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EMPLOYEE BENEFIT ANALYSIS: LIQUIDHUB

PART I: EXPOSURE MATRIX PART II: INVENTORY OF BENEFITS PART III: BENEFIT ANALYSIS

912092695 912864524

RMI 3501 DR. DRENNAN FALL 2011

Page |1 EMPLOYEE LOSS EXPOSURE/BENEFITS MATRIX LOSS EXPOSURE MEDICAL EXPENSES Hospital/Physician Dental Vision Prescription LTC Retiree Health Care LOSS OF INCOME DUE TO DEATH Non-Accidental, NonOccupational Death Accidental Death Occupational Death COVERED? COVERAGE/BENEFIT PROVIDED Yes Yes Yes Yes No Yes Yes Yes Yes 3 PPOs (Base, Plus, Premier), Healthcare FSA MetLife PPO, Healthcare FSA All Plans*, Healthcare FSA All Plans*, Healthcare FSA Medicare, COBRA Basic Life Insurance, 401(k), OASDI Basic Life Insurance, 401(k), OASDI Basic Life Insurance, 401(k), OASDI, Workers Compensation Unemployment Insurance STD Through MetLife, PTO, 401(k), OASDI LTD Through MetLife, 401(k), OASDI Workers Compensation, 401(k), OASDI LTD Through MetLife, Workers Compensation, 401(k), OASDI

LOSS OF INCOME DUE TO UNEMPLOYMENT Unemployment Yes LOSS OF INCOME DUE TO DISABILITY Short-Term, Non-Occupational Yes Long-Term, Non-Occupational Short-Term, Occupational Long-Term, Occupational Yes Yes Yes

LOSS OF INCOME DUE TO RETIREMENT Retirement Yes 401(k), OASDI OTHER EXPOSURES Educational Assistance No Work/Life Yes Computer/Laptop Stipend Dependent Yes Dependent Care FSA Property/Liability No Legal Expenses No *participants in any of the PPO options are automatically enrolled in the vision and prescription drug plan through FutureScripts

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SUMMARY OF BENEFITS
PLAN Independence Administrators Base PPO (includes vision) Independence Administrators Plus PPO (includes vision) Independence Administrators Premier PPO (includes vision) MetLife Dental PPO A.M. BEST RATING n/a FINANCING Contributory FUNDING Self-Funded ELIGIBILITY Active full-time employees and dependents Active full-time employees and dependents Active full-time employees and dependents

n/a

Contributory

Self-Funded

n/a

Contributory

Self-Funded

Active full-time employees and dependents FutureScripts n/a Contributory* Self-Funded Active full-time Prescription Drug employees and Plan dependents MetLife Basic Life A+ NonFully Insured Active full-time Insurance (superior) Contributory employees MetLife, STD A+ NonFully Insured Active full-time (superior) Contributory employees MetLife, LTD A+ NonFully Insured Active full-time (superior) Contributory employees Morgan Stanley FullyFully Insured Active full-time 401(k) Contributory employees * the Prescription Drug Plan is managed by FutureScripts. Employees and their eligible dependents are automatically enrolled when they enroll in any of the PPO options

A+ (superior)

Contributory

Self-Funded

Page |3 INVENTORY OF BENEFITS LiquidHub offers its employees a competitive benefits package, providing medical, dental, vision, dependent care, loss of income, and retirement coverage. In order to qualify for the benefits package, an employee must be active, full time, and work 30 or more hours per week. The benefits may also cover any of the employees eligible dependents. An eligible dependent is either the employees spouse (legally married or domestic partner) or a child under the age of 26 who does not have access to any other insurance. According to LiquidHubs Summary Plan Description employees are eligible to receive their benefits on the first day of the month following their date of hire. If the employee chooses not to enroll in the benefits plan when hired, they must wait until the next annual open enrollment period. For the case when an employees coverage from a spouse may have ended, leaving them with no coverage until the next open enrollment period, LiquidHub has established special enrollment, which allows the employee to enroll in LiquidHubs benefit plan even if it is not during the open enrollment period. LiquidHubs benefit plans state that if an employee is enrolled in LiquidHubs medical plan he or she is automatically enrolled in the vision and prescription drug plans. If an employee chooses to opt out of the medical plan and shows proof of other credible coverage, he or she will receive a reimbursement of $100. Medical Expenses LiquidHub offers its employees three different preferred provider organization (PPO) healthcare plan options. The three plans are called Base, Plus, and Premiere. The differences between the plans are the amount of coverage provided. Each PPO medical plan is administered through the third party administrator (TPA), Independence Administrators. These medical plans are offered to all eligible employees and dependents on a contributory basis (employees contribute 30%) and is deducted from the employees pre-tax income. Since, by definition, a PPO does not require

