A Guide to

LOVABLE EMPLOYEE HEALTH BENEFITSCreate Affordable Health Benefits Employees Will Love

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

2

The #1 Online Small Business Health Benefits Solution

Successfully transition to a health benefits solution that creates happier employees, reduces costs, and frees up time for meaningful work. Request a Demo.

Health Benefit Solutions Since 1993 Matthews N.C. A Zane Benefits Consultant for the CarolinasBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com DISCLAIMER

The information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com.

HappierEmployees

With Zane’s solution, employees choose t

he health plan that best fits their families' needs. Learn more.

Controllable CostsEmployers fix the

ir costs by utilizing a defined contribut

ion approach.Learn more.

More Time forMeaningful WorkOnce implemented,

Zane’s solution takes less than 5 minutes per month to admin

ister online.Learn more.

Easy TransitionZane Benefits’ impl

ementation team will ensure a smooth and fast transition for you and your employees.

Learn more.

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

3

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITSCreate affordable health benefits employees will love

Introduction

For businesses to thrive in today’s economy, finding and retaining the best employees is top priority.

This is especially true for small businesses competing with larger businesses, and larger budgets,

for top talent. Additionally, the landscape of employee health insurance is rapidly changing.

Businesses need new ways to offer the same (or better) health benefits at a controllable cost.

Happy Employees Help Your Business Thrive

Frequent voluntary turnover has a negative impact on employee morale, productivity, and

company performance. Recruiting and training a new employee requires staff time and money.

Every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average.

For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training

expenses.

On the flip-side, retaining employees who are committed, loyal, and embody the business’s

mission are what gives your business its competitive edge.

While some turnover is inevitable, a strategic employee recruiting and retention strategy mitigates

the turnover and associated costs for a small business. Employee health benefits are a key part of

the compensation offered to employees, and therefore vital to employee recruitment and retention

programs.

The New Way of Offering Health Insurance

Businesses are transitioning to defined contribution health benefits because it offers predictable

costs to the business, while providing employees access to quality health insurance.

Defined contribution health benefits reduce the cost and time associated with traditional

health insurance, while maintaining all of the benefits employees love.

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

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About this Guide

Offering health benefits through a defined

contribution approach allows your business to provide

health benefits that employees love, while staying within

your business’s health insurance budget.

Small and medium-sized businesses are transitioning

to defined contribution health benefits because of:

1) Controllable costs / pg. 5

2) Happier employees / pg. 7

3) Painless administration / pg. 9

This guide provides an overview of these three benefits.

Contact: Health Benefit Solutions Since 1993 Matthews N.C. 28105 A Zane Benefits ConsultantBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272 Fax: 1-888-881-9884E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

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1) Controllable Costs

Being able to set, control, and predict all health benefits costs is revolutionary for many businesses.

Defined contribution health plans give your

business controllable costs by offering the following

features:

Define your budget by setting any

contribution amount to employees’ health care.

Give employees tax-free monthly health

care allowances (via an IRS-approved Medica

l Reimbursement Plan).

Employees purchase individual health insurance

policies (or incur an eligible medical expenses) and

submit expenses for reimbursement. The

business reimburses employees on payroll tax-

free.

The business only reimburses employees for

eligible premiums and expenses, up to the amount

of their health care allowance.

At the end of the year, the business decides what

happens to employees’ unused allowances (i.e.

do they carry-over to the next year).

Without annual renewal increases or minimum

contribution amounts, the business is free to control all

benefit costs.

Compared to Group Health Insurance

…Average Employer Cost For One Year of Group Health

Insurance*

Single Employee:$5,615

Up 255% since 1999

Family:$15,745

Up 272% since 1999

*Source: Kaiser Family Foundation, 2012

In the past, group health insurance was the best way to provide quality health insurance to employees.Today, group health insurance is a source of frustration to declining benefits and increased costs.

Businesses need the same quality of coverage, but with controllable cost and sustainable administrative effort.

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How Defined Contribution Health Benefits Work

It’s a simple and effective approach,

But a significant change in how companies offer health insurance…

Set any amount to contribute to employee's health care

Give employees tax-free health

care allowances via

an HRA

Reimburse employees on

payroll for approved premiums

and expenses

Business liability is controllable & Employees shop for policies that BEST meet their

needs

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“61% of employees report that being able to customize benefitswould increase their

loyalty.”

~ MetLife 2013 Study of Employee Benefit Trends benefittrends.metlife.com

2) Happier Employees

In order for a health benefits program to work, it has

to meet the business’s budget and provide value to

employees. The following aspects of defined

contribution health benefits contribute to happier

employees.

Access to the Best Health Care

Because employees choose how to spend their health

care allowance, including which individual health insurance policy to purchase, they can pick

the health coverage that best meets their needs.

Employees say they no longer want a one-size fits all healthinsurance plan. Rather, they want the options to

customize their health benefits.

With defined contribution plans, employees select:

Any type of plan, from any insurance carrier.

