Agenda

• Introduction• Health Plan Self-Funding• MEWA Explained• MEWA Benefits• Five Phases of MEWA

Development• MEWA Build Options and ToolBox• Next Steps• Implementation Timeline• Questions

INTE

GR

ITY

BEN

EFIT

SO

LUTI

ON

SMEWA FEASIB IL ITY

MEWA BUILDING AND MANAGEMENT SUPPORT

SERVICES

Integrity Benefit Solutions, LLC works solely to assist associations achieve a key value proposition – to help their members provide high quality services through education, representation, and group services.

Our proven process helps the association reduce both the build cost and development time, as well as deliver ongoing plan services to support the governing Board.

We bring expertise working with all health plan types and use our experience to identify trends and make recommendations to continually improve the plan for its members.

WHY COMPANIES SELF-FUND

Fully-Insured vs Self-Funded Health Plans

4

In the last decade, there

has been nearly a

complete overhaul of

the US healthcare

finance system, while

premiums have

doubled.

• The Affordable Care Act

(ACA)

• The Medicare Shared Savings Program (MSSP)

• The Next Generation ACO program (NGACO)

• The Hospital Readmission Reduction Program (HRRP)

Legislative solutions are not working

HEALTH PLAN FUNDING: SELF-FUNDED/FULLY-INSURED

* © Statista 2021 5

67%

US Workers on a

Self-Funded Health

Plan*

6% INCRESE

Shift to Self-

Funding

20-25%

Average FI Profit

Margin

10-12%

SF Fees Avoided:

EX: Premium Tax,

State Mandated

Benefits

$1 SF/$1.25 FI

Healthcare Spending

Success

FINANCIAL DIFFERENCES

SELF-FUNDED MODELS

6

• Fixed Monthly Cost for reinsurance and

administration

• Plan pays Claims Liability up to specific and

aggregate limit

• Specific Stop Loss Reinsurance for

individual spend above specific limits, and

• Aggregate Stop Loss Reinsurance for

collective claims above threshold

Partial Self-Funding

• “Premium-like” monthly cost

• Employer funds claims up to monthly limit to

“Level” spend

• Reinsurance covers Aggregate limit, but no

Specific

• Lower volatility is advantageous particularly

for smaller companies

• Higher percentage cost for Reinsurance

• Less opportunity for surplus

Level-Funded

• Multiple Employer Welfare Arrangement

• Member-owned Plan

• Combines “Premium-like” dollars from all

MEWA Members to cover all plan costs

• Permits higher limits of Reinsurance to lower

costs

• MEWA secures administrative and vendor

services at lower cost

• MEWA manages the Plan on behalf of

Members

• Surplus is retained by the MEWA

MEWA

Multiple Employer Welfare AssociationMEWA Exp la ined

Multiple EmployersEmployers with common interest

can band together to provide

employee health insurance as if

they were one employer

Governing BodyThe MEWA is owned by the

participating Employers and

governed by an owner Board of

Trustees

AutonomyEach Employer selects

benefits with an overall

construct established by the

MEWA

RegulationThe MEWA is regulated by

ERISA and applicable State

laws

MEWA BenefitsWRITE SOMETHING HERE

The combined group secures

bargaining power and economies

of scale in contract negotiation

and service acquisition

Buying Power

A self-funded structure allows

flexibility for comprehensive

coverage that best serves the

needs of employees

Comprehensive Coverage

Single point of management

to monitor claim trends,

vendor performance and

recommend improvements

Plan Management

Assists employers in providing

healthcare coverage for all their

employees in a more cost-

effective manner

Cost-Effective Delivery

Cost comparison

9

Michigan Average 2020 Employer Premiums

Employer Comparative Criteria

PPO Plans Healthcare Industry Non-Union

Large Employer (200+ EEs) Few Higher-Wage Employees Self-Insured

Midwest Region Many Lower-Wage Employees Not-for-Profit

Annual Deductible: $1,767 Out-of-Pocket $4,039

Average Monthly Employer Premiums

MEWA “Premiums” at 20% Reduction

Example Net Premium

Single: $636 20% $509

Family: $1,819 20% $1,455

Annual Premium: $1,810,320$361,680 (savings)

$1,448,640

FIVE PHASES OF MEWA IMPLEMENTATION

A process to validate structure and strength

FeasibilityConfirm Member

participation

Member Buy-InBoard confirms Plans and

Program vendors

Plan DesignMembers sign MEWA

contract

ConfirmationBilling, eligibility, and Open

Enrollment set-up

Implementation

While there are different methods of forming a MEWA, one type of MEWA, known as a VEBA, or voluntary employees' beneficiary association is a tax-advantaged welfare benefits funding vehicle defined under the Internal Revenue Code (IRC).

The structure and operations of a VEBA tend to fit well with the organization and needs of many LeadingAge state associations.

By definition, VEBAs are substantially devoted to providing for the payment of life, sickness, accident, or other benefits to the VEBA's members and their dependents and beneficiaries.

When properly organized under IRC Section 501(c)(9), a VEBA will be exempt from federal income taxation.1

Feasibility

1. 26 U.S.C. § 419(e)(3)(A); 26 U.S.C. § 501(c)(9). Section 501 of the IRC deals with organizations that are exempt from federal income taxation. VEBAs are described in IRC § 501(c)(9) as: "providing for the payment of life, sick, accident, or other benefits to the members of such association or their dependents or designated beneficiaries, if no part of the net earning of such association inures (other than through such payments) to the benefit of any private shareholders or individual." The reader is cautioned that this article is not intended to provide any form of tax advice, or method for avoiding tax penalties, insurance regulation, or any other legal requirement. It is recommended that the reader seek the advice of an independent tax advisor or other qualified professional based on a program's particular circumstances.

