1. 1 Health Insurance Briefing 22 July 2010 CHANGES IN THE HEALTH INSURANCE PROGRAMMES www.un.org/insurance

2. www.un.org/insurance 2 HEALTH INSURANCE Self Funded programme Self Funded programme Uses expert administrative services of insurance carriers Uses expert administrative services of insurance carriers Carriers paid fees to use provider networks and services of experts Carriers paid fees to use provider networks and services of experts Risk responsibility Risk responsibility July to June cycle for US-based plans July to June cycle for US-based plans Jan to Dec cycle for other plans Jan to Dec cycle for other plans

3. www.un.org/insurance 3 Cost containment and Education initiatives Containing costs is a shared responsibility of all participants in the UN plans. This can be achieved by being a knowledgeable consumer and selecting medical care providers from the vast number of doctors in the Aetna and Empire Blue Cross networks. A visit to an in-network doctor or care provider is less costly than a visit to an out-of-network care provider for both the staff and the plan. Containing costs is a shared responsibility of all participants in the UN plans. This can be achieved by being a knowledgeable consumer and selecting medical care providers from the vast number of doctors in the Aetna and Empire Blue Cross networks. A visit to an in-network doctor or care provider is less costly than a visit to an out-of-network care provider for both the staff and the plan. Cost containment is also available through wellness initiatives. Health improvements and cost reductions have started to become apparent as staff and retirees are using the disease management and wellness features available to Aetna and Empire Blue Cross participants through the ActiveHealth programme implemented in December 2008. Staff are encouraged to make full use of the ActiveHealth programme so as to obtain maximum benefits from both a health/wellness perspective and plan cost perspective. Cost containment is also available through wellness initiatives. Health improvements and cost reductions have started to become apparent as staff and retirees are using the disease management and wellness features available to Aetna and Empire Blue Cross participants through the ActiveHealth programme implemented in December 2008. Staff are encouraged to make full use of the ActiveHealth programme so as to obtain maximum benefits from both a health/wellness perspective and plan cost perspective. Staff and the administration also agreed to collaborate on a vigorous education campaign geared towards providing information to all plan participants, to help participants make informed decisions to contain health costs while continuing to have access to high quality care Staff and the administration also agreed to collaborate on a vigorous education campaign geared towards providing information to all plan participants, to help participants make informed decisions to contain health costs while continuing to have access to high quality care

4. www.un.org/insurance 4 How Premiums are Determined CLAIMS (total amount paid to all medical providers during the last 12 months) CLAIMS (total amount paid to all medical providers during the last 12 months) + TREND(adjustment for increase in health care utilization due to aging population, new procedures and technologies, newly developed drugs, changes in medical practice patterns, medical inflation) TREND(adjustment for increase in health care utilization due to aging population, new procedures and technologies, newly developed drugs, changes in medical practice patterns, medical inflation) = PROJECTED CLAIMS (paid claims plus adjustment for trend) PROJECTED CLAIMS (paid claims plus adjustment for trend) + FEES (administrative fees paid to insurance companies to use the carrier’s eligibility and claim processing expertise and benefit from discounted services that the carriers have negotiated with medical providers in their networks) FEES (administrative fees paid to insurance companies to use the carrier’s eligibility and claim processing expertise and benefit from discounted services that the carriers have negotiated with medical providers in their networks) = TOTAL COST (paid claims plus trend plus administrative fees) TOTAL COST (paid claims plus trend plus administrative fees) / CURRENT PREMIUM (total amount of employee premium contribution and organization subsidy received during the last 12 months) CURRENT PREMIUM (total amount of employee premium contribution and organization subsidy received during the last 12 months) = REQUIRED INCREASE (the rate increase that current premium will go up by) REQUIRED INCREASE (the rate increase that current premium will go up by) Example Example Claims1,000,000 Claims1,000,000 Trend at 10% + 100,000 Trend at 10% + 100,000 Projected claims1,100,000 Projected claims1,100,000 Administrative fees+ 50,000 Administrative fees+ 50,000 Total Cost1,150,000 Total Cost1,150,000 Current Premium1,075,000 Current Premium1,075,000 Rate Increase6.98% Rate Increase6.98%

5. www.un.org/insurance 5 How Premiums are Determined CLAIMS total amounts drive the Premiums determination CLAIMS total amounts drive the Premiums determination It is the responsibility of each participant to seek appropriate and high quality care as needed, while paying attention to the costs incurred It is the responsibility of each participant to seek appropriate and high quality care as needed, while paying attention to the costs incurred

