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AgendaWelcome & Introductions
Garry Ramsey, Chief Marketing Officer, Bluegrass Family Health
Today’s Healthcare Environment & CDHPs as a SolutionKismet Toksu, President, Candor Consulting
HRA, FSA, HSA & Debit CardsLynden Kendrick, Vice President, Wells Fargo Flex Benefits Services
Bluegrass Consumer Choice - ConceptRita Woods, Product Specialist, Bluegrass Family Health
Sales Proposition to Employer Groups – Case StudiesGarry Ramsey, Chief Marketing Officer, Bluegrass Family Health
Broker Sales Support, Process & CommissionsNancy Atkins, Director of Sales, Bluegrass Family Health
Q & A
Insurix Quoting Tool DemonstrationAaron Downend, Vice President, Insurix
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Kismet ToksuPresident
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State of the Current Environment
Premiums increased an average of 13.9% in 2003. Average coverage cost is now $9,068 family/$3,576 single. Plan sponsors continue to pay an average of 84% of premium for single
and 73% for family coverage. Rx cost increases are driving employers and consumers toward
generics. 58% of patients surveyed use the internet to become better educated
about their treatment options and costs. A 4% pay increase is considered good in this economy is often negated
by increasing health care costs. Rising costs squeeze budgets leaving less money for salaries and
wages, especially among small employers.
Data excerted from nationwide surveys conducted by the Kaiser Family Foundation, Fidelity Investment and Mercer Human Resource Consulting.
Rather than cutting health benefits, employers are screaming for innovative coverage ideas.
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Enter… Consumer Choice Health Care
Holds Cost or Minimize Increases in 2004
Minimizes Premium Trend Going Forward – average 7% for CDHP rather than 15% PPO
Continues to Provide Comprehensive, High Quality Medical Benefits
Better Manages Utilization
Supports Recruitment and Retention Goals
Provides Incentives for Employees to Become Partners in Managing Health Care Costs
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Employer Value Proposition
Mitigates health care cost trend. Employs a new cost control strategy combining supply-side and
demand-side management. Provides financial incentives to employees for wise health care
purchasing.
Motivates members to be healthy.
Enables and supports employees to take control of their healthcare.
Provides a “safety umbrella” in the event of multiple or catastrophic health events.
Creates a partnership between Employer and Employee in managing health care quality and cost.
Leverages the power of technology.
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Current Adoption Rates
When offered as an option: Up to 65% of participants enroll – appx. 20% is average 20% - 30% of new hires select
Increasingly offered as full replacement
More than 90% of employees re-enroll
Employee surveys show high levels of satisfaction
Employer and carrier analysis show positive financial results
Employee and employer survey results from Towers Perrin, PriceWaterhouseCooper, Mercer Human Resources Consulting, Definity Health and Lumenos.
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• Abbott Labs• Baylor Health Systems• Budget Group• Western Trailers• Cardinal Health*• Honeywell• JB Hunt• Novartis• Pharmacia• City of Provo• US Postal Service
• Whole Foods• Raytheon• CVS Pharmacy• Charter Communications• Old World Industries• Intel• Medtronic• Pitney Bowes• Ridgeview Medical Center• Trover Solutions
Current Employers Offering CDHPsLarge Group + Mid and Small Segments in All Industries
* Current Bluegrass Family Health client.
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Consumer Choice “Best in Class” Product Features
Employer-sponsored, consumer-directed health care alternatives -- in its best form -- combine:
1. Preventive Care Coverage2. HRA 3. Patient Responsibility4. Traditional Coverage 5. Consumer Support –
Web Tools Health & Medical Management
Are fully Internet-enabled.
Leverage and support consumer purchasing ability by providing access to tools.
Focus on the consumer as the most powerful form of health care cost containment.
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How Consumer Choice Products WorkHow Consumer Choice Products WorkExample: Family CoverageExample: Family Coverage
Health Reimbursement Account$1,000
64% of participants roll over fundsAverage roll over amount of $342
Patient Responsibility
$1,000
TraditionalCoverage
Employee is responsiblefor paying an out-of pocketamount. This is called the “bridge” or “gap.”
