Consumer Driven Experience 1 What is Consumer Driven

Consumer Driven Experience 1

What is Consumer Driven Health Care? • Consumer Driven Health Care offers a medical plan partnered with a tax-advantaged account to offset the cost of the medical plan deductible and coinsurance. • Consumer Driven Health Care encourages members take a more active role in managing their health care and health care services. • Medical plans that are considered Consumer Driven Health Care most often no co-pay plans. Preventive services may be covered at 100%, but all other services require the member to meet their deductible first, prior to the coinsurance paying any percentage of the cost. • To help the member pay for those first dollar charges, the IRS allows tax-advantaged accounts such as Health Savings Accounts or Health Reimbursement Accounts. 2

Difference between Health Savings Accounts and Health Reimbursement Accounts CDHP with Health Savings Account • Account owned by the employee • Account portable • Tax free distribution of funds if used for medical expenses (this includes all 213 d expenses as well as qualified long term care insurance premiums and certain medical premiums) • IRS allows distribution from account for non qualified expenses with income tax and 20% penalty tax. CDHP with Health Reimbursement Account • Employer provided (and owned account) • Account not portable • Employer decides if other expenses may apply (may include all 213 d expenses) • May roll over from year to year • Typically forfeited when leaving the group • May roll over from year to year and continue to earn interest • May be invested in mutual funds 3

How Consumer Driven Health Care Has Performed • Nationally there are over 9 million individuals participating in Consumer Driven Health Care. • Nationally • Within the first year, trend generally decreases 4 -5% • Savings after the first year indicates trend rates lower than the traditional plans by 3 -5% • Cost savings not generated by avoidance of appropriate care • Significant increase in CDH members seeking preventive care • CDH members received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants * Emerging Data on Consumer Driven Health Plans, May 2009, American Academy of Actuaries 4

United. Healthcare CDHP Experience § Delivers lower cost, sustained over time § Overall, Consumer Driven Health Plan members cost 10 -12% less § Consumers make better choices about prescriptions § Prescription costs were less in CDH plans, while utilization rates were equivalent § 82 -87% savings based on changes in utilization, not member cost shifting § CDH members seek preventive care at the same rate as PPO members. § Over two years, 30% deeper decline in hospital admissions than did traditional plans § Emergency Room visits also declined in Health Savings Account Plans 8% § Full replacement slows cost growth § 10% slower growth in plan cost by following year, compared to employers offering HSAs as an option at enrollment. 5

An Experienced Partner • 10 years’ experience as leader in health consumerism • 3. 2 million members are in either an HSA or HRA § 25, 000+ employer clients § Private Sector: 93% § Public Sector: 7%, § Public Sector consumer driven health care RFPs up 20% from 2009. Optum. Health Bank • Over 569, 000 Health Savings Accounts • Over 20, 000 HSA employers • Over $1 Billion dollars in balances on deposit • Over $48 Million dollars held in investments • Average account balance $1616. 00 6

Why a Health Savings Account • A Health Savings Account (HSA) is tax-advantaged • Contributions are made pre-tax and funds can grow tax free • Owned by the account holder • Money left in the account holder’s account carries over from year to year • It remains the individual account holder’s even if they leave their employer or retire • Used to pay for both current and/or future health care expenses • Account holder can withdraw money tax-free for qualified health expenses (non-qualified expenses are subject to taxes and penalties) • Or account holder can save funds to pay for future expenses • Funding of a Health Savings Account may be made by • Employer • Employee • Interested Party 7

Best Practices • 100% coverage for preventive care • Individual deductibles of $1, 500 – $2, 000 are common • Apply coinsurance after the deductible at approximately 80% • Include preventive pharmacy in the deductible and account • Employer contributions to the HSA 8

HSA Plan Components Health Savings Account Option to reimburse from Health Savings Account for Deductible and Coinsurance or save funds for future medical expenses. Amount that needs to be satisfied before health coverage begins. Preventive care not subject to deductible. Deductible Protects member from high costs. Coinsurance similar to traditional plans. Coinsurance 20% Out-of-pocket maximums are in place for added peace of mind. OOP Maximum 9

Employee Only: HSA Example Your HSA Account Your Expenses $750 from OC $0 – Physical $150 – Prescriptions $750 self contributions $75 – Doctor’s Visit $125 – Urgent Care = $1500 = $350 Total Expenses Deductible Coinsurance OOP Maximum 20% $1500 $3000 10

How Did it Work? You Had: You Paid: • $1, 500 in HSA • $350 from HSA • $350 in expenses • $0 Out of Pocket • $1, 150 Rolls from the HSA to Next Year! 11

Employee Only: HSA Example - Year Two Your HSA Account Your Expenses • $1, 150 Rollover • $0 Physical • $750 from County contribution • $225 Prescriptions • $750 Self-Contribution • $275 Three Doctor’s Visits = $2, 650 Balance • $22, 000 Hospital = $23, 000 Total Expenses Deductible Coinsurance OOP Maximum 20% $1500 $3000 12

How Did it Work? You Had: You Paid: • $2, 650 in HSA • $2, 650 from HSA • $23, 000 in expenses • $350 out of pocket 13

Growing Funds Maximizing Value for Tax-free Growth • Deposit Account • Provides liquidity for transactional needs • Option to select among various types of accounts targeted to meet your unique spending/saving patterns, including two account options that pay interest (Interest rate is accrued daily; paid monthly) • Optum. Health Bank’s deposits are insured by the Federal Deposit Insurance Corporation to at least $250, 000 for each depositor. (FDIC insurance rate is inflated currently, due to regulatory changes) • Low maintenance fees are industry competitive *Interest rates are subject to change. 14

Growing Funds Maximizing Value for Tax-deferred Growth • Investment Options • Provides potential greater investment return for long-term growth • Funds over established threshold amount may be directed into mutual fund(s) in $100 increments • Account holders must retain at least the threshold amount in their HSA deposit account after transfer. • Separate disclosures required – not FDIC insured • Access via website or Interactive Voice Response (IVR) • Integrated statements – deposit and investment accounts combined – viewable online • Auto sweep functionality Any investments in mutual funds are not FDIC-insured, are not guaranteed by Optum. Health Bank, and may lose value. 15

It’s Easy To Access Funds • The HSA debit card can be used to pay for qualified expenses such as doctor’s visits, prescription drugs and vision care. Employees may also access HSA funds through: Online bill payment at My. UHC. com (free) Checks, if you choose to purchase them ($10 for a book of 25) Account holder can elect to receive additional cards for spouse or dependents for no additional cost 16

Snapshot of the Education and Engagement Program Pre-enrollment Goal: Awareness Enrollment Goal: Understanding Post-enrollment Goal: Engagement • Train the Trainer Seminar • • User Guide • Webinars • Bi Monthly Electronic Newsletter • Flash presentations • Targeted email campaigns • “People Like Me” Stories • Lunch and Learns • Brochures and handouts • • Onsite open enrollment assistance at designated offices Multimedia presentations • Opening Your Account • Using Your Account Targeted email campaigns 17