Page |4 participants to have a primary physician, there is no need for a referral to see a specialist. Each plan has the same coverages, exclusions, eligibility requirements, and conditions which the employee must satisfy to qualify for LiquidHubs plan, and the plans have a $50 copay for any visits to the emergency room. Base The Base plan offers employees 70% coverage in the network, a $1,500 individual deductible, a $3,000 family deductible, and no out-of-network coverage. Office visits within the network incur a $25 copay and specialist visits incur a $35 copay. The out-of-pocket maximum for individual is $3,000, and the maximum for a family is $6,000. This plan covers 70% of inpatient and outpatient expenses in the network; there is no coverage for inpatient or outpatient expenses out-ofnetwork. Plus The Plus plan covers 80% in-network expenses with a $1,000 individual deductible and a $2,000 family deductible, and 60% coverage for out-of-network expenses. The copay for an office visit and seeing a specialist are $15 and $25, respectively. The out-of-pocket maximum in-network for an individual is $4,000 and $8,000 for a family. The Plus plan covers 80% of inpatient and outpatient expenses as well as the deductible, and covers 60% of out-of-network inpatient expenses. Premier The Premier plan offers 100% coverage in-network with no deductible, 80% out-ofnetwork coverage with a $500 individual deductible and a $1,000 family deductible. The office copay is $10 and the specialist copay is $20. The out-of-pocket maximum for the Premiere plan is $2,000 for an individual and $4,000 for a family. The plan provides 100% coverage for inpatient hospital

Page |5 visits and a $10 copay for outpatient in-network visits. It also offers 80% coverage for out-ofnetwork inpatient hospital visits.
PLAN PREMIUMS (PER MONTH)

Base
Individual EE/Single Dependent EE/Family Dental $121.32 $249.60 $349.18

Plus
$157.93 $324.91 $454.54

Premier
$182.02 $374.49 $523.89

LiquidHubs PPO dental plan is offered on a 40% employee contribution basis; it is selffunded and administered through Metropolitan Life (MetLife). Since the plan is a PPO, it does not require participants to have a primary dentist, and does not require a referral in order to see a specialist. The plan offers the same coverage for in and out-of-network care. Although employees are allowed to go out-of-network, staying in-network is more cost effective due to the lower out-ofpocket costs. The maximum annual benefit per covered person is $1,000 and there is 100% coverage for preventative services with no deductible in or out-of-network. When in-network, the plan pays 90% coverage for basic services including: space maintainers, basic restoratives, simple extractions, endodontic, repair of crowns and inlays, non-surgical periodontics, complex oral surgery, and general anesthesia. For major services in-network which can include inlays, onlays, crowns, bridges, and dentures the dental plan provides 50% coverage. The plan offers 80% coverage for basic surgery out-of-network and 30% coverage for major surgery out-of-network. For any basic surgery, whether it be in or out-of-network, there is a $50 deductible. For any major surgery, in or out-of-network the deductible is $150. Vision