Employee is responsiblefor paying an out-of pocketamount. This is called the “bridge” or “gap.”
Annual employerpre-tax allocation to an employee’s HRA
Employer providescoverage above the deductible
Coverage takes effectwhen expenses exceedannual employer HRA
allocation plus the “Bridge.”
HRA used for qualified expenses;
Unused amounts roll over year to
year
Deductible $2,000
Preventive Care 100% 1st Dollar Coverage
+ Consumer Health & Medical Management + Web Enabled ToolsFSA & Debit Card Features Optional
Institutional Trust ServicesWells Fargo Health Benefit Services
A Fast, Easy & Quality Solution!A Fast, Easy & Quality Solution!
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Institutional TrustInstitutional Trust Premier Provider of Retirement,Premier Provider of Retirement,
HRA, FSA and HSA Administrative ServicesHRA, FSA and HSA Administrative Services
Administering 120,000 HRA accounts; 95,000 FSA accounts. Administering 120,000 HRA accounts; 95,000 FSA accounts.
Total Trust Assets Under Administration: Over $500 Billion
Total Trust Assets Under Management: Over $200 Billion
Total Institutional Trust Staff: 1,600+ Team Members
Total Investment Professionals: 200+ Team Members
Total Wells Fargo Mutual Funds Assets: Over $72 Billion
Total Retirement Plan Services Participants: Over 1 Million
Institutional Trust Plans: Over 8,500
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HRA TrendsHRA Trends What we are seeing
Both HRA & Flex use BennyTM Card for all of 213(d)
Using data file to match card swipes to lessen audits letters.
Most plans are NOT funded.
Rx and Dental HRA’s are new…we are introducing both for 2004
Flex first vs. second or mutually exclusive
Vesting periods and retirement strategy including interest
Offering HRA as option or full replacement
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Employer Advantages of HRA vs HSA
Potential HRA Advantages Potential HSA Disadvantages
Cash flow advantage—HRA $’s are a promise to pay. Employer keeps control
Employer may fund on pay-as-you-go basis but doesn’t have real control.
Employer has much more flexibility in designing plan
High Deductible Health Plan (HDHP) more strict. Only $1K and 2K deductible or more will apply.
Employer can decide to vest $ or not. HSAs are owned by EE’s
No trust required, company can set up VEBA. Most don’t.
Must set up trust
No restriction on other plans ee may have. HSA participant cannot be covered by other plan with lower deductible.
Maximum out-of-pocket not mandated, company has more freedom to design plan
HSAs set limits on plans…$5k for single and $10k for family. Rx plans are problems
EE’s must use $ for qualified expenses EE can use $ for car payment and pay penalty
Employer has more control of expense substantiation process
Employer cannot restrict reimbursement or claims process
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Card Features• Works with Wells Fargo as the “Intel Inside”• Interfaces with HRA and/or FSA;
employees can still submit manual claims• Used for allowable services wherever
MasterCard is accepted• “Multi-Purse” capabilities• With web (wffbs.com) access to:
– account transactions– account balances– account history
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Rita Y. WoodsProduct Development Specialist
Bluegrass Family Health
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Bluegrass Consumer Choice
Next Generation Alternative
Employers
Understand health care costs will continue to rise
Most cannot continue to absorb the rising costs
Employees
Want more choice and control
Underestimate the value of their health insurance benefits
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Deductible
Bluegrass Consumer Choice
Five Major Components
Web
-ena
bled
tool
s
PPOHealth
Insurance
PatientResponsibility
Health Reimbursement
Arrangement
Preventive Care
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Bluegrass Consumer Choice Plan Design – Phase I
DEDUCTIBLE Range of Deductibles offered
Employee $1000/1500/2000/$2500
E+S, E+C, Family (2X) $2000/3000/4000
