BLUE CROSS of California Medicare Supplemental Products

1. BLUE CROSS of CaliforniaMedicare Supplemental Products New

2. MARKET POTENTIAL • 2 Million people turn 65 each year in the U.S. = 166,667 each month, 5,574 each day • 3.6 MILLION CALIFORNIA SENIORS • Approximately 200,000 Californians become Medicare eligible each yr. = 16,000 each month * Based on 2000 U.S. census data.

3. MARKET POTENTIAL • Guaranteed Issue – no underwriting in most situations! • Within 6 months after obtaining Part B • Within 6 months after terminating “Group” coverage • Persistency • Average Blue Cross Member stays over 10 years • 1 sale = 10 years of commission • Simplicity • Medicare SupplementalPolicies have remained basically unchanged since 1990

4. BLUE CROSSSupplemental Products • Products • CareResource Solutions • Review of the Rules New

5. BLUE CROSS Supplemental Products New • This product accounts for 25% of Blue Cross’ Medicare Supplemental sales. • In Areas 1, 2, 3, the premiums are 56% less than the F Plan. • In Areas 4, 5, 6 the premiums are 54% less than the F Plan.

6. BLUE CROSS Supplemental Products New SmartChoice

7. BLUE CROSSSmartChoice • The Classic F Plan with two major differences: • High Deductible F Plan: $1690 Deductible - AfterMedicare pays its portion of services • Includes Unlimited Generic Formulary Prescription Plan! • NO Deductible • $12 copay at Participating Pharmacies • $15 copay for 90 day supply through the mail order program

8. BLUE CROSSSmartChoice • Examples of expenses that may be used to satisfy the annual plan deductible: • Part A Deductible • Part A Hospital Copays • Part B Annual Deductible • Part B Coinsurance and Excess Charges • Skilled Nursing Facility Copays • Foreign Travel Coinsurance

9. BLUE CROSSSmartChoice • Examples of expenses that may not be used to satisfy the annual plan deductible: • Services not covered by Medicare • Foreign Travel Emergency $250 Deductible • Prescription Drug Copays

10. BLUE CROSSSmartChoice

11. BLUE CROSSSmartChoice

12. BLUE CROSS SmartChoice • Important Points: • Plan coordinates with Medicare, so the member is responsible only for deductibles/coinsurance and/or copayment amounts • Once the member reaches the annual deductible, SmartChoice benefit levels are the same as Classic F • The Prescription Drug benefit covers Generic Formulary drugs ONLY and is available upon enrollment

13. BLUE CROSSSmartChoice vs. Classic F • Out of pocket comparison (premium, office visit charges and Rx) for a member having 12 office visits ($100 per) and two $40 Rx/ month (one covered under SmartChoice formulary) • Area 1, 2, 3 - Age 65 • Classic F - $2,172 • SmartChoice - $1,388 • Area 4, 5, 6 - Age 65 • Classic F - $2,352 • SmartChoice - $1,496

14. BLUE CROSSSmartChoice Rates Commissions: 13%

15. BLUE CROSS Supplemental Products New SmartChoice Plus & AdvantageCare

16. BLUE CROSS Supplemental Products New To provide you with more selling options, we added a chronic care rider to our most popular selling Plan -- the F Plan. This rider is available on the Classic F Plan as well as the high deductible F Plan -- SmartChoice. This rider is not a Long Term Care Plan.

17. BLUE CROSSSmart Choice PLUS & AdvantageCare • These are new products designed to provide benefits for: • SNF • Residential Care Facilities • Home Health As well as ...

18. BLUE CROSSSmart Choice PLUS & AdvantageCare • Adult Day Care • Chore Services • Personal Care Services • Transportation to Physicians • Adaptive Equipment/Home Repair • Money Management • Home-delivered Meals • Respite Care Home Support Services Not covered by Medicare

19. BLUE CROSSSmart Choice PLUS & AdvantageCare Benefit Triggers: Assistance to perform two (2) of the following Activities of Daily Living: • Eating • Bathing • Continence • Dressing • Toileting • Transferring OR,

20. BLUE CROSSSmart Choice PLUS & AdvantageCare Benefit Triggers: Assistance to perform three (3) of the following Instrumental Activities of Daily Living: • Using Transportation • Preparing Meals • Maintaining the physical upkeep of the home • Completing house cleaning chores • Performing necessary daily chores • Managing necessary finances

21. BLUE CROSSSmart Choice PLUS & AdvantageCare Care Coordination & Plan of Care • Written assessment of the subscriber’s disabilities and description of necessary chronic care services needed. • Developed by the care manager together with the subscriber, the subscriber’s physician and other healthcare professionals and family members. • Benefits will be provided for services that are pre-approved by Blue Cross and included in the Plan of Care. • Care coordinated through care manager.

