2. TEXAS BusinessFlex for Small Groups  Offering Employer Options & Value This summary of benefits provides a very brief description of the important features of our plans. This is not the insurance contract and only the actual Certificate of Coverage provisions will apply. The Certificate set forth, in detail, the benefits, limitations, and exclusions. If there are any conflicts between the terms of the Certificate of Coverage and the information in this presentation, the terms of the Certificate of Coverage will prevail. Offered by Unicare Life and Health Insurance Company.

3. Today’s Agenda Introduction to BusinessFlex Why BusinessFlex? What we’ve learned Product strategy BusinessFlex Core Features BusinessFlex Plan Details Texas BusinessFlex for Small Groups

4. Introduction to BusinessFlex

5. Introducing BusinessFlex Taking innovation to a higher level: Defined Contribution options for both medical and dental coverage Section 125 Premium-Only Plan administered by Ceridian Benefits Services Member Flex options with Twelve (12) PPO Plans.

6. Why BusinessFlex?

7. Premiums Medical Inflation -2% 0% 2% 4% 6% 8% 10% 12% 14% 19901992 1994 1996 1998 I.II. III. IV. Source: Bureau of Labor Statistics, 1999 The Underwriting Cycle Why BusinessFlex?

8. Small Group Average Price per Member AVG PREMIUM PMPM Why BusinessFlex?

9. What We’ve Learned?

10. Growing demand for choice by employees Increasing Costs What We’ve Learned

11. Price/Cost vs Creative Plan Structures Allow for financial risk sharing with members Focus on Direct Access (PPO) plans vs. Managed Care Successful Health Plans What We’ve Learned

12. How to continue our recent rate of success as the economy slows. How to better meet the needs of Texas businesses and employees. The Challenges We Face What We’ve Learned

13. Product Strategy

14. Objectives: Help Employers successfully manage the current challenges of today’s business climate Ensure that Employees have improved choices and options Product Strategy

15. Objectives: Expand opportunities for Uninsured Groups to acquire coverage Contribute to WellPoint vision of market redefinition Product Strategy

16. BusinessFlex Core Features BusinessFlex Core Features

17. Consumer Choice 1000, 2000, 2500 & Saver 2000 HSA’s Plan A Plan B Plan C Performance Choice 500, 1000, 2000, 2500 & Saver 1000 Broad Range of Products and Premium Options BusinessFlex Core Features DO NOT COMBINE PERFORMANCE CHOICE WITH CONSUMER CHOICE

18. BusinessFlex Core Features Premium Only Plan (POP) Defined Contribution MemberFlex

19. Enables employers to empower employees with control of their own medical and dental needs Enables employers to empower employees with control of their own medical and dental needs What is MemberFlex? Allows the employer the flexibility to offer one, several or all plans to his/her employees Employees control their costs by choosing from plans of varying costs Employees control their costs by choosing from plans of varying costs BusinessFlex Core Features

20. Premium Only Plan (POP) Defined Contribution MemberFlex

21. Four financing options for Medical plans: Defined Contribution 100: Limits employer’s monthly contribution to no more than $100 per covered employee. Defined Contribution 80: Limits employer’s monthly contribution to no more than $80 per covered employee. Employer may choose from the low and medium medical plan options? Defined Contribution Options BusinessFlex Core Features

22. Four financing options for Medical plans: Defined Contribution Select: Allows employer to pay any fixed monthly amount in excess of $100 per covered employee. Traditional Contribution: Enables employers to contribute a minimum of 50% of employee’s monthly premium. BusinessFlex Core Features Defined Contribution Options

23. Options for Dental plans: Defined Contribution options are also available for dental. - Defined Contribution 15 - Defined Contribution Select - Traditional Contribution BusinessFlex Core Features Defined Contribution Options

24. BusinessFlex Core Features Premium Only Plan (POP) Defined Contribution MemberFlex

25. Employers can: Generate company tax savings through a reduction in taxable payroll Receive P.O.P. for only $125 per year Apply tax savings toward the purchase of enhanced employee benefits, increasing employee satisfaction The Premium Only Plan (P.O.P.) BusinessFlex Core Features

26. Employees can: Increase take-home pay Defray part of the cost of their premium with associated tax savings Reduce FICA, federal or, where applicable, state or local taxes on their portion of employer-sponsored plan insurance premiums BusinessFlex Core Features The Premium Only Plan (P.O.P.)

