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Executive Compensation Benefits. Incentive Bonus Plans ..


Executive Compensation / Benefits. Incentive Bonus Plans ... Review current executive compensation arrangements, including individual employment contracts ... – PowerPoint PPT presentation

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Title: Executive Compensation Benefits. Incentive Bonus Plans ..

  • David Foster, JD, CLU, ChFC
  • Presenting
  • The Changing Landscape of Qualified
    andNon-qualified Retirement Plans

Alphas New Services Financial Services
  • Executive Compensation / Benefits
  • Incentive Bonus Plans
  • Deferred Compensation Programs
  • Supplemental Disability / Life Insurance
  • Wealth Management Resources
  • Employee Financial Planning
  • Lunch Learn educational seminars
  • Individual employee financial consulting
  • Retirement and college education savings
  • Executive Long Term Care Programs
  • Phantom Stock, Stock Options Stock
    Appreciation Rights
  • Retirement and college education
    savings projections

Alphas New Services Financial Services
  • Estate Planning
  • Estate Tax Planning
  • Asset Protection
  • Trust Planning
  • Business Succession Planning
  • Buy-Sell Agreements
  • Exit Planning Strategies
  • Management Buy-Out Arrangements
  • Planning for Children With Special
  • Planned Giving Alternatives
  • Employee Stock Ownership Plans
  • Family Business Continuation

Alphas New Services Financial Services
  • Qualified Retirement Plans
  • Defined Contribution Plans 401(k), 403(b),
    Profit Sharing, SIMPLE Plans, ESOPs
  • Defined Benefit Plans Pension Plans, 412(i)
  • Products
  • Mutual Funds
  • Annuities
  • Managed Investment Accounts
  • Life Insurance
  • Disability Insurance
  • Long Term Care

Alphas New Services Total Retirement Solutions
  • Employees rely on employer sponsored retirement
    plans to meet their retirement goals. We can
    help by
  • Designing and implementing effective,
    cost-efficient qualified retirement plans
  • Analyzing plan level administrative services and
  • Providing employee educational seminars

Alphas New Services Total Retirement Solutions
  • Highly compensated executives may be limited in
    the amount they can contribute to qualified
    retirement plans. We can help by
  • Designing and implementing nonqualified executive
    retirement / benefit plans
  • Reviewing current plans to assure compliance with
    recent legislation
  • Providing turnkey programs that reduce human
    resource time commitment

Alphas New Services Total Retirement Solutions
  • We provide individual employees with the tools
    and education they need to meet their retirement
    goals. We can help by
  • Establish goals and review current savings plan
  • Provide retirement needs calculations
  • Develop strategies to reach their retirement
  • Educational lunch learn seminars

Alphas New Services Total Retirement Solutions
  • Employees who terminate their employment will
    have to make decisions regarding their retirement
    plan. We can help by
  • Exploring the many, and sometimes complex,
  • Helping them avoid triggering substantial income
  • Helping them allocate investments based on
    lifetime changes

Pension Protection Act of 2006 - PPA
  • Background
  • Effective dates
  • Provisions

Pension Protection Act of 2006 PPABackground
  • Defined Benefit funding concerns strain pension
  • American workers not saving enough for
  • Signed into law by President Bush on August 17,
  • Various effective dates

Pension Protection Act of 2006 PPAEffective
  • Various effective dates
  • EGTRRA permanence (immediate)
  • Automatic enrollment changes (immediate and
  • Vesting changes (2007)
  • Investment advice (2007)
  • DB(k) Plan combination of best of defined
    benefit and 401(k) in one plan (2010)
  • Other changes (highlights)

Todays Focus 401(k) Changes
Todays Focus 401(k) ChangesEGTRRA Permanency
Growth Opportunities
  • Makes permanent higher contribution limits for
    401(k)s and IRAs, enabling more workers to build
    larger retirement nest eggs
  • Increased Deferral Limits
  • Catch-up Contributions
  • Increased 415 Limits
  • Savers Credit
  • After-Tax Contribution Rollovers
  • Direct Rollovers to Roth IRAs
  • Roth(k) Contributions

