private sector will receive traditional employer-sponsored health insurance.” The source of this claim? Dr. Ezekiel J. Emanuel, in his just-published book, “Reinventing American Health Care.”Reinventing American Health Care

© 2011, National Association of Health Underwriters Source: 2013: Health Partners America. Leading Experts – Game Changer Innovative technology is eliminating payroll deduction as the method of choice for collecting WVB premium, sounding the death knell for payroll deduction. And it’s creating a huge opportunity for brokers who want to preserve their group medical commissions. Nelson Griswold

© 2011, National Association of Health Underwriters Payroll Deduction Premium Persistency 55% of employees feel that payroll deductions for voluntary benefits help them to be more disciplined about saving. This discipline – coupled with the financial safety net the benefits provide, and an integrated education campaign – can translate into increased enrollment. MetLife Survey – 2013 P ayroll deduction participation ranges between 25% and 45% for most products but on direct pay, the rates tend to be in the single digits. Eastbridge Consulting Group – June 2013 The Average American bounces 12.7 checks a year and which generates $9.4 billion in bank fees Compilation American Banker 2012 The Average Pa. checking account balance is $3,100. This would be depleted in less than one year. The Average savings account in Pa. is ONLY $6,100.Pitney Bowes 2012 Payroll Deduction Persistency Drives Participation

© 2011, National Association of Health Underwriters “Every check a policyholder/customer has to write provides him or her another opportunity to reconsider the purchase decision.” Joint Study Sponsored by LIMRA International and Society of Actuaries

© 2011, National Association of Health Underwriters The Shift…….. What We Know: The Affordable Care Act (ACA) is here to stay Employers are becoming more aware of the potential subsidies Employers are asking their brokers for help transitioning their employees to the exchange Brokers are concerned about lower commissions (rightfully so) and their ability to enroll and engage individuals Brokers need to be able to drive new revenue from new business and from existing cases

© 2011, National Association of Health Underwriters The Future? Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI. At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries. Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation. McKinsey and Company – Private sector employer study

© 2011, National Association of Health Underwriters The Shift……cont. What We Know Continued……. Employers and employees may no longer pre-tax individual policies on the public exchange (No HRA’s or PRA’s) Once employers send employees to the exchange, they may wash their hands of all administration – no more billing and administration which limits revenue (VB) opportunities Medical Insurance is becoming a “voluntary” program

© 2011, National Association of Health Underwriters Follow The Money The Subsidy Calculator The ACA Calculator

© 2011, National Association of Health Underwriters Illustrative Sample of a 60-Life Group Commission Opportunity Income drops to this lower point as you lose commissions because employees leave the group. Your income when you convert the group to individual coverages and you remain as the broker. You can also sell additional voluntary products

© 2011, National Association of Health Underwriters This is the site your employees will see on the government’s healthcare web site Money the government contributes to the employee instead of the employer Total the employee pays for SILVER (not Bronze) Family Coverage – $172/month By the way, the Bronze Plan would be FREE for this family!

© 2011, National Association of Health Underwriters

You’ve taken the Plunge – Now What?? Either your client asks you to enroll their employees on the exchange Or You proactively approached your client with these financial solutions and sold them on your strategy Congratulations!

© 2011, National Association of Health Underwriters Now oh god you actually have to sell the individuals and enroll it!! HOW DO YOU DO THIS?

© 2011, National Association of Health Underwriters What Do You Have To Make Decisions About? 1. PICK PRODUCTS What other products other than the individual medical Critical Illness, Gap, Life, Pet, Dental, Telemedicine, ID Theft, Disability, Vision, name your product 2. PICK THE CARRIERS? How do you pick between them? Transamerica, Humana, Aflac, Abacus, Colonial Life, Lincoln Financial, Trustmark, Allstate, Etc. Etc… Etc… 3. What Commission Schedule and what trips? You probably never know unless you do this all the time

© 2011, National Association of Health Underwriters What Do You Have To Actually Do To Enroll The Case?

© 2011, National Association of Health Underwriters What About The Money? How are employees going to pay?

© 2011, National Association of Health Underwriters A New Solution for Carriers, Brokers, Enrollment Companies Payment system solutions and banking platform that:  Bills, collects, and remits payments from individuals directly to carriers  Provides Direct Access to sell employees even when an employer doesn’t offer, sponsor, or assist in providing supplemental benefits This is not the current payroll deduction process or any existing bill consolidation approach! This is not the current payroll deduction process or any existing bill consolidation approach! Financial Wellness Strategies The PDD Approach (Premium Direct Deposit)

© 2011, National Association of Health Underwriters Current Employer Challenges New Payment Solutions Current Challenges / Headaches Peace of Mind Solution with Premium Payment Aggregator Solutions Premium reconciliation, escrow balance recordkeeping and balance sheet headaches No More Reconciliations E.R.I.S.A. Plan Liabilities Same benefits transforms ERISA plans to non- ERISA plans NO ERISA LIABILITY! Lose productivity because one third of my employees are dealing with financial issues Provides employees with budgeting tools and visibility to manage their payments and finances Administrative tasks with helping employees with 401(k) hardship loans – currently 40% of employees request loan withdraws This can be reduced when employees budget their money correctly. HIPAA – Privacy Laws YOU KNOW WHAT EMPLOYEES PURCHASE – SHOULD YOU? Similar to PayPal™, their purchases can be shielded from the employer.

© 2011, National Association of Health Underwriters Employer Access Strategy in the New World? As Employees Turn Consumer without Payroll Deduction Plans… Fact – Traditional group insurance and ESI are on the decline Question – How are you going to deal with this? Answer – Provide group-like coverage to individuals o Engage Voluntary! o Maintain the same access o Maintain the same retention when they don’t have payroll deduction How? Engage a Premium Direct Deposit Provider (PDD) o Exchange Payment Methods o Voluntary Marketplace Place payment methods

© 2011, National Association of Health Underwriters Keys To Success Follow the Money Engage Voluntary to enroll your new individuals Find new prospects and replace their broker! Sell More Cases Sell More to Existing Cases Help make practical the transition from group to individual Help maintain renewals of the individual product sales