1. Update on Consumer Directed Health Fidelity Human Resources Services Company October 5, 2004

2. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company2 Early HSA growth may come through consumer-directed plans Relative market share among health plan products (percentages may not total 100 because of rounding ) Source: Forrester Research, July 2003

3. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company3 Humana is reporting favorable utilization trends for their CDHP product SmartSuite 7/02 to 7/03 (Humana Product) Utilization vs. Market Change Source: Early Experience with Consumer Centric Health Plans, Testimony to the Joint Economic Committee of the US Senate,John M. Bertko, FSA., MAAA, February 2004 Preventive Services in SmartSuite increased by 14% over the prior year

4. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company4 More Employers are Offering HDHPs as a plan option Source: Kaiser Family Foundation and Health Research and Educational Trust Survey of Employer-Sponsored Health Benefits: 2003, 2004. Percentage of Firms Offering Employees a HDHP 27% of all employers surveyed report that they are “very likely” or “somewhat likely” to offer a personal or health savings account option in the next two years 3.5% offer a personal or Health Savings Account Option along side the HDHP

5. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company5 The social cost and future value of retiree healthcare are not aligned Social Programs Healthy Birth Primary and Secondary Education Higher Education & Job Training Active Healthcare Retiree Healthcare Future Value Index 0.0 1.0

6. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company6 Projected Employer Benefit Costs

7. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company7 Financial Security Risk for Employees When employees retire without medical insurance, their personal risk dramatically increases Employee Risk Age

8. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company8 No Funding For Retiree Medical Plan More Discretionary Spending Comprehensive Plan Funding For Retiree Medical Plan Less Discretionary Spending HDHP ? Tradeoffs Will Benefit Employees

9. Health & Welfare Consulting © 2004 Fidelity Human Resources Services Company9 Framework for Constructing an Alternative Program Guiding Principles: Pay Equity Tax Efficiency Flexibility Productivity Transparency Limit Complexity Old Promises Market Pressures Legal Constraints