The network of providers and doctors they want to see.Coverage to fit their health needs (maternity coverage,

prescription, HSA-plan, etc.).

The level of deductible, co-pays, co-insurance, etc.

Tip: Because some employees may not be comfortable selecting an individual health insurance

policy on their own, you may want to designate an insurance professional to help employees select

individual policies. This also shows employees you care about them and want to improve their health

benefits.

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Coverage for All Employees

Starting October 1, 2013 all employees (regardless of health conditions) will be able to purchase

an individual health insurance plan (effective January 1st, 2014) that is equal or better for them

than existing group health insurance options.

Access to Health Insurance Subsidies

Starting in October 2013, employees can use their health care allowance to purchase policies from

the new health insurance marketplaces. This gives them access to federal health insurance tax

subsidies (starting in 2014) to lower the cost of their premium. Eligibility for the tax subsidies is

based on income and household size. Households with income up to 400% above the federal

poverty line (FPL) will be eligible (up to $45,960 for an individual in 2013, or $94,200 for a family of

four in 2013).

Tip: Employees will only be eligible for the tax subsidies if the business chooses not offer

group health insurance. Read more on the individual health insurance subsidies here.

Predictable Costs for Employees

Employees have a clear budget to spend on health insurance. Individual plans are, on average,

30% cheaper than the same group coverage. And if an employee doesn’t spend their full allowance

on health insurance, they could use it on co-pays, prescriptions, etc. (as the employer’s plan

allows).

Easy to Use

Lastly, employees value health benefits that are easy to

understand, and easy to use. Similar to the transition

from pensions to 401(k) retirement plans, the defined

contribution health benefits approach requires

employees to take more control of their health benefits.

Defined contribution administration software provides

employees easy access through an online portal where

they can see benefit information and submit requests

for reimbursement (“claims”).

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3) Painless Administration

Every small business owner or HR manager wants to spend

more time on strategic issues, and less time renewing

health insurance plans.

With defined contribution health benefits,

administration becomes a payroll function. Once set

up, it takes 5-10 minutes a month.

Once the plan is set up, the business’s

administrative activities include:

Adding approved reimbursements to payroll.

Enrolling new employees online.

Terminating employees from the plan when they leave the company.

Providing education to employees about the benefit.

Connecting employees with an insurance agent for insurance questions.

Tip: Defined contribution health benefits software is key

to managing these administrative aspects in a painless,

compliant, and efficient way.

* Source: Talent Management Magazine, “Make HR Happy.” http://talentmgt.com/articles/view/make_hr_happy. July 12, 2013.

Most HR Managers spend less than 10% of their time at the strategic level.

Rather, 50-65% is spent processing HR transactions.

Heavy transactional

workloads make recruiting and retaining top

managerial talent increasingly

difficult.*

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

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Next Steps

For a business transitioning to defined contribution health benefits, or for a business using

defined contribution to offer health benefits for the first time, here are the next steps:

Set a date to cancel your group health insurance plan (if you have one).

Define any amount you can afford for health benefits.

Use a Defined Contribution Software provider to:

o give each employee a fixed dollar amount to use on premiums and/or

medical expenses,

o develop a customized transition and on-boarding plan, and

o educate employees on their new plan.

Select any insurance professional to give employees a resource in selecting the best plan.

Conclusion

We hope this guide has given your business the foundation for creating health benefits

that employees love.

Because of the unsustainable costs of group health insurance, and the new individual health

insurance opportunities with health care reform, educated businesses are transitioning to

defined contribution health benefits to give employees access to equal or better health

insurance, at a controllable cost, with less administrative time.

The Result?Employees Love Their Health Benefits Again!

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

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ADDITIONAL HEALTH BENEFITS RESOURCES

View our full library of health benefits tools, on-demand webinars, and eBooks at: www.zanebenefits.com/health-benefits-resources

A GUIDE TO LOVABLE EMPLOYEE HEALTH BENEFITS

12

The #1 Online Small Business Health Benefits Solution

Successfully transition to a health benefits solution that creates happier employees, reduces costs, and frees up time for meaningful work. Request a Demo.

DISCLAIMERThe information provided herein by Zane Benefits is general in nature and should not be relied on for commercial decisions without conducting independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.zanebenefits.com.

Contact: Health Benefit Solutions Since 1993 Matthews N.C. 28105 A Zane Benefits ConsultantBill Peterson/Owner Local: 704-847-3314 Toll Free: 1-888-881-9272 Fax: 1-888-881-9884E-Mail Me: billpeterson36@gmail.com Website: www.lowestcosthealthplans.com

HappierEmployees

With Zane’s solution, employees choose t

he health plan that best fits their families' needs. Learn more.

Controllable CostsEmployers fix the

ir costs by utilizing a defined contribut

ion approach.Learn more.

More Time forMeaningful WorkOnce implemented,

Zane’s solution takes less than 5 minutes per month to admin

ister online.Learn more.

Easy TransitionZane Benefits’ impl

ementation team will ensure a smooth and fast transition for you and your employees.

Learn more.