First Look: What The Election Results Mean For Employee BenefitsJames Slotnick, JDSun Life FinancialAVP, Advanced Markets & Broker Education

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Type your question into the “Questions” panel

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Ryan GlushkoffSenior Director, Marketing

PlanSource

James Slotnick, JDAssistant Vice President

Sun Life Financial

The Strength Of Our Portfolio

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We are the largest employee benefits insurer in the U.S., affording us the scale to offer products and services to meet customer needs.1

6thWe have the largest PPO dental network in the U.S., helping our customers control costs and giving our members access to the dentists they want all across the country.2

2nd

We are the independent Stop-Loss carrier, providing us with the financial power to manage catastrophic claims risk.3

1#

1. As a result of the acquisition, Sun Life Financial’s U.S. group benefits business is the sixth-largest group benefits carrier (excluding group health care) in the U.S. based on pro forma combined revenue from an internal analysis of publicly available information. The acquiring entity was Sun Life Assurance Company of Canada, a subsidiary of Sun Life Financial Inc.

2. The Ignition Group, LLC Data as of September, 2015, based on unique dentist count. For more information, please visit www.netminder.com.3. The #1 ranking is based on the 2014 year-end Sun Life Stop-Loss premium of $1.03 billion and on our analysis of publicly available financial information and third-party market share

data.

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Trump tears down Blue Wall

IL

ME

1992 – 2012 ElectionsBlue Wall’s 18 States and DC voted in same pattern

– representing 242 electoral votes

18 states and D.C. since 1992

WA

OR

NV

CA

AZ

MT

ID

WY

COUT

NM

TX

OK

KS

NE

SD

NDMN

IA

MO

AR

LA

MS AL GA

FL

SC

NCTN

KY

WI

MI

IN OH

WVVA

PA

MDDENJ

CTRI

NY

VTNHMA

AK

HI

ME

IL

Source:NewYorkTimes,270towin.com

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Trump tears down Blue Wall

IL

ME

Pennsylvania, Michigan*, and Wisconsin go to Trump

WA

OR

NV

CA

AZ

MT

ID

WY

COUT

NM

TX

OK

KS

NE

SD

NDMN

IA

MO

AR

LA

MS AL GA

FL

SC

NCTN

KY

WI

MI

IN OH

WVVA

PA

MDDENJ

CTRI

NY

VTNHMA

AK

HI

ME

IL

Source:NewYorkTimes,270towin.com

*Michigan has not yet been called but is leaning red

INTERNAL USE ONLY

“Reconciliation” 101

Priorities of the Trump Administration

Looking to 2018

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Republicans hold a 4 seat Senate majority

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46

54

42

44

46

48

50

52

54

56114th Senate

Assumes Democrats pick up New Hampshire

48

52

42

44

46

48

50

52

54

56115th Senate

Only 2 “at risk”

Republican seats moved

Republicans hold:

WisconsinPennsylvania

OhioIndiana

MissouriFlorida

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Senate rules will both help and hinder change

• With a 52 seat majority in the Senate Republicans:

• Cannot bring most legislation to a vote on the Senate floor

• Generally requires 60 votes for “Cloture”

• Certain budget legislation cannot be filibustered• Generally speaking, this legislation can not increase federal

spending or increase deficits

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Recent uses of Reconciliation

- Bush Tax Cuts- EconomicGrowth&TaxReliefReconciliationActof2001

- Jobs&GrowthTaxReliefReconciliationActof2003

- Bothleveraged“sunset”provisions

- Affordable Care Act- HealthCareandEducationReconciliationActof2010

INTERNAL USE ONLY

“Reconciliation” 101

Priorities of the Trump Administration

Looking to 2018

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220225230235240245250255

Insured Under ACA Insured Under Repeal

Millions of Insured Individuals

Full repeal would cause 19 million individuals to lose health insurance coverage

Proposal: Repeal Affordable Care ActBenefit: Eliminate individual and employer mandates, ACA insurance provisions, Cadillac Tax, Exchanges, and Medicaid expansionLikelihood: Possible, but difficultReason: A full repeal could leverage reconciliation to pass, but would significantly increase the uninsured population. A partial repeal (keeping some aspects of the ACA) may not be able to leverage reconciliation and would not have support of Democrats in Congress

Source:CommonwealthFund

Can a President Trump repeal the ACA?

