USI Rhode Island 2012 RI Health & Welfare Benefits Survey

Prepared Exclusively for:

ABC Company
Benchmarking Results
Presented by: Ted Larson Senior Vice President USI Rhode Island 5700 Post Road East Greenwich, RI 02818 (401) 558-3172 Ted.Larson@usi.biz

CONFIDENTIAL AND PROPRIETARY: This document is confidential and proprietary information of (USI Insurance Services LLC ("USI") and may not be used or disclosed by the recipient without prior written consent of USI. By receipt hereof, in addition to any obligation the recipient has under any confidentiality agreement with USI, recipient agrees that recipient will not copy, reproduce or distribute this document, in whole or in part, without prior written consent of USI and recipient will keep confidential all information contained herein. USI Insurance Services LLC - 2012. All Rights Reserved.

Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Survey Highlights
Keyfindingsfromthe2012RhodeIslandAreaEmployerSponsoredHealth&WelfareBenefitsSurvey:

In aggregate, the average total gross cost of medical coverage for all respondents is $13,118 Per
EmployeePerYear(PEPY) ,whichisa2%increasecomparedtolastyear.

According to our survey respondents, the selfreported group medical cost change shows an increase of
25%overthelastthreeyears (+5.2%in2012,+7.8%in2011and+9.8%in2010).

In aggregate the average Rhode Island area employee paid $2,793 PEPY toward the cost of their group
medicalbenefits, whichrepresent21%ofthemedicalgrosscostPEPYaverage.

Large employers pay a higher percentage of the total costs than small employers. Large employers pay
on average 79% of the gross cost of medical coverage whereas small employers pay 71% of the gross cost of medicalcoverage.

The average copay for an office visit is $20 for a Primary Care Physician and $30 for a Specialist. This is
an increase over the average copays from last years survey. There is little difference in the richness of benefitsofferedwhencomparinglargeemployersandsmallemployers.

As compared to 2012 national averages, Rhode Island employers had higher gross costs. Rhode Island
employers experienced costs that were 13% and 6% higher than national averages for single coverage and family coverage respectively. When compared to the Northeast region, Rhode Island employer costs were 6%higherand3%lowerforsinglecoverageandfamilycoveragerespectively.

As compared to 2012 national averages, Rhode Island employees paid more for single coverage and less
for family coverage. Rhode Island employees pay on average 22% of the premium cost for single coverage, which is a little higher than the national average of 18%. For family coverage, Rhode Island employees pay 21%,whichisconsiderablylessthanthenationalaverageof28%.

Only 9% of respondents indicated that they changed carriers within the last year and 33% within the last
three years. This is the lowest level of carrier change since the inception of our survey in 2002 and may be reflectiveoftheeasingofmedicaltrendrates.

Cost shifting to employees has become much more prevalent as employers deal with increasing health care
costs. 38% of respondents indicated that they increased employee contributions within the last year. In addition,28%ofrespondentsindicatedthattheychangedbenefitswithinthelastyear.

65% of respondents have implemented a wellness program. Large employers are more likely to have a
wellnessprogramthansmallemployers(87%vs.47%).

Only 3% of respondents claim that they are likely or very likely to drop coverage once the insurance
exchangesbecomeavailablein2014asrequiredunderHealthCareReform.

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Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Competitive Cost Benchmarks - Medical
Medical Gross Cost Comparison
$15,745 $16,144 $17,269 $14,320 $12,658 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ $5,615 $12,908 $13,673 $15,608

$12,273

Inour analysisweprovidecomparisonsto benchmarks three ways: PerEmployeePerYear(PEPY) SingleCoverage FamilyCoverage PerEmployeePerYearGrossCosts arethe traditionalmeasureofhowyourhealthplancosts comparewiththoseofotheremployers.Thereare factorsthatcanaffect thisincluding: Populationdemographics Richnessofbenefits Geographic locationofmembers Number ofdependents covered Theanalysisshowncomparesagainstthe national surveyinformation provided byKaiserFamily Foundation(KFF)aswellastheUSIRhodeIsland areasurveyinformation.

