Consumer Choice Health Care: A Solution for Rising Healthcare Costs

2. Agenda Welcome & Introductions Garry Ramsey, Chief Marketing Officer, Bluegrass Family Health Today’s Healthcare Environment & CDHPs as a Solution Kismet Toksu, President, Candor Consulting HRA, FSA, HSA & Debit Cards Lynden Kendrick, Vice President, Wells Fargo Flex Benefits Services Bluegrass Consumer Choice - Concept Rita Woods, Product Specialist, Bluegrass Family Health Sales Proposition to Employer Groups – Case Studies Garry Ramsey, Chief Marketing Officer, Bluegrass Family Health Broker Sales Support, Process & Commissions Nancy Atkins, Director of Sales, Bluegrass Family Health Q & A Insurix Quoting Tool Demonstration Aaron Downend, Vice President, Insurix

3. Kismet Toksu President

4. 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.

5. 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 Enter… Consumer Choice Health Care

6. 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. Employer Value Proposition

7. 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.

8. 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 CDHPs Large Group + Mid and Small Segments in All Industries * Current Bluegrass Family Health client.

9. Consumer Choice “Best in Class” Product Features • Employer-sponsored, consumer-directed health care alternatives -- in its best form -- combine: • Preventive Care Coverage • HRA • Patient Responsibility • Traditional Coverage • 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.

10. Employer provides coverage above the deductible Annual employer pre-tax allocation to an employee’s HRA How Consumer Choice Products WorkExample: Family Coverage Coverage takes effect when expenses exceed annual employer HRA allocation plus the “Bridge.” Traditional Coverage Employee is responsible for paying an out-of pocket amount. This is called the “bridge” or “gap.” Patient Responsibility $1,000 Deductible $2,000 HRA used for qualified expenses; Unused amounts roll over year to year HealthReimbursement Account $1,000 64% of participants roll over funds Average roll over amount of $342 Preventive Care 100% 1st Dollar Coverage + Consumer Health & Medical Management + Web Enabled Tools FSA & Debit Card Features Optional

11. A Fast, Easy & Quality Solution! Institutional Trust Services Wells Fargo Health Benefit Services

12. Institutional TrustPremier Provider of Retirement,HRA, FSA and HSA Administrative Services 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

13. HRA 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

14. Employer Advantages of HRA vs HSA

15.  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

16. Rita Y. Woods Product Development Specialist Bluegrass Family Health

17. 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

18. PPO Health Insurance Patient Responsibility Health Reimbursement Arrangement Bluegrass Consumer Choice Five Major Components Deductible Web-enabled tools Preventive Care

19. CO-INSURANCE Co-insurance for all services except preventive care 90% / 10% in network 70% / 30% out of network 80% / 20% in network 60% / 40% out of network 70% / 30% in network 50% / 50% out of network All services on a co-insurance basis -- No preset co-pay Urgent care pays at in network rates Utilizes current network Bluegrass Consumer Choice Plan Design – Phase I

20. Bluegrass Consumer Choice Plan Design – Phase I

21. 123454678900 123454678 900 Bluegrass Consumer Choice Web Support – MyBluegrassInfo.com

22. Bluegrass Consumer Choice Web Support – Wells Fargo Flex Benefits Services

23. Bluegrass Consumer Choice Plan Design – Phase I

24. Garry R. Ramsey Chief Marketing Officer Bluegrass Family Health

25. 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.

26. Nancy G. Atkins Director of Sales & Marketing Bluegrass Family Health

27. Product Description

28. Employer Materials

29. Employee Materials

30. Out - of - Pocket Maximum $ 2,000 / $ 4,000 Deductible $ 2,500 / $ 5,000 $ 1,000 / $ 2,000 Coinsurance $ 3,000 / $ 6,000 $ 1,500 / $ 3,000 90% / 10% $ 4,000 / $ 8,000 $ 2,000 / $ 4,000 80% / 20% $ 5,000 / $ 10,000 $ 2,500 / $ 5,000 70% / 30% Rx Options Maximum per Deductible Coinsurance Prescription $ 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 $ 150 / 300 70% / 30% $ 150 $ 200 / 400 70% / 30% $ 150 Quoting Options

31. 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

32. $ 89.25 89.25 89.25 Proposal Package

33. Garry R. Ramsey Chief Marketing Officer Bluegrass Family Health

34. Bluegrass Consumer Choice Phase II • 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