Page |6 The participants of LiquidHubs medical PPOs are automatically enrolled in the vision plan offered. The vision plan provides $60 coverage for any hardware (i.e. frames, lenses, contact lenses) per 24 months, and 100% coverage for an eye exam, both in and out-of-network, every 24 months. Prescription LiquidHub offers three PPO prescription drug plans that are administered by FutureScripts. An employees medical plan ID card can be used for the prescription drug plan since each of the options offer the same coverage. An employee can choose how he or she would like to order their prescriptions, either through retail or mail order, and is responsible for the copay applied to each type of drug. The three prescription drug plans are Generic, Brand, and Brand NonFormulary. The respective copays are shown in the table below. Retail (Up to 30 Day Supply) $5 $20 $35 Mail Order (Up to 90 Day Supply) $10 $40 $70

Generic Brand Brand Non-Formulary

Flexible Spending Account LiquidHub offers two different flexible spending accounts (FSA), one for healthcare and another for dependent care. An FSA allows an employee the option of taking a pre-tax salary reduction to fund one or more of the FSA accounts. However, if any balance is left in the FSA at the end of the year, federal law requires that the employee forfeit the balance. These FSAs are administered through Automatic Data Processing, Inc. (ADP) and are funded through employee contributions which are deducted from payroll each month. LiquidHub does not require its employees to be enrolled in its medical plan in order to participate in these FSAs. Healthcare FSA A healthcare FSA helps to cover any medical expenses that is either not covered or not fully covered by an employees medical plan. The maximum amount an employee can contribute per year

Page |7 to their healthcare FSA at LiquidHub is $5,000. Some of the eligible expenses for the FSA are deductibles, any coinsurance not covered by the medical plan, contact lenses and glasses, and other out-of-pocket costs to maintain employees health and well-being. In order to access their FSA, employees are given a debit MasterCard administered by ADP. If the card is rejected at the time of payment, the employee must pay out-of-pocket and file a claim to receive possible reimbursement. Dependent Care FSA A dependent care FSA helps cover expenses related to child care and elder care if the coverage allows the employee to work outside the home. The maximum amount per year an employee can contribute to their FSA is $5,000; if the employee is married but files a separate tax form, he or she is only permitted to contribute up to$2,500 per year. The IRS defines a dependent as a child who is under the age of 13 or someone over the age of 13 who is permanently and totally disabled. In order to be eligible for a reimbursement, claims must be filed under the correct tax identification number/social security number. Loss of Income Life Insurance LiquidHub offers basic life insurance through MetLife on a non-contributory, fully insured basis. In order to qualify, an employee must be full-time (working 30 or more hours a week) and active in his or her job. The life insurance is valued at $50,000, and the employee must designate a beneficiary at the time of enrollment; this beneficiary can be changed or updated at any time. Short Term Disability Insurance Short term disability insurance is provided through MetLife on a non-contributory, fully insured basis. Payments to an employee begin on the 14th consecutive day of disability and are limited to a maximum of 13 weeks of payment. Each payment an employee receives is 60% of his or

Page |8 her weekly salary and is capped at a maximum payment of $1,500 per week. This amount may be reduced by other income benefits. Paid Time Off Every LiquidHub employee is given a specified amount of time off each year. The amount of time given depends on the employees length of employment at LiquidHub. If an employee has worked there for less than 5 years, he or she will receive 15 paid days off; if he or she has worked there for over 5 years but less than 9, the employee will receive 20 paid days off. Once an employee has worked at LiquidHub 9 or more years he or she will receive 25 paid days off each year. These days can be used for any absence such as vacation, illness, personal days, or snow days. Long Term Disability Insurance LiquidHub provides long term disability insurance through MetLife on a non-contributory, fully insured basis. Any eligible employee (active, full time) receives these benefits after 90 consecutive days of disability until the age of 65 or when the employee is no longer disabled. An employee receives 60% of his or her monthly earnings, up to $8,500 a month. This amount may be reduced by any other income benefits. Retirement Employees are provided a 401(k) plan by LiquidHub; this plan is fully contributory and is administered by Morgan Stanley. A 401(k) plan provides benefits for any loss of income due to death or disability. The IRS has set the maximum amount of employees yearly contribution to their 401(k) plan at $16,500. These contributions are deducted from the employees paycheck pre-income tax. Any earnings or gains the 401(k) plan has will accrue until the employee makes a withdrawal. If an employee participating in LiquidHubs 401(k) plan dies during employment, the balance of their 401(k) plan is given to the employees designated beneficiary. If an employee becomes substantially disabled for an extended period of time, he or she is entitled to the balance of their 401(k) plan.

