Self-Funding and CIGNA Select Solutions - Rogers Benefit

1 1 Self-Funding and CIGNA Select SolutionsBrian HelmlyRogers Benefit Group2 Innovative fundingoptionsCIGNA offers more funding options for smaller companies than any other national health company. A fully insured optionTwo Self-Funding options33 CIGNA Offers More funding Options than Any Other CarrierAll dedicated to cost controlRISK : REWARDF ully InsuredLevelFundingGradedFundingFixed Monthly CostParticipating Contract4 Fully Insured Risk PoolingHigh ClaimsLow ClaimsExpected Claims $*Source: The Kaiser Family Foundation Employer Health Benefits Survey, 20054 Fully Insured funding averages the risk across the pool.

2 On average, self -funded employers run under expected four-out-of-five years, but experience volatility year over year and must be prepared for the bad year.* 5 Fully Insured FundingFunctions as full insurance protection Employer pays a fixed monthlypremium Insurance plan assumes full claimliability5 Predictableexpenses Premiums do not fluctuate based on actual claims incurred by plan members Rates are set prospectively and are guaranteed forthe plan year No additional costs atterminationBenefits aligned by state State required benefits are included automaticallyAlso referred to as pooled orguaranteed cost6 CIGNA Fully Insured Product Overview51 (or more)

3 ELIGIBLEand Minimum of 50% PARTICIPATION7 Simplicity and predictabilityFully insured funding is ideal for companies looking for the financial protection that comes from knowing their annual health care a fully insured option, companies:A fully insured option Can easily budgetwith a single, set premium amount due each month. Get full protectionfor covered claims, regardless of how high claims go during the year. Enjoy features that are straightforwardand easy to understand. Gain financial advantages in claims riskby being combined with a large group of smaller employer funding options8 self -Funding8 Functions as a self -administered plan Employer pays an administrator to provide benefits Often paired with Stop-Loss insurance to limit the total liability (especially for smaller employers)Pay for what yourplan uses Employer liable for paying claims incurred by their plan s members Low claims: > lower payments.

4 High claims: > higher payments Employer holds reserves (versus fully insured carrier holding reserves)Benefits uniformamong all states Flexibility to design a customized Benefit plan not subject to state mandated benefits Designed with the help of an administrator and broker based on employer s/ employee s needsAlso referred to as ASO (Administra-tive Services Only) For this presentation, all references to Self-Funding assume a paired arrangement with Stop-Loss insurance9 Why Consider Self-Funding ?9 Your client wants to Benefit financially from good claims experience9 Your client needs greater control and flexibility over their plan design (No canned plans)9 Your client needs one consistent plan design across multiple states9 You and your client want better reporting & transparency of their healthcare costs (Puts you in better position to negotiate renewal to help clients)

5 9 Your client wants to participate in the health and wellness of their members9 Your client wants lower Premium Taxes10 What about Self-Funding can scare small employers? Fluctuations in monthly payments Unknown Terminal Liability due if they terminate the plan Large claims and/or unfavorable claims experience Delays in stop loss reimbursements Hidden fees or pass through costs that make budgeting difficult Stop Loss covered charges not matching plan covered charges Complex contract provisions-Minimum Attachment -Deficit Carryover Provision-Lasers at renewal11 CIGNA Level funding Product25(or more) ENROLLEDL evel funding .

6 Protection Geared to Smaller EmployersCIGNA Stop Loss Provisions Low Individual stop-loss levels with Immediate Reimbursement Low attachment levels with Monthly Accommodation 15 months of Runout protection (12/27 spec & agg)Level funding Contract Provisions No lasers No deficit carry forward No terminal liability No minimum attachment Includes 12/27 spec & aggConfidential unpublished property of CIGNA . Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. 2010 CIGNA 1213 How does Level funding Work?

7 $0$5,000$10,000$15,000$20,000$25,000$30, 000$35,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec15monthrun-outTotal CostsMonthly claimsfunding (MCF)Administrativeand insurancecosts (A&I)1 Held by CIGNA on behalf of the group Client pays pre set level payments(max costs) each month of policy year, based on actual enrollment each month Client and broker can view monthly claims reportingand assess expected surplus throughout the year In month 15, a reconciliation is doneto assess Claim funding Surplus, less the Terminal Fund1set aside (to cover runout claims; no additional fees due) In month 16, the client benefits from an administrative fee creditfor their portion* of the Claims funding Surplus*Surplus Share arrangements vary and may be impacted by state regulations.

8 Includes 2/3 option, option, and 100% = 50% Mo. 11 Claim funding + 75% Mo. 12 Claim Funding14 Who Are the Ideal Candidates?1 What employers want from health insurers in 2010: Better information, more value, Pricewaterhouse Coopers Health Research Institute, January 2010 Level Funding9 The losers under Obama Care (Young, healthy, favorable industry)9 Wants to Benefit from good claims experience9 Needs greater control and flexibility9 Needs consistent plan across multiple markets9 Wants better reporting & transparency9 Wants to participate in the health and wellness of their members9 Wants lower Premium Taxes9Is accustomed to fully insured 9 Needs predictable payments9 Needs low pooling level15 CIGNA Graded funding Product25(or more) ENROLLEDG raded funding .

9 Protection Geared to Smaller Employers, with Added FlexibilityCIGNA Stop Loss Provisions Low Individual stop-loss levels with Immediate Reimbursement Flexible Aggregate Attachment Points Low attachment levels with Monthly Accommodation 15 months of Runout protection (12/27 spec & agg)Graded funding Contract Provisions No lasers Optional deficit carry forward Pre-established terminal liability Optional minimum attachment 12/27 spec & aggConfidential unpublished property of CIGNA . Do not duplicate or distribute. Use and distribution limited solely to authorized personnel.

10 2010 CIGNA 1617 How does Graded funding Work? Traditional self -funded product, but designed for the smaller employer Client pays fixed costs each month plus claims, up to a pre-defined maximum Financial design of the product follows claim patterns: Month 1 (25%) & Month 2 (50%); Months 3-12 are at 100%. Allows for cash flow savings to employer. Client and broker can view monthly claims reportingand assess savings throughout the year The employer retains all unspent claim dollarsunder pre-set liability maxes Reserve liability is pre-determined, and held by the client until termination125% liability not collected in Month 1 & 2 = terminal liability funding18 Who Are the Ideal Candidates?