After the Ballots are Counted:Election 2016 Recap Webinar

Joel KopperudVice President

Government Affairs

Joel WoodSenior Vice President Government Affairs

Exit Polling: Demographics

Trump exceeded expectations in several key demographics while Clinton underperformed:

VotingBloc Trump‘16 Clinton‘16 Obama‘12 Romney‘12

Black 8% 88% 93% 6%

Hispanic 29% 65% 71% 27%

Female 42% 54% 55% 44%

Male 53% 41% 45% 52%

White Female 53% 43% 42% 56%

WhiteMale 63% 31% 38% 62%

Veterans 61% 34% 39% 59%

White CollegeGrad 49% 45% 42% 56%

White Non- CollegeGrad 67% 28% 36% 61%

Millennials 46% 54% 60% 37%

2018 Senate Races

Budget among many lame duck priorities

October 12, 2016 | Katharine Conlon

Source: National Journal Research, 2016.

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■ Senate in session ■ Both chambers in session

November December

House

16Days left

in session

Senate

20Days left

in session

Other possible congressional priorities in the lame duck session Criminal justice reform: Sentencing Reform and Corrections Act of

2015 may be voted on by the end of the year Energy: Water Resources Development Act to be revisited during

lame duck session International trade: congressional vote on TPP to happen after

November election LGBT rights: Rep. Maloney (D-NY) expected to reintroduce anti-

discrimination amendment Mental health reform: congressional consideration of Mental Health

Reform Act of 2015 expected this fall

Current continuing resolution expires Dec. 9th

Congress leadership election process is expected to take place within the first few weeks after the election

Health care reform: what will Trump do?Repeal and replace scenarios for 2017

Will it pass?

Totalrepeal

• Unlikelyintheshortterm– the 2017marketsareenrollingandpremiumsareset.2018wouldbetheearliest the ACA could be repealed, and a sudden loss of health insurance for more than 20 million people would be politicallydamaginginthefuture

STOP Defund• AsdefundingwouldcrippletheACA,legislationimmediatelyremovingfundingwouldlikelynot passbecauseit wouldbetoosignificant of adisruptionto thehealth

insurancemarket.Additionally,lastyear’sHousebillthat defundedtheACAincludedatwo-yeartransitionperiod,andlawmakerswouldlikelyincludeit againifthey opt totakethisapproach

Replace:with what?

Themarketplacesandassociatedsubsidies:shuttingdownmarketplacescouldtakeawayinsurance plansandraisepremiums,whichwouldlikelybepoliticallydamaginginthefuture

• Medicaidexpansion:GOPcouldconvertMedicaidexpansionto blockgrants

• Removalof<26year-olds’righttoremainonparents’plan:provisionislikelytoo popularto repeal

• MedicalDeviceTax:CouldberepealedastheGOPseesthetaxasstiflingto innovation

? • RepealoftheCadillactax:“ABetterWay”agendaalsoproposesacapontaxexclusionforplans

? • RepealofIndividualmandate:likelywouldneedaGOPsupermajoritytorepealtheindividualmandate

• Preexistingcondition:Politically,thiswouldbehardfortheGOPto pass

? • 10 essential benefits: a replacementplan may cut down on insurance regulations

? •

?

?

Trump adopts Ryan's ideas into his health policy agenda

Health CareProgram Trump

Affordable Care Act (ACA) O Repeal & replace with health savings accounts(HSAs)

Prescription drugprices P Lower barriersto marketentryandto tradeto allow drugmakers from overseas to sell in the

U.S.

Medicaid expansion ? Unclear, Trumpproposesstate block-grants for Medicaid

Medicarebuy-in ? Unknown, Trumppromisedto improveMedicarebymaking “the countryrich”

Publicoption O Does not support

Mental healthparity P Supportscurrent reform plan inCongress

Provider pricetransparency P Require transparency from doctorsandhospitals

Sale of healthinsurance

across statelinesP Allow health insurance to be sold across statelines

Implement high riskpools P Work with states toimplement high risk pools

Details on Trump’s platforms on health care

14

Trump promises to repealObamacare

Donald Trump’s promises for the first 100 days

Broader legislative that Trump will push inCongressMiddle Class Tax ReliefAct

“An economic plan designed to grow the economy

4% per year and create at least 25 million new jobs

through massive tax reduction and simplification, in

combination with trade reform, regulatory relief,

and lifting the restrictions on American energy.”