$10,588

$10,052

$6,246

$6,572

$11,827 $6,194

$5,787

Medical Employee Contribution Comparison

$5,430 $6,000 $3,163 $5,000 $ , $4,000 $3,000 $2,000 $1,000 $ $951

$4,959

$3,103

$2,174 $1,099 $2,696

$1,823 $1,089 $2,199

$2,962

692 $3,6

3,986 $3

PleasenotethatKaiserdoesnotprovidePEPYcost estimatessowehaveprovided anapproximate value basedontheenrollmentbreakdown (singlevs. family)ofthesurvey population population.

$4,316 $

$4,262 $

$1,612

$1,835

EmployeeContribution costscompare solelythe required deduction fromemployees toelectthe appropriate levelcoverage (singlevs.family). Further analysisofadditionaloutofpocket costs underthehealth planarecovered insubsequent pagesofthisreport.

$1,522

Medical Participation Comparison AllRespondents

13% 42% 57% 30% 33%

<250EE's
25%

Itisimportant toanalyzeMedicalParticipation whenlookingatPEPYcostsaswellasinvestigating claimtrend analyses.Themedicalparticipation hasa directimpactonthePEPYcosts(agroupwitha higherpercentage offamilycoverage willtypically havehigher PEPYratesthanagroupwithlower percentage offamilycoverage). Thisanalysiscanalsobeusedasanindicatorfor whether yourmedicaltakeupratesaretoohigh(a signthatemployee contributions maybetoorich)or ifyourwaiverpercentage istoohigh(anindicator of possibleadverseselection).

Manufacturing
13% 48%

ABC
19%

58%

29%

33%

Waivers SingleCoverage FamilyCoverage Page3

Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Medical Benefit Benchmarks & Miscellaneous Comparisons
Medical Benefit Benchmarking
ABCCompany General TypeofPlan InNetwork PCPOfficeVisitCopay SpecialistOfficeVisitCopay InpatientHospital PPO $20 $40 100%after$1,000deductible AllRespondents MedianPPOPlan $15 $25 20%coveredinfull 73%havedeductible (Median:$300) 6%havecopay (Median:$250) $500 80% $7 $30 $50 $50 <250EE's MedianPPOPlan $20 $30 0%coveredinfull 82%havedeductible (Median:$1,000) 18%havecopay (Median:$250) $2,000 80% $10 $30 $50 $75

EmployeeContributions areonlyone waytosharecostswithemployees. Theother isthrough sharing outof pocketexpenseswithemployees. TheMedicalBenefitBenchmarking chartcompares yourcompany'smost utilizedplanversusthe RIdataforall employersaswellasbyemployer size (overorunder 250employees). Since72%ofplansinRIarePPOplans basedonoursurveyresponses,we havecompared planstothePPOplan designs.

OutofNetwork AnnualDeductible(Individual) Coinsurance PrescriptionDrugs GenericCopay(retail) BrandPreferredCopay(retail) NonPreferredCopay(retail) SpecialtyCopay(retail) OR Coinsurance(alltiers)

$2,000 70% $7 $30 $50

19%haveacoinsurance/ 0%haveacoinsurance/ HybridRxPlan HybridRxPlan Ifmorethanoneplanisofferedbysurveyrespondent,benchmarkingcomparisonisprovidedfortheplanwith thehighestemployeeenrollment.

Miscellaneous Medical Comparison

ABCCompany WaiverCredit OfferFSA SelfInsurance Medical Dental ReportedCostIncrease Medical 2012vs.2011 2011vs.2010 2010vs.2009 Dental 2012vs.2011 2011vs.2010 2010vs.2009 StepsTakentoControlCosts ChangedCarriers ChangedBenefits EliminatedBenefits IncreasedEEContributions ImplementedCDHP
Doesnotofferwaivercredit OffersanFSA Doesnotselfinsuremedical Doesnotselfinsuredental

AllRespondents
42%offerwaivercredit 80%offeranFSA 52%selfinsuremedical 34%selfinsuredental

<250EE's
21%offerwaivercredit 61%offeranFSA 39%selfinsuremedical 6%selfinsuredental

6.8% 7.0% 0.0% 6.0% 6.0% 0.0% Withinthelastyear Withinthelastyear Nochangeinlast3years Withinthelast3years Nochangeinlast3years

7.9% 10.1% 4.3% 4.5% 6.1% 2.7% LastYear Last3Years 17% 32% 40% 68% 2% 6% 53% 74% 2% 13%

5.1% 9.6% 8.6% 5.8% 4.5% 4.9% LastYear Last3Years 14% 43% 33% 67% 4% 6% 41% 71% 4% 14%