Page |9 Other Coverages Work/Life LiquidHub offers a computer or laptop stipend to eligible employees. In order to be considered eligible, the employee must be an active, full time employee working 30 or more hours a week. The stipend is limited to $1,000, and an employee may only apply once every three years. Stop-Loss Coverage All LiquidHubs self-funded coverages have specific stop-loss coverages of $50,000 per person per plan year. There is also an aggregate stop-loss coverage limit of $1.7 million a year. This stop-loss coverage has been established in order to indemnify LiquidHub in case of a catastrophic loss exceeding the specified attachment point.

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INTRODUCTION TO BENEFITS ANALYSIS


LiquidHub is a global management and technology consultancy focused on fueling business transformation for our clients in the healthcare, life sciences, financial services, insurance and other progressive markets (LiquidHub). LiquidHub has grown tremendously in its eleven years of existence. In 2000, LiquidHub had 52 full-time employees; today LiquidHub has 250 active, full-time employees working there and that number continues to grow. LiquidHubs benefit plans currently cover over 380 employees and eligible dependents. Mr. Paul Harewood, Vice President of Human Resources, Chief Information Officer, and one of the founding members of LiquidHub, is the direct contact to the benefits coordinator and helps make key decisions in reference to the plans offered to the employees at LiquidHub. In his role, Mr. Harewood is responsible for the management of corporate administration functions such as human resources, information system, recruiting, and the facilities department.

OVERALL CONSIDERATIONS AND OBJECTIVES IN OFFERING EMPLOYEE BENEFITS


Objectives and Goals of the Plan Employee benefit plans became popular in the 1950s when the US adopted a wage freeze. This left employers with the question how do we attract and retain employees? The answer became clear - offer them benefits. Today, LiquidHub offers a competitive and comprehensive benefits package in the hope to both attract and retain its employees. Mr. Harewood said, When LiquidHub was starting out we needed to be conscious of the impact different aspects of a job offer might have on prospective employees. LiquidHub decided to offer the best benefits package they were able to, in order to obtain the best employees. Funding

P a g e | 11 LiquidHub decided to self-fund their medical plans after speaking with DiBona Associates, an employee benefits brokerage. This decision was based on the predictability of LiquidHubs losses. After a few years of analysis it became apparent that the losses LiquidHub incurs each year are relatively consistent, allowing them to self-fund in good conscience. LiquidHub employs a third party administrator (TPA), Independence Administrators, to perform all the administrative tasks that are involved in their three preferred provider organization (PPO) healthcare plan options. Each year, LiquidHub analyzes the costs associated with self-funding their healthcare plans in order to certify that self-funding is still its best option. When it came to analyzing short-term and long-term disability, as well as life insurance, LiquidHub quickly saw it would not be able to self-fund. The data showed that LiquidHubs losses were too erratic and could not be properly predicted. Because of this, these benefits are provided through MetLife on a non-contributory basis. LiquidHub has purchased both specific and aggregate stop-loss coverage for all its selffunded coverages. Specific stop-loss coverage means that an Insurance Company agrees to reimburse the Plan Sponsor (usually the Employer) for any claim over a certain amount (McKuin).Currently, LiquidHub has a $50,000 specific deductible, which means that after the first $50,000 it pays for an individual loss, the stop-loss insurance will pay for any additional losses. Aggregate stop-loss coverage means that an Insurance Company agrees to reimburse the Plan Sponsor for any amount over and above the Plan's retention for all claims in a given year (McKuin). LiquidHubs aggregate stop-loss coverage limit is set to $1.7 million a year. This stop-loss coverage has been established in order to indemnify LiquidHub in case of a catastrophic loss exceeding the specified attachment point.