6. www.un.org/insurance 6 In-network vs. Out of Network Cost: Containing costs in the US A visit to an in-network doctor or care provider is less costly than a visit to an out-of-network care provider for both the staff and the plan A visit to an in-network doctor or care provider is less costly than a visit to an out-of-network care provider for both the staff and the plan The insurance company has identified a group of providers who are “in-network” and has contracted with these providers on your behalf to get services at “discounted” rates. The insurance company has identified a group of providers who are “in-network” and has contracted with these providers on your behalf to get services at “discounted” rates. The primary advantage of using an in-network provider is that you receive this discounted rate for their services, and your insurance generally picks up a larger portion of the bill than with an out-of-network provider. The primary advantage of using an in-network provider is that you receive this discounted rate for their services, and your insurance generally picks up a larger portion of the bill than with an out-of-network provider.

7. www.un.org/insurance 7 In-network vs. Out of Network Cost: Containing costs in the US Example Example An in-network primary care physician (pcp) may charge $140 for an office visit. Your insurance company has contracted with them to discount this visit to $80. The UN insurance pays 100% of the discounted cost after you pay your $15 copay. This means the plan pays $65.00 and you, the patient pay $15. An in-network primary care physician (pcp) may charge $140 for an office visit. Your insurance company has contracted with them to discount this visit to $80. The UN insurance pays 100% of the discounted cost after you pay your $15 copay. This means the plan pays $65.00 and you, the patient pay $15. Compare with an out-of-network physician that also charges $140 for the visit. Without the negotiated rate from your insurance company, the cost will remain $140. For out-of-network providers and care, the UN insurance covers 80% of reasonable and customary charges after you meet your annual deductible. If you have not met your annual deductible, you will pay the full $140. If you have met your annual deductible, the UN insurance will pay $112 and you will pay $28. Compare with an out-of-network physician that also charges $140 for the visit. Without the negotiated rate from your insurance company, the cost will remain $140. For out-of-network providers and care, the UN insurance covers 80% of reasonable and customary charges after you meet your annual deductible. If you have not met your annual deductible, you will pay the full $140. If you have met your annual deductible, the UN insurance will pay $112 and you will pay $28.

8. www.un.org/insurance 8 Calculation of In network vs Out of network cost In-NetworkOut-of-Network Office visit charge$140Office visit charge$140 Network discount-$60Network discount-$0 Contracted office visit rate=$80 =$140 Your PCP copay-$15You pay-$28 UN insurance pays=$65UN insurance pays=$112 In this example, for out-of-network expenses, the staff pays 87% more and the Plan reimburses 72% more, an additional cost eventually passed onto the premium of the following year

9. www.un.org/insurance 9 EMPIRE BLUE CROSS PPO Plan with in-network and out-of-network benefits PPO Plan with in-network and out-of-network benefits Members pay a copay for medical services received in-network Members pay a copay for medical services received in-network Members pay an annual deductible, coinsurance, and out of pocket maximum for services received out of network Members pay an annual deductible, coinsurance, and out of pocket maximum for services received out of network Members pay a 20% co-payment or a maximum of $20 per prescription for drugs. Members pay a 20% co-payment or a maximum of $20 per prescription for drugs. Effective 1 July 2010: Costs Costs Projected trend of +11.5%Projected trend of +11.5% Reduction of administrative fees of 10%Reduction of administrative fees of 10% Very low reserve of 6 weeks onlyVery low reserve of 6 weeks only JNC could not reach an agreementJNC could not reach an agreement USG DM decided to pursue with a required 10.66% increaseUSG DM decided to pursue with a required 10.66% increase Coverage Coverage remove the annual limits on inpatient hospital days and outpatient visits for mental health and substance abuse servicesremove the annual limits on inpatient hospital days and outpatient visits for mental health and substance abuse services