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Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Competitive Cost Benchmarks - Dental
Dental Gross Cost Comparison
$1,208 $1,358 $1,097 $1,057 $1,124

$1,400 $855 $1,200 $1,000 $800 $600 $400 $200 $

Inour analysisweprovidecomparisonstobenchmarks threeways: PerEmployeePerYear(PEPY) SingleCoverage FamilyCoverage PerEmployeePerYearGrossCosts arethetraditional measureofhowyourdental plancostscompare with thoseofotheremployers. Below,weshowtheDentalParticipation Comparison againstbenchmarks.thethree categories reflect below are: Waivers SingleCoverage FamilyCoverage

$876

$380

$406

$425

$889 $363

Dental Employee Contribution Comparison

$600 $35 54 $318 8 $500 $251 $400 $300 $200 $100 $ $536

Itiscommontoseemorevariabilityinparticipation within dentalduetovastlydifferent contribution methodologies

$456

$427

AllRespondents
$290 26% 39% 45% $232

>250EE's
23%

$209

$118

$196

$101

35%

32%

Manufacturing
16%

ABC
8% 28%

57%

27%

64%

Dental Benefit Benchmarking

AllRespondents (MedianPlanDesign) $0 $1,200 100% 80% 50% 65%offerOrtho

ABCCompany Deductible&Maximum AnnualDeductible(Individual) AnnualBenefitMaximum(Individual) BenefitPercentages PreventiveServices BasicRestorativeServices MajorRestorativeServices Orthodontia OrthodontiaCoverage $0 $1,200 100% 80% 50% DoesnotofferOrtho

Ifmorethanoneplanisofferedbysurveyrespondent,benchmarkingcomparisonisprovidedfortheplanwith thehighestemployeeenrollment.

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Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Competitive Cost Benchmarks - Medical & Dental Net Costs
Medical Net Cost Comparison
$13,448 $11,429 $10,734 $10,459 $10,711 $13,577 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ $9,110 $10,058 $10,178

Inour analysisweprovidecomparisonsto benchmarks three ways: PerEmployeePerYear(PEPY) SingleCoverage FamilyCoverage Whenlookingatcosts,employers aretypicallymost concernedwiththeNetCostComparison. Someemployers maychoosetooffer averyrich levelofmedicalbenefits butshareagreater portion ofthecostwithemployees through employee contributions.Ontheotherhand, anemployer may choosetokeep theemployee contributions affordablebycostshiftingwithin themedicalplan design.ANetCostAnalysiswillallowthesetwo approachestocompareonanapplestoapplesbasis.

$8,228

$5,147

$7,485

$4,664

$5,050

$7,841 $657 $262 $8,498 $4,621 $11,012 $834 $4,359

$4,174

Dental Net Cost Comparison

$779 $752 $821 $630 $229 $10,810 $8,859 $4,098 $11,280

$900 $604 $ $800 $700 $600 $400 $300 $200 $100 $ $262 $500

$52 22

Combined Medical & Dental Net Cost Comparison

$14,227

$16,000 $14,000 $12,000

$11,338

$5,409

$10,000 $8,000 $6,000 $4,000 $2,000 $

$8,007

$4,371

$197

$3,869

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Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Life Insurance & Disability Benefit Benchmarking
Benefits Offered
ABCCompany Offerscoverage Offerscoverage Offerscoverage Offerscoverage Offerscoverage Offerscoverage Doesnotoffercoverage AllRespondents 82%offercoverage 75%offercoverage 62%offercoverage 56%offercoverage 43%offercoverage 63%offercoverage 35%offercoverage <250EE's 75%offercoverage 69%offercoverage 55%offercoverage 52%offercoverage 41%offercoverage 57%offercoverage 33%offercoverage

BasicLifeInsurance BasicAD&D SupplementalEmployeeLife SupplementalDependentLife VoluntaryAD&D BasicLongTermDisability Supplemental/VoluntaryLTD

Rate & Benefit Benchmarking

ABCCompany LifeInsurance/AD&D MonthlyRates* BasicLifeInsurance(per$1,000) BasicAD&D(per$1,000) BasicLife/AD&DBenefits ProductionEmployees SalariedEmployees LongTermDisability MonthlyRates* BasicLTD(per$100CMP) BasicLTDBenefits ProductionEmployees EliminationPeriod OwnOccBenefitDuration** SalariedEmployees EliminationPeriod OwnOccBenefitDuration** AllRespondents <250EE's