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DESIGN OF HEALTH BENEFITS


Plans Offered LiquidHub offers its employees three different PPO options for their healthcare coverage. The three plans are called Base, Plus, and Premier. Each plan is essentially the same with different degrees of coverage. Since the plans are PPOs, there is no need to have a primary physician or obtain a referral in order to see a specialist. This lack of a gatekeeper was a key factor in LiquidHub determining which type of plan to offer its employees. Mr. Harewood believes that employees take great satisfaction in the lack of a gatekeeper and thinks many employees would not be nearly as happy with another plan. Originally, LiquidHub only offered the Premier plan to its employees; however, the rising cost of healthcare caused LiquidHub to make the two other options available. Each offered plans attracts a different type of LiquidHubs employee. For employees who have a family with a few health issues, the Premier plan would be the best option. This plan covers the most, has very little out-of-pocket costs, and the annual deductible does not apply to prescriptions, which would be very valuable to a family with many prescriptions each month. If an employee has a relatively healthy family but wants coverage just in case anything were to ever happen, they might want to choose the Plus option. If an employee is healthy, single, and has no dependents, the best option for them would be the Base option. This option provides sufficient coverage with the lowest employee contribution but higher out-of-pocket expenses than the other plans. Every active, full-time employee is eligible to participate in a healthcare flexible spending account (FSA), which helps to cover any medical expenses that is either not covered or not fully covered by an employees medical plan. These out-of-pocket expenses result from anything including medical, dental, vision, and prescription plans. Employees can contribute up to $5,000 a year into this plan, pre-tax, and are not required to be enrolled in any of LiquidHubs medical plans.

P a g e | 13 According to Mr. Harewoods calculations, 61% of LiquidHubs employees are currently participating in the healthcare FSA offered. LiquidHub decided to utilize Independence Blue Crosss network. The Blue Cross/Blue Shield name and logo carry a lot of weight and many people recognize them as the best providers and network around. Mr. Harewood said this was the easiest decision to make and that having Blue Cross/Blue Shield was worth the extra expense. Originally, LiquidHub used Benefits Concepts as its TPA, but the employees complained that they did not have access to certain doctors within the network. Due to the great employee dissatisfaction LiquidHub swiftly changed to Independence Administrators and the Blues network. Employer Subsidy Decisions Due to the rising costs of healthcare, LiquidHub has had to decrease its contributions toward healthcare premiums. This year, LiquidHub contributed 70% of healthcare premiums compared to 80% contribution in 2000. Mr. Harewood said the decrease in contribution was the lesser of two evils LiquidHub faced; either LiquidHub could keep coverage the same and increase the employee contribution or decrease coverage and keep costs the same. Mr. Harewood realized that reducing the amount of coverage offered to employees would result in an abrupt decrease in employee satisfaction. Therefore, he decided to keep the level of coverage and increase the employee contributions. Once the contribution amounts had changed Mr. Harewood expected to see a decline in the number of employees enrolled in the Premier plan, however there was very little change. This result confirmed to Mr. Harewood that LiquidHub must continue to offer extensive coverage to the employees. Cost Containment Issues Since its inception, LiquidHubs average employee age has increased ten years. In 2000, the average age of LiquidHubs employees was 31; most of these employees were young and did not

P a g e | 14 have any children. Since then the average age has risen to 41 and now the majority of LiquidHubs new hires are senior level executives. Also, most of its employees now have children and are concerned with benefits for their dependents. The employees, of course, expect to be compensated via their salary but are also concerned with the level of benefits they and their families receive. Mr. Harewood expressed concerns that with the aging population of the company, the difference in the cost of self-funding and being fully insured has begun to decrease. He indicated that unless the costs of healthcare either decreases or freezes in the next 5 to 7 years, LiquidHub will need to transfer to a fully insured plan. In order to aid in cost containment, LiquidHub has applied a coordination of benefits. This is a schedule that determines the order in which employees receive their payments if they are enrolled in more than one plan. By using this schedule, LiquidHub can ensure that there are no duplicate payments for the same medical service.

