Pre-work: Impact of Medicare Prescription Drug, Improvement and Modernization Act (MMA)

1. Pre-work: Impact of Medicare Prescription Drug, Improvement and Modernization Act (MMA) September 8 and 9, 2005 Confidential and Proprietary, not for Public distribution Current as of August 29, 2005

2. Pre-Work Read this presentation and the Glossary of Terms prior to attending the Medicare Individual Plan Sales Training. At the beginning of the meeting, you will be asked to complete a quiz to confirm your understanding of this material. All participants should do: • The Glossary of terms • Consumer Options • MMA regulated changes Each participant locate and study your own • Regional Part D Sample Charts California participants should also do: • California Monthly Dues • California 2006 Plan Benefits

3. Overview Consumer Options Module All participants should do the Consumer Options Module • This is an Overview Consumer Options module • The complete Consumer Options module will include competitor information and a more detailed explanation of the Supplemental Plans • It should be completed in October and be delivered by your DSM or Regional Team Lead

4. What are the consumer’s options in regard to Part D? In 2006, there are more options and combinations of options for prospects to choose: Let’s look at the 4 primary options: • Original Medicare with no Part D • Prescription Drug Plans for Part D only • Part D through a supplemental Plan • Part D through a Medicare Advantage Plan

5. Option One: Original Medicare If a prospect stays with Original Medicare: • They still will not have drug coverage. • Medicare beneficiaries need to be aware that Part D is NOT provided by CMS or Social Security, but through an independent plan a beneficiary must purchase.

6. Option Two: Enroll in Part D with a Prescription Drug Plan If a prospect enrolls in a Prescription Drug Plan (PDP): • They purchase prescription drug coverage (Part D) benefits only. • They can not enroll in a Prescription Drug Plan without A and/or B. • They need to pay multiple monthly premiums: to the Part D PDP, to the Medi-Gap plan and/or Original Medicare • PDP’s will most likely include deductibles and co-insurance, as well as a monthly premium A Prescription Drug Plan can be offered by a wide range of private companies; for instance, Longs, Walgreens and perhaps Secure Horizons, Blue Cross, etc. If a person purchases a PDP, they cannot enroll in Kaiser Permanente or any other plan that offers Part D. • Kaiser Permanente will NOT offer a separate stand alone PDP.

7. Option Three: Enroll in Part D from a Supplemental Plan Beginning January 1, 2006 MMA drastically impacts Supplemental Plans as well as Medicare Advantage Plans. • Seniors will need to learn a whole new alphabet. • Medi-gap prescription drug policies that include prescription drugs (H, I, or J) may not be sold or issued as they exist today. • 60 days before the Medicare prescription drug plan initial enrollment period, the companies offering H,I,J policies will notify their beneficiaries of this benefit change and suggest options. • A,B,C,F policy holders purchase a prescription drug plan separately. • There will be two new plans, K or L. (more details on Supplemental Plans will be coming in October)

8. Option Four: Enroll in Part D through a Medicare Advantage Plan If a prospect enrolls in a Medicare Advantage Plan like Kaiser Permanente Senior Advantage with Part D • They receive one plan with A, B and D coverage • They receive one bill that covers everything (in most regions) • They have no deductible and no co-insurance End of Consumer Options Pre-Work All participants continue to next page

9. MMA regulated changes All participants should study this page B coverage changes: • An initial physical examination in the first 6 months of having B coverage • Cardiovascular screening blood tests, cholesterol and blood lipid screenings once every two years • Two diabetes screenings a year, if you are high risk • Part D will exclude certain classes of drugs, like anti-depressants. • Smoking cessation drugs are covered under D • Kaiser Permanente Base drugs that WERE included under B are now Part of Part D, they will accumulate towards TrOOP now. • Medicare base drugs are still Part B. They do NOT accumulate towards TrOOP.

10. Standard Part D verses Sample Kaiser Permanente Plan Designs Each participant should study their own regions sample plan design • Find your Regions plan design and practice how you would describe this plan in your own language. • California participants should find their plan design and then continue on to the California 2006 Plan Benefit module. • All other regional participants, your are finished with your prework. • Thank you, and we will see you in September!