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■ AdoptedExpansion■ NotAdoptedExpansion

31 States (and DC) Have Expanded Medicaid Programs

OHWV

VA

PA

NY

ME

NC

SC

GA

TN

KY

IN

MIWI

MN

IL

LATX

OK

ID

NV

OR

WA

CA

AZNM

CO

WY

MT ND

SD

IA

UT

FL

AR

MO

MS AL

NE

KS

AK

DC

Medicaid enrollment has increased 16 million since

2014• Federal government

scheduled to cover 90% of expanded Medicaid costs

• ACA repeal who both eliminate funds and states’ ability to offer to expanded populations

Source:KaiserFamilyFoundation

Repealing ACA impacts Medicaid expansion

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Most exchange enrollees receive Government assistance

Source:HHS,March31,2016effectuatedenrollment

Repealing ACA eliminates exchanges and subsidies

0

2

4

6

8

10

12

2016 Enrollees

Assistance

No assistance

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Step 2: Legislation Replaces ACA

How: Build bi-partisan coalition

Benefit: Democrats may be willing to make compromises to avoid individuals losing coverage

Issue: Democrats may not be willing to make compromises, individuals lose coverage when no replacement plan put forward

A “two-step” repeal and replace process?

Step 1: Legislation repeals ACA

How: Leverage Reconciliation

Benefit: Only 50 votes needed

Issue: Will cause spike in uninsured rate

Solution: Delay reduction of funds for Medicaid and exchange subsidies for 6-18 months

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Possible Replacement HighlightsHouse Republican “A Better Way”- No individual or employer mandates

- “Continuous Coverage” protections- National open enrollment period

- Cap on employer sponsored coverage tax exclusion

- Refundable tax credit for those without employer health coverage

- Block grant Medicaid

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$0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0

Spending Direct Revenue

10 Year ACA Cost Projections

Cadillac Tax represents$79 billion in revenue

Source:CongressionalBudgetOffice

Or does President Trump go after pieces of the law?

Proposal: Repeal Cadillac TaxBenefit: Would eliminate 40% excise tax on high cost plans scheduled for 2020Likelihood: Possible.Additional delay in implementation likelyReason: Cadillac Tax has projected revenue in the future, eliminating would decrease ACA projected revenues

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Paid leave could be a bi-partisan effort

• President-elect Trump proposes:• 6 weeks paid maternity leave• Mother of child only• Available only at birth

• Will Democrats in Congress compromise on the issue?

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Summary Details

Create simplified tax bracket structure

12% under $75,00025% from $75,000 to $225,000

33% more than $225,000

Increase standard deduction Single:$15,000Married: $30,000

Create new childcare and eldercare deductions

Childcare deduction available regardless of whether or not paid care is used

Eldercare deduction capped at $5,000

Repeal federal estate tax and modify step up in basis rules

0% federal estate taxStep up in basis for $10 million of assets

Individual Tax Proposals

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3 4

5 6 7

Summary Details

Reduce corporate tax rate 15% tax rate

Allow one time repatriation of funds

10% one time tax

Corporate Tax Proposals

Republicans in Congress could attempt to use reconciliation to pass both corporate and

individual tax changes

INTERNAL USE ONLY

“Reconciliation” 101

Priorities of the Trump Administration

Looking to 2018

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21

10

25

15

24

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2014 2016 2018

Democratic seats Republican seats

Senate seats in play, by election year

Republicans gained 9 seats Democrats gained 2 seats ?????

What to watch for in mid-terms

Source:CookPoliticalReport.

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Democratic Seats At Risk?

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State 2016 Winner

Florida Trump

Pennsylvania Trump

West Virginia Trump

Ohio Trump

North Dakota Trump

Montana Trump

Wisconsin Trump

Michigan Trump

Source:NationalJournal

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Summary

• The election is behind us….

• The real work begins

• The mid-terms are around the corner!

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What does this mean for you?

• As a broker, clients are looking to you for expertise• Stay current on legislative and political developments• This will add another layer of insight and guidance

you can provide, along with the benefits expertise you offer your clients

• If you are an employer, talk to your broker about what you see happening in Washington and discuss what it may mean for employee benefits going forward

• No one can predict the future, but the more informed we are, the better we can adapt to upcoming trends.

INTERNAL USE ONLY

Questions?James R. Slotnick, JD617-821-0804james.slotnick@sunlife.com

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This communication is intended to provide general information only and should not be construed to be legal advice. Sun Life Financial, its distributors, and its respective representatives do not provide tax, accounting, or legal advice. Any tax statements made are not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Clients should consult their own independent advisors about any tax, accounting, or legal statements.

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