American Energy & InfrastructureAct

“Leverages public-private partnerships, and private

investments through tax incentives, to spur $1 trillion in

infrastructure investment over 10 years. It is revenue

neutral.”

School Choice and Education Opportunity Act

“Redirects education dollars to give parents the right to send

their kid to the public, private, charter, magnet, religious or

home school of their choice. Ends common core, brings

education supervision to local communities.”

Repeal and replaceObamacare“Fully repeals Obamacare and replaces it with Health

SavingsAccounts.”

End Illegal ImmigrationAct

“Fully-funds the construction of a wall on our southern

border with the full understanding that the country

Mexico will be reimbursing the United States for the

full cost of such wall; establishes a 2-year mandatory

minimum federal prison sentence for illegally re-

entering the U.S. after a previous deportation.”8. Restoring CommunitiesAct

“Reduces surging crime, drugs and violence by creating

a Task Force On Violent Crime and increasing funding

for programs that train and assist local police;

increases resources for federal law enforcement

agencies and federal prosecutors to dismantle criminal

gangs and put violent offenders behind bars.”

Repeal and replace – with what?

• Buying across state borders

• Association health plans

• Medical malpractice reform (really? Trump?)

• HSAs

Repeal and replace – with what?, cont.:

• Off-ramp for exchanges … to high-risk pools?

• Ryan healthcare Blueprint – tax the 1%?

• Individual market premiums tax deductible

• Medicaid block grants – roll back coverage?

Health Insurance Coverage In 2016

For People Under 65

Primary Drivers To TheEmployer-Provided Group Platform:

• Pre-tax treatment of both employer and employee paid premiums

• Ease of distribution from carrier perspective

• Expectation by employees that good employers will provide benefits

Largest Tax Expenditures, FY 2014

$164.2BExclusion of employer health insurance

$162.7BExclusion of employer pensions

$99.8BMortgage interest deduction

$76.2BExclusion of Medicare

$71.4BCapital gains rates

$58.4BEarned Income Credit

$51.6BDeduction of charitable contributions

7. Tax Fairness at Work: For

the first time, the federal

government will give

everyone the same tax relief

for health insurance,

regardless of where it is

obtained– at work, in the

marketplace or in an

exchange. Employees will

not be able to double dip,

however. Other tax relief,

such as the ability of an

employer to purchase

insurance with pre-tax dollars,

will be clawed back or topped

up to the tax credit amount.

So, for employers, let’s recap:

• No exchanges/off-ramp in 2018?

• No mandates

• No reporting requirements for mandates

• No Cadillac tax

• No reporting requirement for Cadillac tax

• No other ACA taxes – HIT/medical device

Recap, cont.:

• Cap on employer-provided health benefit?

• Tax credit for purchase of health insurance for all?

• Expansion of HSAs – pre-tax contributions in individual market

What other kinds of reg reform?

• Rollback of fiduciary duty rule for investment advisors?

• Joint employer requirements (McDonalds case) overturned?

• Overtime regulations – tension between populist vs. Republican agenda?

• The Department of Labor announced on May 17th a final rule raising the minimum salary threshold required to qualify for FLSA “white collar exemption” from $23,660 to $47,476

• The DoL is instituting an “automatic update” for the salary threshold to occur every three years beginning in 2020

Department of Labor Final Overtime Rule

• The final rule will allow up to 10% of the salary threshold to be met with nondiscretionary bonuses, incentive payments, or commissions that are paid quarterly or more frequently

• The final rule did not change the current job-duties-related tests• The final rule will go into effect on December 1st, 2016.

After the Ballots are Counted:Election 2016 Recap Webinar

Joel KopperudVice President

Government Affairs

Joel WoodSenior Vice President Government Affairs