11. CATASTROPHIC COVERAGE 95% Plan Contribution (Unless LIS) 5% co-ins No Co-ins. 100% Enrollee Payment Coverage Gap “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $40 Brand Co-pay No Deductible Standard Part D vs. SAMPLEKPSA California North Plan Design North California Part D Design Standard Part D Design TotalDrug Cost Enrollee Out-of-Pocket Expenses Member True Out-of-Pocket Expenses Total Drug Cost CATASTROPHIC COVERAGE $3 Generic $10 Brand (Unless LIS) $5,100+ $3,600 TrOOP $3,600+ TrOOP 100% of Member Rate $2,250 $2,250 Initial Coverage limit $750 $10 Generic $40 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 $0 1 copay for 30 & 2 co-pays for 100 day supply up to Catastrophic Coverage then Dr. determines supply

12. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $30 Brand Co-pay No Deductible Standard Part D vs. SAMPLEKPSA California South Plan Design South California Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $3 Generic $10 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP $10 Generic 100% Member Rate for Brand $3,000 Initial Coverage limit for brand only $2,250 $750 $10 Generic $30 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 100 day supply up to Catastrophic Coverage then Dr. determines supply

13. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $40 Brand Co-pay No Deductible Standard Part D vs. SAMPLE Hawaii Plan Design Hawaii Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $8 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate $2,250 Initial Coverage limit $2,250 $750 $10 Generic $40 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

14. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $35 Brand Co-pay No Deductible Standard Part D vs. SAMPLEColorado Basic Alternative Plan Design Colorado Basic Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $3 Generic $10 Brand (unless LIS) $5,100+ $3,600 TrOOP $3,600+ TrOOP 100% Member Rate $2,250 Initial Coverage limit $2,250 $750 $10 Generic $35 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

15. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $25 Brand Co-pay No Deductible Standard Part D vs. SAMPLEColorado Enhanced Alternative Plan Design Colorado Enhanced Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $3 Generic $10 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate for brand $10 generic $3,500 Initial Coverage limit Brand only $2,250 $750 $10 Generic $25 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

16. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $15 Generic $35 Brand Co-pay No Deductible Standard Part D vs. SAMPLE Northwest Enhanced Alternative Plan Design Northwest Enhanced Alternative –SAI Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $3 Generic $7 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate for brand $15 for generic $2,250 Initial Coverage limit for brand only $2,250 $750 $10 Generic $35 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

17. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $25 Brand Co-pay No Deductible Standard Part D vs. SAMPLENorthwest SHMO Plan Design Northwest Enhanced-SHMO Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $3 Generic $7 Brand (unless LIS) $5,100+ $3,600+ TrOOP? $3,600+ TrOOP $5,100 Initial Coverage limit $2,250 $750 $10 Generic $25 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

18. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible No Deductible Standard Part D vs. SAMPLE Georgia Plan Design Georgia Basic Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $10 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate $2,250 Initial Coverage limit $2,250 KP Pharmacy: $15/$30 Community Pharmacy: $25/$50 Mail order: $10/20 $750 No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 3 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

19. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible No Deductible Standard Part D vs. SAMPLEMid- Atlantic Basic Alternative Plan Design Mid-Atlantic Basic Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $8 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate $2,250 Initial Coverage limit KP Pharmacy: $10/$35 Community Pharmacy: $15/$45 Mail order: $7/$30 $2,250 $750 No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 3 co-pays for 90 day supply at all levels up to Catastrophic Coverage then Dr. determines supply

20. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible No Deductible Standard Part D vs. SAMPLEMid-Atlantic Enhanced Alternative Plan Design Mid-Atlantic Enhanced Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $8 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate for Brand $10/15/7 Generic depending on fulfillment option $3,000 Initial Coverage limit for brand only $2,250 $750 KP Pharmacy: $10/$35 Community Pharmacy: $15/$45 Mail order: $7/$30 No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 3 co-pays for 90 day supply at ICL and Catastrophic, 1 copay for 30 and 2 copays for 90 in coverage gap. Subject to change

21. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $35 Brand Co-pay No Deductible Standard Part D vs. SAMPLEOhio Basic Alternative Plan Design Ohio Basic Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $10 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP 100% Member Rate $2,250 Initial Coverage limit $2,250 $750 $10 Generic $35 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

22. CATASTROPHIC COVERAGE 95% Plan Contribution 5% co-ins No Co-ins. 100% Enrollee Payment “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $10 Generic $30 Brand Co-pay No Deductible Standard Part D vs. SAMPLEOhio Enhanced Alternative Plan Design Ohio Enhanced Alternative Part D Design Standard Part D Design TotalDrug Cost Total Drug Costs Enrollee Out-of-Pocket Expenditures Member True Out-of-Pocket Expenses CATASTROPHIC COVERAGE $2 Generic $10 Brand (unless LIS) $5,100+ $3,600+ TrOOP $3,600+ TrOOP $10 Generic 100% Member Rate for Brand $2,250 Initial Coverage limit for brand only $2,250 $750 $10 Generic $30 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 1 copay for 30 & 2 co-pays for 90 day supply up to Catastrophic Coverage then Dr. determines supply