DESIGN OF NON-RETIREMENT BENEFITS


Other Benefits Offered LiquidHub currently has fully insured, non-contributory short and long-term disability insurance through MetLife. This benefit is designed to reduce any loss of productivity from employees. This coverage will pay employees a portion of their salary for the time they are unable to work. Since the payments received are lower than the employees normal salary there is an incentive for the employee to return to work. This works well for both the employer - who wishes their employee to return after a full recovery to continue their work - and the employee, who would like to return to work to once again receive their normal salary. Every active, full-time employee at LiquidHub is eligible to receive basic life insurance on a non-contributory basis, provided through MetLife. This life insurance is valued at $50,000 and is

P a g e | 15 provided to ensure financial protection. Should an employee die, their beneficiary, who must be named at the inception of the policy, will receive the $50,000. Most employees at LiquidHub make more than $100,000, so the value of this life insurance policy may seem low. However, when this was mentioned to Mr. Harewood he said This benefit is on par with the amount many other companies offer and that most employees already have a personal life insurance policy worth much more in order to protect their families from any financial hardship, should they pass away. Along with the previously mentioned benefits, every active, full-time employee is eligible to participate in a dependent care FSA, which helps to cover expenses related to child and elder care if the coverage allows the employee to work outside the home. Currently, an employee can contribute up to $5,000 a year to the plan; if they are married but filing their taxes separately, they can only contribute up to $2,500 per year. The participation rate is currently at 63%. LiquidHub offers a computer or laptop stipend to eligible employees. In order to be considered eligible, the employee must be an active, full time employee working 30 or more hours a week. The stipend is limited to $1,000, and an employee may only apply once every three years. LiquidHub encourages participation in this program in order for its employees to remain up-to-date on all technological advances.

REGULATION COMPLIANCE
Patient Protection and Affordable Care Act (PPACA) There are many changes that have and will continue to impact the healthcare coverage LiquidHub offers its employees under PPACA. Starting September 23, 2010, the age of a dependent increased to 26 years old and there was a significant drop in the amount of money, from $5,000 to just $2,500, an employee could contribute to an FSA. The age increase did not greatly affect LiquidHubs cost of healthcare benefits, since almost all of the current dependents are under 19, but

P a g e | 16 LiquidHub must now cover these dependents for longer than previously anticipated. The decrease in the amount of money an employee could contribute to their FSA may affect LiquidHub drastically. Most of the employees who participate in LiquidHubs healthcare FSA contributed the maximum of $5,000. Mr. Harewood said he was not completely surprised when he heard that some of the employees were exiting the FSA program by the end of the year. He hoped that most people who see the value in staying with it and retaining at least $2,500, pre-tax, toward their out-of-pocket costs. Also over-the-counter drugs can no longer be obtained without a doctors prescription under PPACA. All these changes have been difficult to describe to employees in a clear, simple manner. Over this past year there have been many meetings conducted and emails sent out about all the changes that have been taking affect. Although employees seem to be reacting well to the changes, there is an undercurrent of confusion with some, which a team of benefits specialists is attempting to address in an orderly and timely fashion. Thus far, Mr. Harewood feels confident that the average employee has a good understanding of how these legislative changes will affect them. Consolidated Omnibus Budget Reconciliation Act (COBRA) LiquidHub has never had to worry about the cost or effects COBRA might have on their company since their healthcare plans have always been self-funded. Mr. Harewood expressed concerns that with the rising cost of healthcare, within the next 5-7 years, LiquidHub may need to change to a fully insured plan. Should they make this switch, LiquidHub would then have to be concerned with any extra cost, as well as all the regulations and any changes involved with COBRA. Simply put, COBRA allows employees to continue their healthcare coverage after leaving employment, voluntarily or non-voluntarily. One of the main features of COBRA that concerns employers is the denial of income tax deductions for any contributions the employer makes to the employees group health plan, unless the contribution meets specific criteria. Health Insurance Portability and Accountability Act (HIPAA)

