1. 1 Health Savings Account Open Enrollment 2010

2. 2 Enable informed decision-making by providing members with meaningful & easy to use information Engage consumers with health & wellness programs that emphasize routine preventive care which can lead to healthier behaviors now and in the long term Encourage members to make informed health care decisions by creating financial incentives, such as portable health care cash accounts with balance rollover The concept of consumer directed health plans (CDHP) focuses on encouraging members to become more involved in and taking more responsibility for their health care decisions, purchases and use of health care services. Definition of Consumer Directed Health

3. 3 Capital BlueCross markets CDH products under the name of SimplySelect. SimplySelect incorporates products, web tools and clinical programs into a cohesive, packaged consumer directed product. Consumer Directed Product Suite

4. 4 Health Savings Account HSA Overview

5. 5  Savings account with money in it  Allows you to put money aside to pay for qualified expenses tax- free*  Unused dollars roll over into the next year  The account can be invested and you keep any earnings  Employer and/or employee contributions permitted up to the established IRS maximum contribution limit each year  It’s portable - you own the account funds even after termination, retirement, etc.  You retain control and make choices about how to spend your health care dollars  Allows you to pay for medical expenses that may not be covered under your health plan Health Savings Accounts are like a medical 401(k)...a way for you to save for retirement. What is an HSA? *Tax references are for federal taxes only. State taxes vary. Consult your tax advisor.

6. 6 You must have a IRS-qualified High Deductible Health Plan (HDHP) in order to open an HSA. The two pieces work together to create the SimplySelect HSA product. Preventive Care Deductible PPO Medical Plan Prescription Drug Plan Health Savings Account HDHPHSA HDHP + Account = SimplySelect HSA * * * * * In-network preventive services (medical & Rx) not subject to the deductible Medical and prescription drug expenses accumulate to the same combined deductible The PPO medical plan covers medical expenses after the deductible has been met The prescription drug plan covers drug costs after your deductible has been met Funds in the HSA can be used to pay for any eligible expenses as defined by Section 213(d)

7. 7 The IRS requires important design differences in these qualified high deductible health plans compared to our standard PPO plans. The deductible applies to ALL services, except preventive (medical & Rx). This includes ER visits, ambulance services, prescription drugs and office visits. The deductible must be met before the medical and/or prescription plans will pay. Qualified plans only have two tiers of deductible coverage – single or family. The entire family deductible (contracts of 2 or more) must be met before any family member is eligible for covered benefits. The OOP max includes the deductible, coinsurance and copayments. Once the in-network OOP max is met, everything is covered in full. Coinsurance is 100% and all copayments are waived (in-network) through the end of that calendar year. DeductibleOut-of-Pocket Design Differences PPO Q vs. PPO

8. 8 HSA “Q”ualified HDHP Plan Design Here’s a high level outline of your qualified HDHP plan... PPO HSA 1500Q Deductible $1,500 member; $3,000 family OOP Max $2,000 member; $4,000 family Coinsurance 100% In-network 80% out-of-network PCP$25 (subject to deductible) Specialist$35 (subject to deductible) ER$100 (subject to deductible) IP Copay None OP Facility Copay None Rx (subject to deductble) Retail: $8/$30/$60 Mail: $16/$60/$120 Specialty: $15/$50/$100 2010 EMPLOYER HSA Funding (50%) Single$750 Family$1,500

9. 9 HSAs are available to any individual that: Who is eligible for an HSA?  Is covered by an IRS-qualified high deductible health plan (HDHP)  Is not covered by other health insurance, some examples of permitted/non-permitted coverage are:  Is not enrolled in Medicare  Can’t be claimed as a dependent on someone else’s tax return Permitted  Limited FSAs & HRAs  Auto, life, workers comp or disability coverage  Dental care, vision care or long-term care  Specific disease insurance, and per diem hospitalization insurance. Not Permitted  General Purpose FSA or HRA  Other Rx coverage  Medical coverage under spouse plan

10. 10 The IRS annually adjusts minimum deductible amounts and maximum contribution amounts based on Cost of Living (COLA). HSA guidelines for 2010 are listed below. HSA Contributions 2010 Minimum Deductible$1,200 single $2,400 family Maximum Contribution*$3,050 single $6,150 family Maximum Out-of-Pocket$5,950 single $11,900 family 55+ Catch up Contributions$1,000

