Employee Benefits & Healthcare Reform: An Opportunity in Disguise

Survey Data Sources The J. Henry Kaiser Family Foundation Roberts Woods Johnson Foundation National Business Group on Health Employee Benefit Research Institute (EBRI) Health Insurance Plans Price Waterhouse Coopers (pwc) Towers Watson AON Hewitt Bswift Alegeus Technologies Aetna Cigna UHC Etc. Etc. Etc.

Why an Opportunity in Disguise? The Affordable Care Act has put healthcare, and the cost of healthcare, in the limelight Employees are expecting change ACA provides a stage from which to promote wellness, personal responsibility, and present resources & tools that can guide employees through the process

Premiums are Going Up and Benefits are Going Down

Average Annual Premiums Average Annual Premiums for Single and Family Coverage, 1999 – 2013

Average Annual Premiums and Contributions Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2003 – 2013 Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, 2003 – 2013 $9,068 $16,351 80% Total Premium Increase 89% Worker Contribution Increase

Average Annual Deductible Average Annual Deductible for Single Coverage, by Plan Type, 2006 – HMO$352$401$503$699$601$911$691$729 PPO$473$461$560*$634*$675 $733$799 POS$553$621$752$1,061$1,048$928$1,014$1,314 HDHP / SO$1,715$1,729$1,812$1,838$1,903$1,908$2,086$2,003 All Plans$584$616$735*$826*$917*$991$1,097*$1,135 Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013

Average Deductible of $1,000 + Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, By Firm Size, 2006 – 2013 Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013

What are Employers Doing?

Reactions to Rising Costs Adjusting plan design is perhaps the oldest technique—and it hasn’t worked Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

Enrollment in HDHPs Has Tripled Since 2009 Enrollment in Employer-Sponsored Health Plans by Type of Plan, 2009 – 2014 PPO Plans High-Deductible Plans HMO Plans - 16% - 29% +225% ’09 ’10 ’11 ’12 ’13 ‘14 Source: PwC Health Research Institute, Medical cost trend: Behind the Numbers 2015, June 2014, based on PwC 2014 Touchstone Survey

Market Traction Account-based health plans continue to gain traction in the market... 47% of employers now offer HDHPs 60% of employers now offer FSAs 42% of employers now offer HSAs 23% of employers now offer HRAs Of those employers now offering HDHPs: 53% Offer incentives to choose HDHPs – including HSA contributions 66% Indicate HDHP / HSA enrollment is growing or significantly growing30% Estimate of employee population now enrolled in HDHPs Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

HDHP / Firm Size Among Firms Offering Health Benefits, Percentage that Offer an HDHP / SO, by Firm Size, 2013 Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2013

HDHP Enrollment Percentage of Covered Workers Enrolled in an HDHP / HRA or HSA – Qualified HDHP, 2006 – 2013 Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013

HDHP as the Single Option Under Consideration 44% 38% Not Under Consideration Already Implemented 18% Are you considering implementing a high- deductible plan as a full replacement option for medical benefits over the next 3 years? Most employers are considering or already offer a High-Deductible plan as the only option for employees Source: PwC Health Research Institute, Medical cost trend: Behind the Numbers 2015, June 2014

Telemedicine Potential savings of $6B per year Source: Towers Watson, 2014 Employers are looking for solutions to combat rising healthcare costs, as well as convenient solutions for employees

What’s Working?

“Option” HRA / HSA Source: 9 th Annual Aetna HealthFund Study Savings based on both plan and member spending Based on normalized allowed claim PMPM trends averaged over 6 years Option HRA / HSA Savings $108 Savings $120 Savings $168 Savings $204 Savings $264 Savings $300 AHF study group Control group

“Full Replacement” HRA / HSA Source: 9 th Annual Aetna HealthFund Study Savings $432 Savings $324 Savings $336 Savings $324 Savings $228 Control group AHF study group Savings based on both plan and member spending Based on normalized allowed claim PMPM trends averaged over 6 years Full Replacement HRA / HSA

Average Spend Source: 9 th Annual Aetna HealthFund Study Difference -16% Difference -5% Difference -4% Difference -9% Difference -7% Difference -4% Difference -1% AHF study group Control group Households Spend Less for All Types of Health Costs Versus a Matched Population

2x …more logins to provider websites …more likely to fill out a health assessment …more use of the personal health record …more use of price information tools, including pharmacy drug costs and Member Payment Estimator Source: 9 th Annual Aetna HealthFund Study Members Use the Information Provided Online tools for cost of care and benefits information are used overwhelmingly more by consumers with HDHPs

Will CDH Drive Behavior Change? HDHPs and Tax Advantaged Accounts are Designed to Make Employees More Aware and Accountable for Healthcare Spending; Will it Change Behavior? Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

Education is Critical

HSA Understanding: 10 Years Later 2.8% Of respondents got 9 of 9 questions correct 30% Of respondents “passed” with 7 of 9 questions correct Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

FSAs Have Existed Much Longer....3% Of respondents got 9 of 9 questions correct 50% “passed” with 7 of 9 answered correctly Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

More Consumer Support Needed Consumers want better benefit communication and decision-support from employers Most employers offer limited support today: Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey 65% 60% 33% 17% Communicate about health benefit offerings only during open enrollment Rely only on plan summary documents and enrollment forms Offer plan comparison tools and multimedia & education content Offer an interactive recommendation engine based on personal data inputs

Consumers Value Easy-to-Use Account Features Debit card is #1 ranked account feature across all benefit account types 75% of consumers value integration of insurance claim data to streamline review and payment 65% of consumers value multi-channel account access (online, mobile, etc.) 60% of consumers value self-service features (such as mobile claim submissions, online bill pay, etc.) Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey

Wellness Incentives

>500 employees Base = employers offering wellness programs Source: bswift SourceMedia Research, 2012 – 2014

Wellness Incentives >500 employees Base = employers offering wellness programs Source: bswift SourceMedia Research, 2012 – 2014

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