ConnectiCare HSA Solution Presentation

1. ConnectiCare HSA Solution Presentation The health of your business is at the heart of everything we do

2. HDHP/HSA Program Overview • Health insurance costs are rising • HDHP/HSA programs may be part of the solution by: • Offering potentially lower health premiums • Encouraging healthier lifestyles • Promoting health consumerism

3. Answers to Your Questions • What is an HDHP/HSA program? • Why are HDHP/HSA programs important? • How does an HDHP/HSA program work? • How does an HSA work? • What are the employee benefits? • What are the employer benefits?

4. What is an HDHP/HSA program?

5. A New Kind of Healthcare Program • HDHP/HSA programs were created as part of the Medicare Modernization Act of 2003 • Part of the Consumer-Directed Healthcare (CDH) trend • CDH programs share some of the cost and responsibility for healthcare expenses with the employee

6. Why are HDHP/HSA programs important?

7. Health Premiums Keep Rising Average Annual Health Insurance Premiums 2008 to 2012 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2012. Chart compiled by Finity Communications.

8. HDHPs Can Lower Costs HDHP vs. Non-HDHP Health Insurance Premiums Estimated average annual premium of $4,713 for HDHP individual coverage and $13,446 for HDHP family coverage vs. $5,777 for non-HDHP individual coverage and $16,128 for non-HDHP family coverage. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2012. Chart compiled by Finity Communications.

9. How does an HDHP/HSA work?

10. Two Components Working Together • High Deductible Health Plan (HDHP) • Health plan offered by a health insurance company or an employer • Health Savings Account (HSA) • An individual custodial account

11. High Deductible Health Plan • An HDHP is a health plan designed with a higher deductible than many traditional health plans • Employees pay for most medical expenses before the deductible is reached • In exchange for higher deductibles, HDHPs often have lower premiums • Any premium savings can be put into an HSA to pay for healthcare expenses • Money in an HSA rolls over each year

12. HDHPDeductible Requirements • Single deductible that applies to all covered medical expenses • Minimum annual deductible: • Maximum annual out-of-pocket:

13. How does the HSA work?

14. Health Savings Account • Provided by an HSA custodian • Owned by employees • Not part of a qualified benefit plan (i.e., ERISA does not generally apply)

15. Health Savings Account • Tax-advantaged account • Used to pay for medical expenses before HDHP benefits apply • Employees may be able to use HSA money for expenses not covered under a traditional plan • Employees should check their HDHP to see what counts toward the deductible

16. HSA Contribution Limits • Maximum contribution limits are: • Limits subject to cost-of-living adjustments • Employees age 55 and older can make catch-up contributions

17. Employer HSA Contributions • Matching contributions motivate employees to save in their HSAs • Employees with no savings risk being financially vulnerable • Contributions show our commitment to the HDHP/HSA program

18. Employer Contribution Requirements • Contributions can vary each year • Contributions don’t have to be equal, but they must be “comparable” • Larger contributions can be made for lower-compensated employees • Combined contributions must not exceed contribution limits • Vesting requirements are simple

19. Our HSA Custodian • A leading financial institution • Interest paid on deposit account balances • Deposit accounts are FDIC-insured • Provides all recordkeeping • Provides all administration

20. HSA Services for Employees • HSA welcome kit • HSA debit card • Access to online tools and education • Monthly HSA statements • 24/7 account access online or by telephone

21. What are the benefits of an HDHP/HSA for employees?

22. HDHP/HSAs Offer Choice, Flexibility and Control • Potentially lower health insurance premiums • Tax-advantaged savings in HSAs • Funded with direct deposits, payroll deduction, or an IRA rollover • Promote increased health consumerism • Reward healthier lifestyles

23. HSAs Pay for Medical Expenses Before HDHP Benefits Apply • Employees control their HSAs • No “use it or lose it” provisions • Funds roll over year after year • HSAs are portable

24. HSAs Provide Significant Tax Advantages • Tax-deductible • Earnings accumulate without tax • Funds used for qualified medical expenses are tax-free • State taxes may vary • Employers not responsible for monitoring HSA spending

25. What are the benefits to employers?

26. More Sustainable Healthcare • Rising health insurance costs may create an unsustainable healthcare system • HDHPs share some of the responsibility with the employee • HSAs may motivate health consumerism • Sustainability may be achievable by motivating employees to become part of the solution

27. Healthy Lifestyles and Awareness • Healthy lifestyles can be rewarded with tangible financial benefits • Conscious health consumerism • May help health experience ratings • HSAs may help empower employees

28. Higher Corporate Profitability • Higher deductibles may lower health insurance premiums • Less spent on health insurance means higher company profitability • Higher profitability means a more secure future for employees

29. HDHP/HSA programs can help create a healthy future