11. 11 In addition to using your HSA funds to pay for eligible deductible, coinsurance and copays under your health plan, funds can also be used for any IRS-qualified medical expenses. Below are just a few examples of covered and non-covered services Certain OTC Drugs Hearing Aids LASIK Surgery In Vitro Fertilization Long-Term Care Premiums Eyeglasses/Contacts Copays Coinsurance & Deductibles COBRA premiums Wheelchairs For a complete listing of IRS qualified expenses, go to www.irs.gov/pub/irs-pdf/p502.pdf Life Insurance Premiums Health Club Fees Special Food & Beverages Cosmetic Surgery Bottled Water Burial Expenses Maternity Clothes Cosmetics Medigap Premiums Spa Treatments COVERED EXPENSES NON-COVERED EXPENSES HSA Eligible Expenses

12. 12  Ability to save for future health care expenses and retiree health care coverage  Funds belong to you and the balance rolls over from year to year regardless of job changes or retirement  Ability to pay for services not covered under your medical plan - LASIK, OTC drugs, dental and vision care.  Triple tax advantage - Contributions are made pre-tax, plus any interest earned is earned tax-free and payment (distributions) for eligible expenses are tax free  After age 65, funds can be used for anything without penalty (only taxes apply)  You can continue to use your HSA funds even if you are no longer covered by an IRS qualified HDHP (cannot make any more contributions though) Some advantages of HSAs are: HSA Advantages

13. 13 The chart below shows possible savings for individuals with an HSA. Health Savings Account Balances (Assumes a $2,000 deductible and deposit each year) Account Balance after X Years Age of Head of Household starting at 25 After Family Medical Expenses of $1,000 each year After Family Medical Expenses of $500 each year $0 Family Medical Expenses 5 Years 10 Years 15 Years 20 Years 25 Years 35 Years 30 Years 30 35 40 45 50 60 55 $5,802 $13,207 $22,657 $34,719 $50,113 $94,836 $69,761 $8,703 $19,810 $33,986 $52,079 $75,170 $142,254 $104,641 $11,604 $26,414 $45,315 $69,439 $100,227 $189,673 $139,522 40 Years65$126,840$190,260$253,680 Source: The HSA Coalition; HSAInsider.com Assumes 5% interest per year, and 100% of a $2,000 deductible is deposited each year. Potential HSA Savings

14. 14 HSAs are an IRS program, and as such, require tax filing every year. Employee Responsibilities for HSA  If your funds are used for a non-qualified expense before age 65, taxes and a 10% penalty will apply  Save your receipts in the event of an audit You should contact your tax professional for more information on tax implications and filings

15. 15 How does it work? HSA Mechanics

16. 16 EOB = Explanation of Benefits HDHP = High Deductible Health Plan SOR = Statement of Remittance OOP = Out of Pocket HSA Process Flow Member writes check from ACS|BNY Mellon account and reimburses themselves Member chooses to pay OOP and saves HSA funds for future use Member pays provider with debit card or check Provider bills member for outstanding liability amount Capital mails EOB to member, SOR to provider Capital mails check to provider and EOB to member Capital processes claim Yes Claim is processed and applied to deductible No Option 1 Member pays provider with own OOP funds Option 2Option 3 Provider submits claim to Capital Member goes to the doctor‘s office for service and pays copay at time of service Capital determines if deductible met

17. 17 Single contract with PPO 1500Q… SimplySelect Scenario 1 Single with minimal needs... HSA -YEAR ONEHSA -YEAR TWO Your employer contribution $750 HSA Account Balance $1,750 Roll over from year 1 $787 HSA Account Balance $2,037 Your contribution $1000Your employer contribution +$750 Your contribution Starting balance +$500 You see your doctor for your annual physical -$25 copay $1,725 A minor hiking accident sends you to the emergency room -$638$1,087See your doctor for a cold -$85$1,952 Monthly prescription filled @ $25/mo -$300$787You fill a prescription for antibiotics and purchase some OTC cold medicine -$76$1,876 HSA balance at the end of year one $787 Monthly prescription filled @ $25/mo -$300$1,576 HSA balance at the end of year two $1,576 Costs and expenses are for example purposes only.

