Computer Help Inc Memo - Final

Computer Help Inc.

Memo

Re: Proposed Health Care Program for Computer Help Inc.

Computer Help Inc. has been very profitable, and up until recently, before the company went public, it was owned by partners who were invited to take an ownership position to attract them to the company. Due to the growth in the non-consulting side of the business, Computer Help Inc. has had to hire staff, who will be working for a paycheck, versus company ownership. The staff counts have been increasing steadily, averaging 10% per year. In addition, the company has expanded from its base, and now boasts midtown sales offices in New York, Los Angeles, Dallas, and Atlanta, with development staff in New York and Los Angeles.

Prior to the public offering, there was no need for a benefits program at Computer Help Inc. However, the steady increase of staff, who are seen as employees rather than associates, has caused a need for a benefits program at Computer Help Inc. In order to retain the staff, Computer Help Inc. must offer the employees a competitive benefits package. Computer Help Inc. currently has a turnover rate of 12% a year, offering the employees a competitive benefits package may decrease turnover and absenteeism, and increase employee motivation.

In order to establish a benefits program that meets the diverse needs of Computer Help Inc.'s employees, the employee demographics have been taken into consideration. Currently 50% of the employees are single with no dependents, 30% are married with no dependents, 15% are married with dependent children, and five percent are single parents. The most predominate age group employed by Computer Help Inc. are those between the ages of 26 and 35. With the majority of the workforce being relatively young and not having any dependents, the costs of implementing a benefits program will be minimized at this time. Computer Help Inc. must reevaluate the benefits program regularly, as in the next ten years the majority of the workforce will be in the age range of 36 to 45, with the number of dependent spouses and children likely increasing as well. Please refer to Exhibit #1; Work Force Profile, for details on the current demographics at Computer Help Inc.

The proposed benefits program will include: medical, vision, prescription drug, dental, basic employee life and supplemental employee life. Several types of plans have been chosen including a managed care preferred provider organization (PPO) with Aetna for the medical and dental, a benefit schedule vision plan with Vision Service Plan (VSP), a pharmacy benefit manager (PBM) prescription drug plan with Aetna, and traditional basic and supplemental life insurance plans with Sun Life Assurance Company of Canada. A variety of funding arrangements will be used, included retrospective rating, self-funding with an administrative services contract