To qualify as a VEBA, the entity must be organized pursuant to the Regulations. Requirements of a Self-Funded MEWA/VEBA vary by State.

As such the feasibility study encompasses both a financial and legal analysis, including:

A. Legal review of the Association framework

B. Legal confirmation of State favorability toward association health plans, MEWAs, and VEBAs

C. Board formation

D. Set-up legal entity, develop Articles of Incorporation, Bylaws

E. Develop Contracts and Rules (Membership & Adoption Agreement and Administrative Guide)

F. Determine Target Launch Date

Feasibility

Meetings with Association Members interested in learning about the Program parameters: Conferences, Regional, and individual employer meetings

Secure Letters of Intent for Member Participation

Gather marketing information from Members (Member information, census, employee health information)

Determine Member (Employer) Participation

Member Buy-In

The Board confirms plan designs, eligibility, and other benefit parameters

Solicit proposals for claims administrator, reinsurance, and other benefit vendors

Select and finalize vendor contracts

Work with actuary to determine preliminary pricing

Develop marketing plan

Submit for temporary Certificate of Authority

Finalize Plan Designs and Pricing

Plan Design

Launch series of educational webinars regarding the plan structure, administration, preliminary pricing

Membership & Adoption Agreement. The Contract describing the rights and obligations as Member owners of the plan. It is contractually connected to the Administration and Compliance Guide, the Member Application, the Bylaws and Articles of Incorporation

Administration and Compliance Guide. Describes the “how-to” – or legal and regulatory employer obligations and administrative guidance.

Member Application. Reports employer Plan Elections, contributions, waiting periods, and billing information

Member Contracting

Member Confirmation

Coordinate Open Enrollment between Members, claims administrator and vendors for:

On-site and/or virtual Open Enrollment meetings

Enrollment processes

Consolidated Billing

Eligibility, including EDI Data Transfer needs

COBRA Administration Set-up

Submit final enrollment to reinsurance and actuary

Work with Members to answer questions, review processes, provide enrollment and payroll deduction reporting

Distribute Welcome Packets with ID Cards

Final Steps to Launch Date

Implementation

MEWA BUILD OPTIONS – OPTION 1

PRO’s

Flexibility to incorporate unique coverage platforms

Plans will be unique to your Association

Can integrate multiple more Michigan-specific vendor programs

From Scratch

This Photo by Unknown Author is licensed under CC BY

CON’s

Larger investment needed for custom development

Longer time to launch

May have more State scrutiny in evaluating benefits

Will require more Board time commitment throughout build

MEWA BUILD OPTIONS – OPTION 2

PROs

Reduces build time

Lowers build cost

Improves favorability for State approval

Utilizes a proven plan for greater Member confidence

Accesses greater buying power with other MEWAs

Toolbox

CONs

Few variations can be incorporated without adding time and cost in the first year

This Photo by Unknown Author is licensed under CC BY-NC

This Photo by Unknown Author is licensed under CC BY

Articles of IncorporationTrust DocumentsBy-LawsVendor Agreements

Structural Documents

Member Documents

Implementation Documents

Member ApplicationOpen Enrollment Guides and Educational MaterialID Cards and Welcome KitsInvoicing Structure

Membership & Adoption AgreementAdministration and Compliance GuidePlan Documents and Summary Plan Description

Next StepsWhere From Here?

Decision-makers from 6-10 employers commit to participating in a Task Force to build the Plan. Typically, this group becomes the inaugural Board

Task Force FormationLeadingAge Michigan Members are

surveyed to determine interest level for participation

Survey

4-5 Members in various regions of Michigan volunteer to host meetings to educate, answer questions, and garner interest

Regional MeetingsFormal letter from Members indicating

commitment

Letter of Intent

Implementation TimelineAssuming Board Approval by October 15, 2021

2021November

Regional Meetings

Onsite Meetings for Decision-

makers

2021January

Letter of Intent

Gather Census, Gatekeeper App/Claims,

Plan Elections

2022February

Rating Prep

Stop Loss Proposals,

Preliminary Rates

2022March

Member Commitment

MAA, Member App,

Contributions

2022April

Training Webinars

Series of educational webinars for Admin/HR

9-28-2021Implementation Timeline 021

October December

Implementation Timeline

2022May

Open Enrollment

Face-to-Face On-site

Employee Meetings

2022June

OE Ends

Audit Enrollment

2022July

Welcome Packets

Employee Welcome

Packets, ID Cards are

distributed

2022August

Wrap-Up Webinar

Review Processes,

answer questions

2022September

Launch Date

Plan Effective

9-28-2021Implementation Timeline 022

23

Questions

This Photo by Unknown Author is licensed under CC BY

OUR BRILLIANT TEAM

Sharon is the founder and CEO of

Integrity Benefit Solutions. Sharon is

the architect of the MEWA Platform.

She has 30+ years of experience in all

aspects of insurance, including

underwriting, service, sales and

management

Sharon Earlenbaugh

MEWA building and Plan Management

Support Services

Integrity Benefit Solutions, LLCTyler is Sales Executive at Integrity and

leads the sales and marketing team to

introduce members to the MEWA platform

and bring members through the

implementation process

Tyler Wells

KEEP IN TOUCH WITH US