23. CATASTROPHIC COVERAGE 95% Plan Contribution (Unless LIS) 5% co-ins 5% Co-ins. 100% Enrollee Payment Coverage Gap “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $250 Enrollee Deductible Standard Part D vs. SAMPLEJoes Pharmacy PDP #1 Plan Design Joe’s Pharmacy PDP #1 Part D Design Standard Part D Design TotalDrug Cost Enrollee Out-of-Pocket Expenses Member True Out-of-Pocket Expenses Total Drug Cost CATASTROPHIC COVERAGE 95% Plan contribution (Unless LIS) $5,100+ $3,600 TrOOP $3,600+ TrOOP 100% of cost $2,250 $2,250 Initial Coverage limit $750 $10 Generic $40 Brand Co-pay No Co- Ins. $250 $250 $0 $0 $0 $0 1 copay for 30 day supply Monthly premium is $40

24. CATASTROPHIC COVERAGE 95% Plan Contribution (Unless LIS) 5% co-ins 5% Co-ins. 100% Enrollee Payment Coverage Gap “Donut Hole” 75% Plan Contribution 25% co-ins $250 Enrollee Deductible $100 Enrollee Deductible Standard Part D vs. SAMPLEJoes Pharmacy PDP #1 Plan Design Joe’s Pharmacy PDP #2 Part D Design Standard Part D Design TotalDrug Cost Enrollee Out-of-Pocket Expenses Member True Out-of-Pocket Expenses Total Drug Cost CATASTROPHIC COVERAGE 95% Plan contribution (Unless LIS) $5,100+ $3,600 TrOOP $3,600+ TrOOP 100% of cost $3,000 Initial Coverage limit $2,250 $750 75% Plan contribution 25% co-insur- ance. $250 $250 $0 $0 $0 $0 1 copay for 30 day supply Monthly premium is $45

25. California 2006 Benefit and Premiums This module is for California Medicare Sales only The following information is not final and subject to CMS approval. Information is current as of August 25,2005

26. Statewide benefit changes • Effective January 1, 2006 UP TO TROOP: • 30 day instead of 100 day prescription supply for one copay • A 100-day supply is available through mail order incentive, for two copayments. AFTER TROOP: • The mail order option is not available, and one copay will be for any supply that the doctor writes up to 100 day supply.

27. Statewide benefit changes • Effective January 1, 2006 • Members will receive notification in the mail once a month if they use the pharmacy. This notification will tell them exactly what they have accumulated in drug costs. • After the 20th day, Skilled Nursing Facility copayments increase from $50 a day to $75 a day. • Annual out of pocket maximum remains at $3,000. Please note, this out-of-pocket maximum does not include drugs or Durable Medical Equipment. (DME) • Vision remains at $150 allowance for eyewear every 2 years • Allergy Injection visits are $3 per visit • Group therapy visits remain ½ the DOV.

28. Northern Additional changes • Effective January 1, 2006 Outpatient prescription drug copays will be: • $10 for up to a 30 day supply of generic drugs • $40 for up to a 30 day supply of brand name drugs • Over the calendar year, if a member’s total drug cost reaches $2,250, they will pay full pharmacy price for both brand and generic prescriptions drugs. • If in the same calendar year the member’s out-of-pocket expenses for drugs reaches $3,600, the member will go back to paying copayments, which will be lower and the day supply will increase. • The copayment will be: • $3 for up to a 100 day supply of generic drugs • $10 for up to a 100 day supply of brand-name drugs.

29. Confidential & Proprietary - Internal Use OnlyNorthern California Monthly Dues and Benefit Copayments

30. Southern California Additional Changes Effective January 1, 2006 Outpatient prescription drug copays will be: • $10 for up to a 30 day supply of generic drugs up • $30 for up to a 30 day supply of brand name drugs • Over the calendar year, if a member’s total drug cost reaches $3,000, they will pay full pharmacy price for brand-name prescriptions drugs and continue to pay $10 for generic drugs. . • If in the same calendar year the member’s out-of-pocket expenses for drugs reaches $3,600, the member will go back to paying only copayments and they will be even lower. • Then the copayment will be: • $3 for up to a 30 day supply for generic drugs • $10 for up to a 30 day supply for brand-name drugs.

31. Confidential & Proprietary - Internal Use OnlySouthern California Monthly Dues and Benefit Copayments

32. Goodbye, see you soon! • California participants, your are finished with your prework. Thank you, and we will see you in September!