Broker Market Update

1. Broker Market Update October 2007

2. Agenda • Small Business • Exchanges – CalChoice / KP Choice • Mid-Large Group • HSA Update • Health Education Program

3. Small Business 2008 Portfolio Update

4. What’s changing for 2008? • January 2008 Rates • Geographic Rating Area Changes • Product Portfolio Changes • New PPO • Deductible HMO • Optical Discount • New Dental HMO • Document and Process Changes • Deductible Funding Arrangements • Retroactivity Policy • Enhanced Renewal Notification

5. January 2008 Rates forSmall Business

6. January 2008 Rates RATES • Average Change

7. Finally, a PPO forSmall Business. .

8. New $40/$1000 PPO Plan PPO • Small Business PPO available January 2008 • PROBLEM SOLVED! • Sample Rates • <30 Single $269 • <30 Employee + Spouse $784 • Low combined HMO + PPO premium • Single administrator A business owner who has an existing relationship with a community provider Out of area/out of state employee PPO = +

9. $40/$1,000 PPO Plan DesignNo limit on $40 DOV visits, $15 Rx and combined calendar year deductible PPO

10. Things you should know about our PPO PPO • Rates: • Two rate areas: Northern and Southern California • RAF based on our normal rating guidelines • Participation Requirements: • Kaiser Permanente must be the sole carrier • At least 70% of members must be enrolled in the HMO plan • Up to 30% of members can be enrolled in the PPO plan • Combined PPO and POS members • Participating Providers: • PHCS (Private Healthcare Systems) offers a wide network of participating providers nationwide • Provider search available at www.phcs.com/kaiser

11. Deductible Plans EnhancedSmall Business

12. Richer Deductible HMO Benefits$30/$1000 and $30/$1500 DEDUCTIBLE • 2007: Only preventive services are not subject to the deductible • 2008: All preventive and doctor office visits will not be subject to the deductible • Members pay no more than a $30 copay for the following services: • Doctor office visits • Well child visits • Prenatal and first post partum visit • Physical Exam • Family Planning Visits • Eye Exams • Hearing Exams • Immunizations • Covered Programs in Health Education • Preventive Screenings

13. $40/$1000 Deductible HMO Discontinued DEDUCTIBLE • The $40/$1000 Deductible HMO plan will no longer be sold effective 1/1/2008 • Existing groups will be moved to the $30/$1000 Deductible HMO plan at their renewal • A discontinuation notice was sent to brokers who have groups on the $40/$1000 plan • For groups purchasing this plan for the remainder of 2007, the same process will be repeated at renewal

14. New Optical Discounts Program!Small Business

15. 20% Optical Discount OPTICAL • For 2008, Small Business members get a 20% optical discount. • $5 and $15 Plan are excluded from the discount program • PPO plans and POS non-HMO tiers are also excluded • Discount available at Kaiser Permanente Optical Dept. • The discount applies to: • Frames • Lenses such as no-line bifocals, prescription and non-prescription sunglasses • Cosmetic contact lens purchase • 40% discount for all members on purchase of second pair of glasses

16. Optical OPTICAL • Vision centers located in many Kaiser medical facilities • Eye exam and the eyewear fittings are done in-house • Broad selection of high-quality eyewear products • Competitively priced

17. New HMO Dental PlansSmall Business

18. New DeltaCare Dental HMO Product DENTAL • Introducing two new Delta Dental HMO plans • Copay plans with ortho and bleaching • Over 3,700 network dentists statewide-largest in CA • Low premiums • Brokers receive a $1 PMPM for groups of 2+ • Roughly = 5-10 % of premium

19. Dental HMO DENTAL • Rates: • Two Rate Areas: Northern and Southern California • Small Business Offering Rules: • Cannot be sold standalone – must be attached to a medical plan • Not available to PPO members • May only offer a single dental plan • Dental Network: • Must visit an assigned DeltaCare dentist

20. New Guidelines - Deductible Funding ArrangementsSmall Business

21. Deductible Funding Arrangements Prohibited WRAPS • Deductible Funding Arrangements aka.. • Deductible Self-Funding • Wrapping/Wraparounds • HRA Arrangements • Small Business added language prohibiting wrap arrangements in the July 2007 New Group Application (NGA). • Expanded language has been added to the January 2008 NGA • Supplemental Insurance Arrangements • Insuring Deductible

22. Deductible Funding Arrangements Prohibited WRAPS • New language on HRA contributions and SHPS administration requirements • A Declaration of Understanding (DOU) has been created based on the same language for renewing groups. • A signed DOU is required for any renewing group adding a deductible plan.

23. What language is in the NGA and DOU? WRAPS • A company may not directly compensate employees for their health care expenses on an individual basis with the exception of designated HRA plans thru SHPS • A deductible HMO plan must not be used in conjunction with a wraparound or supplemental insurance arrangement, either directly or through a third-party administrator (TPA). • Employer can make contributions to bona fide HSA

24. New Guideline –Retroactive Plan ChangesSmall Business

25. Limits on Retroactive Plan Changes RETRO • Retroactivity creates benefit adjudication and accumulation problems • Effective 1/1/08, Small Business will only accept downgrade plan changes for the current effective month • AB1672 allows groups to make changes within the first 30 days of the anniversary date

26. Renewal ImprovementsSmall Business

27. Renewal Improvements RENEWAL • More information about rates, benefits and options • Brokers will receive group renewals in single packet • Brokers - 60 days in advance • Groups - 30 days in advance • Groups in recertification will receive a renewal notice, however, it will be contingent on completing recertification.

28. Renewal Improvements RENEWAL • Comparison • Total premium by employee and dependent with % change • Rate for each subscriber with % change • Benefit changes: 2007 benefit versus renewing 2008 benefit • RAF change, if any • Include subscriber age so you are aware if someone has crossed an age-band

29. Renewal Sample – Compares to Current RENEWAL

30. Renewal Improvements- Options RENEWAL • Easy to see alternatives and lower • cost plan options • All plan options shown, page per product • Including Dental and Chiro • Alternate plans include total premium by employee and dependent with % change • Subscriber rates shown for alternate plans

31. Renewal Sample- Includes Options RENEWAL

32. Renewal Improvements RENEWAL • One form to select renewal options • Confirmation sheet with all medical and ancillary plans listed • Waiting period options • Census listing identifying the employee and current plan selection with a place to indicate renewal plan change • Especially helpful for Multiple Plan Options

33. Renewal Sample- Selection Features RENEWAL

34. Exchange UpdateSmall Business

35. Kaiser Permanente Exchange PlansChoice Administrators EXCHANGE • CaliforniaChoice • New $15 HMO Plan • Replacing $10 HMO plan • New $30 HMO Plan • Kaiser Permanente Choice Solution • HMO $30-hospital copay decrease to $400 per day • New $20/$1000 & $30/$1500 POS plans • Replacing $20/$500 & $25/$1000 POS plans • New $30/$500 PPO Plan • Replacing $20/$500 PPO plan

36. Mid-Large Group Changes

37. Mid-Large Group • Multiple Plan Offering for groups 51-250 • Complete Suite • 30 different plan choices including HMO, PPO, Deductible HMO, POS and more • Choose up to 3 HMO plans when offered alongside another carrier • Choose up to 5 plans, including POS, PPO and indemnity for a Kaiser Total Replacement

38. Mid-Large Group • Commission change to % of premium • Effective July 2008 for existing groups • Available to quote new mid-large prospects for July 2008 effective date

39. Q & A • More questions?