P a g e | 17 Much like COBRA, LiquidHub currently does not need to worry about requirements and regulations imposed under HIPAA since its healthcare plans are self-funded. Again, this could become an issue within the next 5-7 years, should LiquidHub find it financially beneficial to switch to a fully insured healthcare plan. If LiquidHub were to switch to a fully insured plan, it would need to comply with all of HIPAAs requirements and pay penalty amounts if it failed to do so. The requirements include written privacy policies and procedures that are consistent with the Privacy Rule. This rule states that a covered entity must designate a privacy official responsible for developing and implementing its privacy policies and procedures. The company must maintain these policies and procedures until six years after the later of the date of their creation or last effective date. The penalty amount for violating HIPAAs requirements is up to $100 per violation prior to February 18, 2009, with a calendar year cap of $25,000 and $100 to $50,000 or more per violation on or after February 18, 2009, with a calendar year cap of $1,500,000 (Summary of the HIPAA Privacy Rule).

COMMUNICATION
Along with providing communications to the employees about the recent changes in legislation, LiquidHub provides each employee with a copy of the summary plan description (SPD) for their chosen health plan. These SPDs are given out to employees so they may better understand their coverage. Should an employee have a question about coverage they are able to contact either the Independence Administrators or one of the benefits specialists. If an employee cannot find their physical copy of the SPD, it is always available through the companys benefits website, which employees have access to through a login ID LiquidHub provides. The basics of each plan are also provided within a small booklet LiquidHub distributes each year before open enrollment starts to help employees chose whether or not they would like to switch their plan.

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CONCLUSION
LiquidHub recognizes the need for a competitive and comprehensive benefits package and has provided the best package possible. Although the package is geared toward the more highly compensated employees, this does not worry Mr. Harewood since most of the employees at LiquidHub are highly compensated. LiquidHub has acknowledged that in order to attract and retain employees they must provide a variety of benefits at all levels; this is why they offer three different medical plans with additional options, as well as the short-term care, long-term care, and life insurance. Without these benefits, LiquidHub would not have its talented team of employees. Since LiquidHub self-funds their healthcare the rules and regulations relating to COBRA and HIPAA do not apply, however, it is subject to the new regulations under PPACA. The change of age for covered dependents increased to 26 years of age, as per PPACA, starting September 23, 2010. This change has not had a significant impact on LiquidHubs current expenses but will potentially increase them in the coming years. Another key alteration due to PPACA was a decrease in the amount an employee can contribute to their FSA, which has caused some of LiquidHubs employees to drop out.

P a g e | 19 References: Harewood, Paul. LiquidHub Employee Benefits. Personal Interview. 6 Dec. 2011. "LiquidHub :: The Hub :: About LiquidHub." Welcome To LiquidHub. LiquidHub. Web. 07 Dec. 2011. <http://www.liquidhub.com/thehub.htm>. McKuin, Michael A. "Stop Loss Shuffle (Or "How to Write Insurance Without Writing Insurance, While Simultaneously Side-stepping the Fiduciary Responsibilities Imposed by ERISA.")." Home. Web. 07 Dec. 2011. <http://www.mckuinlaw.com/Stoploss-Page1.html>. "Summary of the HIPAA Privacy Rule." United States Department of Health and Human Services. U.S. Department of Health & Human Services. Web. 09 Dec. 2011. <http://www.hhs.gov/ocr/privacy/hipaa/understanding/summary/index.html>.

P a g e | 20 Thank You Note: Mr. Paul Harewood Vice President of Human Resources, Chief Information Officer 500 E. Swedesford Road Suite 300 Wayne, PA 19087 Dear Mr. Harewood, We would both like to thank you for your enthusiasm in helping us with our employee benefits project. With your guidance, we were able to better understand a companys benefits package and how both the employer and employee may look at the benefits provided. We very much enjoyed meeting with you to further discuss the benefits package offered to the employees at LiquiHub on December 6th. We know this is a very busy time of year for you and appreciate all your help. Sincerely, Elizabeth Caracino and Vanessa Vander Brink