1 person must meet the deductible after which it is cumulative
OUT-OF-POCKET MAXIMUM
1 person must meet the OOP Max, after which it is cumulative
Range of Out of Pocket Max offered
Employee $2000/$2500/$3000/$4000/$5000E+S, E+C, Family (2X) $4000/$5000/$6000/$8000/$10000
Standard Funding Level at 40, 45 or 50% of DeductibleHRA
Benefits Mirror PPO
Covered expenses pre-determined
PREVENTIVE CARE
Allocated on individual basis
100% first dollar coverage paid from PPO
Co-insurance for all services except preventive care90% / 10% in network 70% / 30% out of network80% / 20% in network 60% / 40% out of network70% / 30% in network 50% / 50% out of network
Urgent care pays at in network rates
CO-INSURANCE
All services on a co-insurance basis -- No preset co-pay
Utilizes current network
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Bluegrass Consumer Choice Plan Design – Phase I
PHARMACY
Co-insurance with minimum (lower of $15 or price) and maximum ($150) by script
Range of Deductibles offered ($100, $150, $200)
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Bluegrass Consumer Choice Web Support – MyBluegrassInfo.com
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Bluegrass Consumer Choice Web Support – Wells Fargo Flex Benefits Services
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Bluegrass Consumer Choice
Plan Design – Phase I
FSA – Option Behavioral – Mandated
Rx – Option Chiropractic – Mandated
Infertility - Option Home Health – Mandated
Benny Card - Option
ADD-ONS/OTHER
MEDICAL – 2-4 Tiers HRA – 2-3 Tiers
Employee Employee
Employee + Spouse Employee + 1
Employee + Child(ren) Family
Family
TIERS
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Garry R. RamseyChief Marketing Officer
Bluegrass Family Health
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Bluegrass Consumer Choice
Next Generation Alternative
Brokers and Agents
To review a sample Bluegrass Consumer Choice recommendation package, contact your Bluegrass Family Health Account Executive, or call 1-800-787-2680, ext. 4317.
Employers
For more information about Bluegrass Consumer Choice, please contact your Broker or Agent.
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Nancy G. AtkinsDirector of Sales & Marketing
Bluegrass Family Health
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Product Description
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Employer Materials
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Employee Materials
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Quoting Options
Deductible
1,000$ / 2,000$
1,500$ / 3,000$
2,000$ / 4,000$
2,500$ / 5,000$
Out - of - Pocket Maximum2,000$ / 4,000$
2,500$ / 5,000$
3,000$ / 6,000$
4,000$ / 8,000$
5,000$ / 10,000$
Coinsurance
90% / 10%
80% / 20%
70% / 30%
Rx Options
Coinsurance
50 / 100$ 80% / 20% 150$
100 / 200$ 80% / 20% 150$
150 / 300$ 80% / 20% 150$
50 / 100$ 70% / 30% 150$
100 / 200$ 70% / 30% 150$
Maximum per Prescription Deductible
150 / 300$ 70% / 30% 150$
200 / 400$ 70% / 30% 150$
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Quoting Process
Phase 1
Step 1 -- You submit request to BFH Account Executive
Step 2 -- BFH Account Executive submits request to Underwriting
Step 3 -- BFH Underwriting calculates rates and returns to Account Executive
Step 4 -- BFH Account Executive works with You to formulate recommendation
Step 5 -- BFH Account Executive returns rates and recommendation to You
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Proposal Package
$ 89.25 89.25 89.25
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Garry R. RamseyChief Marketing Officer
Bluegrass Family Health
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HSA Integration – May 2004
Online Enrollment – July 2004
Enhanced Web Support Tools – 3rd Qtr 2004
Automated Quoting Process – 3rd Qtr 2004
Additional Rx Options – 4th Qtr 2004 Carve in or out of medical HRA Stand-alone Rx-only HRA
Bluegrass Consumer Choice Co-branded Benny Card – 4th Qtr 2004
Bluegrass Consumer ChoicePhase II
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