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Consumer Driven Experience

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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 are 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.

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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 213d 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.

• May roll over from year to year and continue to earn interest

• May be invested in mutual funds

CDHP with Health Reimbursement Account

• Employer provided (and owned account)

• Account not portable

• Employer decides if other expenses may apply (may include all 213d expenses)

• May roll over from year to year

• Typically forfeited when leaving the group

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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

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UnitedHealthcare 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.

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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.

OptumHealth 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

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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

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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

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HSA Plan Components

OOP MaximumCoinsurance20%

Deductible

Amount that needs to be satisfied before health coverage begins.

Preventive care not subject to deductible.

Protects member from high costs.

Coinsurance similar to traditional plans.

Out-of-pocket maximums are in place for added peace of mind.

Health Savings AccountOption to reimburse from Health Savings Account for Deductible and Coinsurance or save funds for future medical expenses.

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Employee Only: HSA Example

Your HSA Account

$750 from OC

$750 self contributions

= $1500

Deductible Coinsurance

20%

OOP Maximum

$1500 $3000

Your Expenses

$0 – Physical

$150 – Prescriptions

$75 – Doctor’s Visit

$125 – Urgent Care

= $350 Total Expenses

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How Did it Work?

You Had:

• $1,500 in HSA

• $350 in expenses

You Paid:

• $350 from HSA

• $0 Out of Pocket

• $1,150 Rolls from the HSA to Next Year!

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Employee Only: HSA Example - Year Two

Your HSA Account

• $1,150 Rollover

• $750 from County contribution

• $750 Self-Contribution

= $2,650 Balance

Deductible Coinsurance

20%

OOP Maximum

$1500 $3000

Your Expenses

• $0 Physical

• $225 Prescriptions

• $275 Three Doctor’s Visits

• $22,000 Hospital

= $23,000 Total Expenses

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How Did it Work?

You Had:

• $2,650 in HSA

• $23,000 in expenses

You Paid:

• $2,650 from HSA

• $350 out of pocket

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Growing Funds

• 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)

• OptumHealth 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.

Maximizing Value for Tax-free Growth

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Growing Funds

• 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

Maximizing Value for Tax-deferred Growth

Any investments in mutual funds are not FDIC-insured, are not guaranteed by OptumHealth Bank, and may lose value.

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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 MyUHC.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

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Pre-enrollmentGoal: Awareness• Train the Trainer Seminar

• Webinars

• Flash presentations

• “People Like Me” Stories

• Lunch and Learns

• Brochures and handouts

EnrollmentGoal: Understanding

• Onsite open enrollment assistance at designated offices

• Multimedia presentations

• Opening Your Account

• Using Your Account

• Targeted email campaigns

Post-enrollmentGoal: Engagement• User Guide

• Bi Monthly Electronic Newsletter

• Targeted email campaigns

Snapshot of the Education and Engagement Program