$0.140 $0.030 1Xsalaryto$75,000 2Xsalaryto$300,000

$0.160 $0.020 2xsalaryto$380,000 2xsalaryto$300,000

$0.168 $0.021 2xsalaryto$300,000 2xsalaryto$300,000

$0.270 Notoffered Notoffered Notoffered 60%upto$15,000 180days 24months

$0.335 60%to$8,000 180days 24months 60%to$10,000 180days 24months

$0.360 60%to$8,000 180days 24months 60%to$10,000 180days 24months

*Medianratesandplandesignareshownfor"AllRespondents"andthe"LargeEmployer/SmallEmployer"benchmarking. **OwnOccBenefitDurationreferstothelengthoftimeaclaimantcanreceivebenefitsduetoan"ownoccupation"disability.

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Rhode Island Area Employer-Sponsored Health & Welfare Benefits Survey

ABC Company
Wellness & Health Care Reform Benchmarking
Wellness Program
ABCCompany Offersprogram AllRespondents 65%offerprogram <250EE's 47%offerprogram

OffersWellnessProgram ProgramFeatures HealthRiskAppraisal HealthCoach FluShot EmployeeHealthFairs FitnessCenter/Reimbursement LifestyleClasses SmokingCessationProgram WeightLossProgram DiseaseManagement Incentives EmployeeContributionIncentive

Offersprogram Offersprogram Offersprogram Offersprogram Offersprogram Offersprogram Doesnotoffer Doesnotoffer Doesnotoffer

74%offerprogram 42%offerprogram 85%offerprogram 60%offerprogram 51%offerprogram 59%offerprogram 55%offerprogram 51%offerprogram 38%offerprogram

59%offerprogram 33%offerprogram 78%offerprogram 41%offerprogram 37%offerprogram 48%offerprogram 41%offerprogram 30%offerprogram 15%offerprogram

NotOfferedbutConsidering

OtherIncentiveRewards

OffersIncentive

35%OfferIncentive 31%NotOfferedbutConsidering 35%NotOffered,NotConsidering 54%OfferIncentive 8%NotOfferedbutConsidering 38%NotOffered,NotConsidering

17%OfferIncentive 38%NotOfferedbutConsidering 46%NotOffered,NotConsidering 46%OfferIncentive 8%NotOfferedbutConsidering 46%NotOffered,NotConsidering

ParticipationRate&Spend AverageParticipationRate WellnessAnnualSpendPerEmployee 30% Unknown 46%Overall 52%withEEContribIncentive 40%OtherIncentiveReward 40%NoIncentive $155.04 37%Overall 48%withEEContribIncentive 41%OtherIncentiveReward 28%NoIncentive $215.60

Addressing Health Care Reform

ABCCompany DropCoverageforExchange 0%VeryLikely 3%Likely 29%NotVeryLikely 41%NotatallLikely 27%Don'tKnow 0%VeryLikely 4%Likely 33%NotVeryLikely 29%NotatallLikely 61%Don'tKnow AllRespondents <250EE's

DropCoverageforExchangesin2014

NotVeryLikely

GrandfatheredStatus CurrentGrandfatheredPlanStatus NonGrandfathered 16%Grandfathered,MaintainStatus 6%Grandfathered,Changeby2013 78%NonGrandfathered 15%Grandfathered,MaintainStatus 0%Grandfathered,Changeby2013 85%NonGrandfathered

CadillacTax CadillacTaxEvaluation Calculated,NotExpectedtoApply 4%Calculated,ExpecttoApply 12%Calculated,UnsureifApplies 16%Calculated,NotExpectedtoApply 67%NotCalculated 2%Calculated,ExpecttoApply 9%Calculated,UnsureifApplies 18%Calculated,NotExpectedtoApply 71%NotCalculated

ContributionMethodologyChange 4%willImplementIncomeSensitive Contributions, 4%willChangeDependentContribution Strategy, 7%willChangePremiumRateTiers, 84% will make No Changes 3%willImplementIncomeSensitive Contributions, 3%willChangeDependentContribution Strategy, 13%willChangePremiumRateTiers, 82% will make No Changes

ChangestoAddressAffordabilityTest underHealthCareReform

NoChanges

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