27.  Made possible through provisions of Section 125 of the Internal Revenue Code  Total taxable payroll of company is reduced by amount of employees’ premium contributions  Savings to employer depend on total company payroll and dollars that employees contribute  Employees use pre-tax dollars to pay their share of monthly premiums, reducing their taxable income How P.O.P. Works BusinessFlex Core Features

28. BusinessFlex Plan Details BusinessFlex Plan Details

29. Next Generation Small Group Plans Introduces.........

30.  Next Generation Small Group Plans Performance Choice Plans Consumer Choice Plans Health Savings Accounts (HSA) BusinessFlex Plan Details

31.  Performance Choice (Tier A)  Enhanced preventive care benefits  Increased ambulance benefit  Unlimited office visits on three (3) plans Three-tier pharmacy benefit Performance Choice PPO plans consist of five (5) plans with selected deductibles and varying co-insurance offering rich, valuable benefits that are competitively priced. BusinessFlex Plan Details

33.  Next Generation Small Group Plans Performance Choice Plans Consumer Choice Plans Health Savings Accounts (HSA) BusinessFlex Plan Details

34. General Inflation (CPI) Drugs, Medical Devices & other Medical Advances Rising Provider Expenses Government Mandates & Regulation, Litigation & Risk Mgmt Increased Consumer Demand Other Source: PricewaterhouseCoopers, 2002 The Factors Driving Premium Costs

35. Studies show that mandated benefits are responsible for an estimated 15% of the increases in premiums in 2002 ARKANSAS INDIANA ILLINOIS NEVADA TEXAS VIRGINIA 27 29 33 46 50 53 Number of mandated benefits by State BusinessFlex Plan Details

36.  Consumer Choice (Tier B) Mandated benefits excluded from Consumer Choice Plan: Chemical DependencyTelemedicines Complications of PregnancySpeech and Hearing Oral Contraceptives and DevicesChiropractic Benefits Serious Mental Illness Mandate-Lite Plan. Developed to make small group benefits more affordable. BusinessFlex Plan Details

38.  Next Generation Small Group Plans Performance Choice Plans Consumer Choice Plans Health Savings Accounts (HSA) BusinessFlex Plan Details

39.  President Bush signed into law on December 8 th as part of the Medicare RX bill (Eff. 1/1/2004)  Who is eligible to open an HSA?  Anyone who is covered under a High Deductible Health Plan (HDHP)  Generally anyone under the age of 65 (not Medicare eligible)  Cannot be claimed as dependent on another person’s tax return  Not covered by any other health plan  Injury or Illness specific plans are allowed Health Savings Accounts (HSA’s) BusinessFlex Plan Details

40. Money Spent on Medical Care Annually Percentage of U.S. Population No Medical Expenses 33% $1 - $50040% $501 - $1,0009% $1,001 - $2,0007% $2,001 - $5,0005% $5,001 - $10,0003% $10,001 - $25,0002.25% $25,001 - $50,0000.50% $50,001 - $100,0000.20% $100,001 - And Up0.05% Copyright 1995-2004, American Health Value, SM, LLC, All rights reserved BusinessFlex Plan Details

41. Health Savings Account (Funds) Established at a financial Institution High Deductible Heath Plan (HDHP) Purchased from UNICARE BusinessFlex Plan Details What are the Elements of a HSA?

42.  Annual Deductible of at least $1,000 ($2,000 family)  Annual Out of Pocket not in excess of $5,000 ($10,000 family)  No first dollar benefits-Deductible must apply to all benefits with the exception of preventive care (Rx Card allowed until 2006) BusinessFlex Plan Details What is considered a HDHP?

43. What are the contribution rules and tax treatment of an HSA?  An HSA is generally exempt from tax (like an IRA or MSA) as long as a HDHP exists  Contributions may be made annually up to the lesser of the HDHP deductible amount or $2600 single ($5150 family).  Individuals, employees or employers may contribute to the HSA account  The HSA account is owned by the individual, not an employer  Withdrawals may be made without tax consequences to pay for qualified medical expenses and in some instances for insurance premiums (COBRA and LTC)  Un-used account balances will carry over from year to year BusinessFlex Plan Details

45. Thank you for Participating!