Todays Focus 401(k) ChangesAutomatic
  • Removes barriers that prevent companies from
    automatically enrolling employees in 401(k)
  • State law preemption (effective immediately)
  • Corrective distributions (2008)
  • Default Investments (TBD)
  • Refunds within 6 months (vs. current 2 ½ months
  • Automatic Enrollment Safe Harbor (2008)

Todays Focus 401(k) Changes Faster Vesting
  • Effective 2007
  • Current Law
  • Employer other contributions
  • 5 year cliff vesting
  • 7 year graded
  • Employer matching contributions
  • 3 year cliff vesting
  • 6 year graded
  • PPA All employer contributions
  • 3 year cliff vesting
  • 6 year graded

Todays Focus 401(k) Changes DB/DC Combined
Plan Deduction Limit
  • Current law Combined plan (DB/DC) deduction
    limit is 25 of pay, or DB funding minimum
  • 2006/2007 for DC plan purposes contribute up
    to 6 of pay in DC plan irregardless of the DB
  • Starting in 2008 The DB/DC combined plan
    deduction limit is eliminated

Todays Focus 401(k) Changes Participant
Account Statements
  • Ensuring workers have more information about the
    performance of accounts. Requirements
  • Participants with control Quarterly Statements
  • Participants without control Annually
  • Explanation of diversification importance
  • Risk statement if 20 of portfolio from single
  • Department of Labor (DOL) is to issue
  • Effective 2007

Todays Focus 401(k) ChangesProfessional
Investment Advice
  • Provide a prohibited transaction exemption for
    advice from a fiduciary advisor to a DC plan
    participant under an eligible investment advice
  • Fiduciary advisor
  • Eligible investment arrangement
  • Effective in 2007

Todays Focus 401(k) ChangesOther Provisions
  • Tax trap for corporate owned life insurance
  • Notice and consent requirement
  • Exceptions based on insureds status
  • IRS information reporting requirement

American Jobs Creation Act of 2004
  • New Rules for Non-qualified Deferred Compensation
  • Consequences of Non-compliance

  • Broad definition of deferred compensation
  • Limitations on what may trigger payment
  • Rules for when the election to defer must be
  • Rules on re-deferrals
  • Prohibits acceleration of payments

  • Compensation subject to immediate taxation
  • Interest at IRS rates plus 1
  • 20 penalty on amount that should have been
    included as taxable income

Due Diligence
  • Review current executive compensation
    arrangements, including individual employment
  • Work with advisors to make sure compensation
    agreements are in compliance with 409a.

Additional Updates
  • PA Taxation of Non-qualified Deferred
  • Split Dollar Regulations
  • Tax Treatment of Long Term Care Insurance
  • Life Insurance Product Improvements
  • Viatical Settlements

  • Todd Hons
  • Presenting
  • Medical Carrier Updates

  • Medical Rates
  • Lower Renewals!

  • New PPO Plan designs available with different
    deductibles and co-insurance amounts
  • BlueCross will be renaming most of their products
    starting January 1, 2007
  • Ex. Twin 250 will be 250/100
  • Deductible will be combined for in/out of

  • In addition to the March 1, 2006 Rx changes,
    BlueCross added 3 more plan available October 1,

No ancillary charge when provider writes
Dispense as written
  • Benefit ChangesEffective January 1, 2007 or upon
    renewal for groups 2-104Effective February 1,
    2007 or upon renewal for groups 105
  • KHP HMO removing Nicotine Cessation Program
  • All plans A co-pay will apply to therapies in a
    home health setting, currently there is no
  • Vision Therapy All plans a co-pay will apply
    and will fall under physical medicine, currently
    no co-pay
  • Bony Impacted Teeth All plans will NOT be
    covered, currently covered under medical plan

  • Benefit ChangesDeductible Credit and Deductible
    Pro-ration(effective and renewal date, other
    than January 1)
  • If a group moves to a higher deductible, member
    will receive credit for the portion of deductible
    already met
  • If a group is new to CBC or moving from a 0
    deductible plan, members will receive a prorated
  • First quarter no pro-ration
  • Second quarter member will be responsible for
    75 of deductible chosen
  • Third quarter member will be responsible for
    50 of deductible chosen
  • Fourth quarter member will be
  • responsible for 25 of deductible chosen