18. 18 Family contract with PPO 1500Q (a $3,000 family deductible)… SimplySelect Scenario 2 Family of seven with many needs... HSA -YEAR ONEHSA -YEAR TWO Your employer contribution$1,500 HSA Account Balance $2,500 Roll-over $1,583 HSA Account Balance $4,083 Your contribution$1,000Your employer contribution $1,500 Family receives annual physicals - $25 copay for each person- you decide to pay OOP (do not use HSA) $175$2,500Your contribution $1,000 Three kids visit doctor for a case of pink eye ($75) -$225$2,275Family receives annual physicals - $25 copay for each person -$175$3,908 Antibiotics for pink eye-$53$2,2224th child goes to emergency room after bike accident -$850$3,058 Youngest sees a speech therapist -$125$2,097Your husband/wife has their gall bladder removed (Total bill is $4100) You visit the doctor for the flu-$75$2,022You pay out of your HSA to meet your remaining family deductible -$1,975$1,083 OTC cold medicine-$18$2,004You pay out of your own pocket for coinsurance (0%) $0$1,083 Youngest sprains a wrist & visit the ER -$421$1,583 Remaining cost of surgery - plan pays 100% $2,125$1,083 HSA balance end of year 1$1,583Balance end of year 2 $1,083 Costs and expenses are for example purposes only.

19. 19 HSAFSA Who owns it? Employee Who funds it? Employer and/or EmployeeEmployee Are there insurance requirements? Yes. IRS qualified HDHPNone. Employee does not need to participate in the employer's health plan What is the maximum contribution? IRS dictates annual limitsNo legal limit. Employers typically impose a limit from $2500 to $5000 Does the unused money carry over? YesNo - 'use it or lose it' Is it portable? Yes, it belongs in a personal account and the money belongs to the employee Unused funds must be spent by year-end (or by March 15 of following year if grace period provision is adopted by employer) otherwise individual forfeits the money What are the tax benefits? The employee does not have to claim reimbursement as income. Employee contributions are pre-tax, and interest earned is tax-free Contributions to FSA are tax free and reduces annual taxable income Can funds be used for non-medical expenses? No, only expenses defined under 213(d) of IRC. If used for other expenses, the funds are taxed and a 10% penalty is applied. After age 65, no penalty applies No, health portion of FSA is only used for expenses defined under 213(d) of IRC Dependent Care expenses eligible? NoYes, employee can select a separate amount of money to pay for dependent care HSA vs. FSA Account Comparison

20. 20 ACS|BNY Mellon Where do they fit in?

21. 21 Capital BlueCross partners with ACS|BNY Mellon to provide the savings accounts portion of your program. ACS|BNY Mellon Background ACS|BNY Mellon HSA Solution (“The HSA Solution℠”) is an independent company whose products and services are not BlueCross® products and services. The HSA Solution is solely responsible for these financial services.  Both ACS (Affiliated Computer Services) and BNY (Bank of New York) Mellon are Fortune 500 companies  Largest HSA administrator in the country with 800,000+ total accounts  Dedicated customer service that specializes in HSAs  Simple, easy-to-use online tools for groups & members  Access to account information 24/7

22. 22 Access to online enrollment, estimator tools, educational materials and account information 24/7. Web site & Tools

23. 23 Transaction Account Investment Account Make the most of your money and manage it online - day or night. Investments  FDIC Insured  Ready access to funds via checkbook or debit card  Balances & transaction info available via IVR  $1,500 minimum to invest  20+ highly-rated funds from multiple fund families  Automatic investing  No minimum for investments  No transaction fees  All options are no-load or load-waived mutual funds

24. 24 NOTE: You can use your debit card to pay copays during an office visit, but let the provider submit your medical claim so Capital discounts can be applied - There is no need to inform your provider that you have an HSA. How do I get money out?  Write a check! -- No manual claim forms or receipts need to be submitted  Signature card in your welcome kit must be signed and returned for checkbooks to be issued  Your first 40 checks are free, additional checkbooks are $5  A signature based card or pin based  You cannot use card at ATM’s to withdraw funds  Your card is automatically issued when the account is opened  Your first card is free, additional cards are $5 each DEBIT CARDCHECKBOOK Distributions & Reimbursement

25. 25  If you have medical or Rx questions on the QHDHP call the Capital BlueCross customer service number on the back of your ID card  If you have specific HSA questions, Capital BlueCross customer service will transfer you to ACS|BNY Mellon or call the dedicated line directly at 866-274-2194 One phone call does it all... What if I have a question…

26. 26 $15 one time set-up fee 1 st debit card is free, additional cards are $5 1 st checkbook (40 checks) is free, additional checkbooks are $5 $3.50 fee per HSA account per month, waived if average balance is over $1,000 All dollars in the account over $1,500 can be invested Flat monthly fee of $2.90 on invested dollars Competitive fees in today’s market... HSA Fees

27. 27 Questions?

28. 28 SimplySelect is offered by Capital Advantage Insurance Company®, a Capital BlueCross subsidiary. Independent licensees of the Blue Cross and Blue Shield Association. Communications issued by Capital BlueCross in its capacity as administrator of programs and Provider relations for all companies.