10. www.un.org/insurance 10 AETNA PPO Plan with in-network and out-of-network benefits PPO Plan with in-network and out-of-network benefits Members pay a copay for medical services received in-network Members pay a copay for medical services received in-network Members pay an annual deductible, coinsurance, and out of pocket maximum for services received out of network Members pay an annual deductible, coinsurance, and out of pocket maximum for services received out of network Members pay a 20% co-payment or a maximum of $20 per prescription for drugs. Members pay a 20% co-payment or a maximum of $20 per prescription for drugs. Effective 1 July 2010: Costs Costs Projected trend of +14% adjusted down for a one-time change to POS II PlatformProjected trend of +14% adjusted down for a one-time change to POS II Platform Reduction of administrative fees of 5%Reduction of administrative fees of 5% Substantial reserve of 10 monthsSubstantial reserve of 10 months JNC agreed on a 4.3% increase + 2 month premium holidayJNC agreed on a 4.3% increase + 2 month premium holiday Coverage Coverage remove the annual limits on inpatient hospital days and outpatient visits for mental health and substance abuse servicesremove the annual limits on inpatient hospital days and outpatient visits for mental health and substance abuse services improve the coverage of contraceptive devicesimprove the coverage of contraceptive devices

11. www.un.org/insurance 11 HIP HMO Plan with in-network benefits and emergency only out of network benefits. HMO Plan with in-network benefits and emergency only out of network benefits. Members have no out-of-pocket cost for hospital and medical services received in-network. Members have no out-of-pocket cost for hospital and medical services received in-network. There is no reimbursement for non-emergency out-of- network benefits. There is no reimbursement for non-emergency out-of- network benefits. Benefits under HIP include hospital services, physician services, behavioural health services, substance abuse services, occupational health services, prescription drug, vision and other health care benefits. Benefits under HIP include hospital services, physician services, behavioural health services, substance abuse services, occupational health services, prescription drug, vision and other health care benefits. Fully insured program. Premiums set by HIP. Fully insured program. Premiums set by HIP. Effective 1 July 2010: Costs Costs Premiums increased by 7.45%Premiums increased by 7.45%

12. www.un.org/insurance 12 CIGNA PPO dental plan with in-network and out-of-network benefits PPO dental plan with in-network and out-of-network benefits Members pay nothing for dental services provided by an in- network dentist. Members pay nothing for dental services provided by an in- network dentist. Members pay an annual deductible and coinsurance of 10% to 30% for services received from an out-of-network dentist Members pay an annual deductible and coinsurance of 10% to 30% for services received from an out-of-network dentist CIGNA covers dental services worldwide and benefits include diagnostic, preventive, restorative and orthodontic care. CIGNA covers dental services worldwide and benefits include diagnostic, preventive, restorative and orthodontic care. Total reimbursements are capped at $2,250 a year. Total reimbursements are capped at $2,250 a year. Effective 1 July 2010: Costs Costs Projected trend of +4%Projected trend of +4% Reduction of administrative fees of 7%Reduction of administrative fees of 7% Substantial reserve of 8.5 monthsSubstantial reserve of 8.5 months JNC agreed on a 6.29% increase + 1 month premium holidayJNC agreed on a 6.29% increase + 1 month premium holiday Coverage Coverage add coverage for dental implants in accordance with high number of requests made by health plan satisfaction survey participantsadd coverage for dental implants in accordance with high number of requests made by health plan satisfaction survey participants

13. www.un.org/insurance 13 Vanbreda International (for non-US based staff) Comprehensive major medical plan Comprehensive major medical plan Members are reimbursed for medical and hospital treatment Members are reimbursed for medical and hospital treatment Members pay a $200 annual deductible and are reimbursed up to 96 percent for reasonable and customary services Members pay a $200 annual deductible and are reimbursed up to 96 percent for reasonable and customary services Vanbreda covers medical services for members residing in all parts of the world except the United States. Yearly reimbursements are capped at $250,000. Vanbreda covers medical services for members residing in all parts of the world except the United States. Yearly reimbursements are capped at $250,000. Effective 1 Jan 2011 Staff survey showed a desire for improved vision, dental and hearing aids benefits Staff survey showed a desire for improved vision, dental and hearing aids benefits

14. www.un.org/insurance 14 Vanbreda International (short-term contracts) Covers emergency or immediate medical treatment for staff members only Covers emergency or immediate medical treatment for staff members only Members pay a $100 annual deductible and are reimbursed 80 percent of reasonable and customary fees. Members pay a $100 annual deductible and are reimbursed 80 percent of reasonable and customary fees. Yearly reimbursements are capped at $30,000. Yearly reimbursements are capped at $30,000.

15. 15 Health Insurance Briefing 22 July 2010 Q&A www.un.org/insurance