  • CBC requires medical underwriting for groups size
    2-19 enrolling
  • CBC requires 75 participation after spousal
    waivers to any carrier, still requires a minimum
    of 50 to enroll

  • ePlatform available
  • Requirements
  • Standard plan design (approved)
  • Online enrollment
  • Receive bills online
  • Receive enrollment materials online
  • If requirements are met, a 1.5 rate reduction is

  • Dual options must be approved by Highmark
  • Groups with over 50 enrollees 75 participation
    required with spousal waivers from any carrier
  • Groups 2-50 enrollees 75 participation
    required, will accept spousal waivers from
    Highmark and any other Blue plans outside of
    their 21 counties (not CBC or KHP)

  • Chamber Choice -
  • Exclusive to Highmark
  • Chamber Plan available for
  • Berwick, Columbia, Waynesborough, Shippensburg,
    Schuylkill, and Chambersburg Chamber of Commerce
  • Main Advantages
  • Discounted rates
  • 15,000 term life insurance included at no
    additional cost
  • Must be a standard, approved plan design
  • Can be marketed through Alpha Benefits

  • Forced Plan Changes
  • Higher specialist co-pays
  • Higher emergency room co-pays
  • Increased lifetime maximums
  • Rx changes higher brand formulary and brand
    non-formulary co-pays

  • Select Rx Option
  • Automatically included with PPO Plans
  • Option for POS plans with 50 enrolled
    (approximate 1 increase in premium cost)
  • Select Rx takes away prior authorization for some
    commonly used prescriptions
  • Example Acid reflux medications
  • Total list includes 22 medications

  • Gettysburg Hospital back in the network
  • New EOBs Explanation of Benefits
  • Lehigh Select Products
  • Available to groups in Lehigh, Carbon,
    Northampton counties
  • Plan includes competitive rates and benefit
    incentive to use Lehigh Valley Hospital

  • Offers fully insured products
  • Medical underwriting for all products
  • Working on competitive pricing
  • Accesses Highmark Blue Shield statewide doctor

Carrier Updates Aetna
  • York Hospital (Wellspan) recently joined network
  • Lancaster General in network
  • New Plan designs with deductible and

Carrier Updates United Healthcare
  • Still building doctor and hospital network
  • Full array of PPO products
  • National capabilities

  • Rxs Coming Off PatentOver the next 12-18
    months approximately 70 prescription drugs will
    be coming off patent
  • Here are some of the most popular
  • 2006 Zocor, Pravachal, Zoloft, Ambien
  • 2007 Norvasc, Imitrex, Plavix, Zyrtec

Plan Year vs. Calendar Year Deductibles
  • If someone is over age 65 and still working
    full-time, they are NOT eligible for Medicare
    Part D

  • Dates for providing Disclosure Notice to CMS
  • Plan years ending in 2006 March 31, 2006
  • Plan years ending in 2007 and beyond Within 60
    days after the beginning of the plan year (ex.
    Plan begins 1/1/2007, deadline is 3/2/2007)
  • Within 30 days of terminating a plan that
    provides prescription drug benefits
  • Within 30 days of a change in the creditable
    coverage status of a plan that provides
    prescription drug coverage

  • Dates for providing a creditable coverage notice
    to employees/retirees
  • By November 15th of each year, starting in 2005
  • Prior to an individuals initial enrollment
  • Prior to the effective date of coverage for any
    Medicare-eligible individual that joins your
    groups plan
  • When the plan you sponsor terminates
  • When the plan you sponsor changes its
    prescription drug coverage so that it is no
    longer creditable or becomes creditable
  • Upon an individuals request

High Deductible Update
  • Medical Expense Reimbursement Plan (MERP Plan)
  • Deductibles increasing
  • 100 Groups In-force
  • Health Savings Accounts
  • Starting to make financial sense
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