22. BLUE CROSSSmart Choice PLUS & AdvantageCare Applying for Coverage • Available to applicants age 65 - 75 • Member must be eligible for Classic F or SmartChoice • Special ‘rider’ underwriting is required • Premium paid until benefits are exhausted • 2-party rates not available for the Rider attached to Classic F Plan or SmartChoice • Rates are based upon age at time of enrollment and do not increase with age, but may be increased overall • No Guarantee Issue for Rider

23. BLUE CROSSSmart Choice PLUS & AdvantageCare Nursing Facility or Residential Care: • Elimination Period of 100 days • Met 1X for life of policy • Coordinates with Medicare • Daily Benefit = billed charges up to $100 Home HealthCare and Home Support: • Home Care Deductible = $1000 • Met in $100/day increments • Met 1X for life of policy • Daily Benefit = billed charges up to $100

24. BLUE CROSSSmart Choice PLUS & AdvantageCare Benefit Design Details • No co-payments for covered Rider services • Member responsible for amounts in excess of $100 Daily Max • The maximum benefit is $36,500 ($100 x 365) • Services from relatives are not covered • A Classic F plan or SmartChoice prospect could conceivably be denied for AdvantageCare or SmartChoice Plus and still be accepted on Classic F or SmartChoice. Remember to check the boxes

25. BLUE CROSSSmart Choice PLUS & AdvantageCare Rider Rates Issue Age Monthly Premium 65 $ 39 66 $ 44 67 $ 48 68 $ 53 69 $ 57 70 $ 62 71 $ 70 72 $ 78 73 $ 86 74 $ 94 75 $102

26. BLUE CROSSSmart Choice PLUS & AdvantageCare Examples of Rates in Areas 1, 2, 3 AdvantageCare: Age 65: Classic F $101 AdvantageCare $39 $140 Same Member 5 yrs. later: Classic F $131 AdvantageCare $ 39 $170 New member age 70: Classic F $131 AdvantageCare $ 62 $193 SmartChoice Plus: Age 65: SmartChoice $44 SmartChoicePlus $39 $83 Same Member 5 yrs. Later: SmartChoice $62 SmartChoicePlus $39 $101 New member age 70: SmartChoice $62 SmartChoicePlus $62 $124

27. BLUE CROSSSmart Choice PLUS & AdvantageCare Examples of Rates in Areas 4, 5, 6 AdvantageCare: Age 65: Classic F $116 AdvantageCare $ 39 $155 Same Member 5 yrs. later: Classic F $152 AdvantageCare $ 39 $191 New member age 70: Classic F $152 AdvantageCare $ 62 $214 SmartChoice Plus: Age 65: SmartChoice $53 SmartChoicePlus $39 $92 Same Member 5 yrs. Later: SmartChoice $74 SmartChoicePlus $39 $113 New member age 70: SmartChoice $74 SmartChoicePlus $62 $136

28. BLUE CROSSSmart Choice PLUS & AdvantageCare Commissions: Classic F: 1-25 13% 26-99 17% 100 + 21% SmartChoice: All sales 13% Rider: Yr. 1 85% Renewal 5%

29. BLUE CROSS Supplemental Products New CareResource Solutions

30. BLUE CROSSCareResource Solutions The work of caregivers would cost an estimated $100-200 Billion per year

31. BLUE CROSSCareResource Solutions Paid home care is the exception for most people receiving care $

32. BLUE CROSSCareResource Solutions Caregivers spend an average of 20 hours/week providing care $ $

33. BLUE CROSSCareResource Solutions Half of all caregivers are older caregivers -- these individuals have difficulty with the physical demands $ $

34. BLUE CROSSCareResource Solutions 63% of Elderly caregivers (66+) who experienced stress and strain were susceptible to higher mortality rates.

35. BLUE CROSSCareResource Solutions • Caregivers are more likely to suffer from depression (6 times the national average) • 76% of caregivers say they don’t get consistent help • Most difficult issue for many caregivers is the feeling of isolation

36. BLUE CROSSCareResource Solutions Counseling and emotional support Referrals (wide scope of local services) One-Stop Caregiver Support Resource Skilled professionals with experience with Caregiving and Eldercare issues • Information • (i.e., educational materials, tip sheets, check lists)

37. BLUE CROSSCareResource Solutions • Saves time in researching • Saves time in action plan development • Helps individuals remain independent • Support for those who can’t qualify or afford a LTC plan

38. BLUE CROSSCareResource Solutions • Care Coordination -- CareGuide • Direct link with CareResource • Discounts on all levels of care planning, coordination, and monitoring

39. BLUE CROSSCareResource Solutions • Personal Emergency Response System -- American Medical Alert • Discount on two-way voice-activated system • Discount on installation fee

40. BLUE CROSSCareResource Solutions • Bill-paying Services -- MoneyTek • Bonded services • Discount on monthly charges • Discount on initial set-up fee

41. BLUE CROSSCareResource Solutions Partnership with Ceridian Corporation: • An established leader in support services • Provides employer and benefit services to 40,000 customers (40% of which are Fortune 1000 companies) • Services provided by professionals who are experienced and certified in eldercare, counseling, legal and financial matters

42. BLUE CROSSCareResource Solutions • Services accessible through toll-free 800 number • 24 hours/day; 365 days/year • $150 annual membership fee

43. BLUE CROSSCareResource Solutions Commissions: CareResource Solutions: Yr. 1 20% Renewal 10%

44. Blue Cross Medicare Supplements Old Rules Worth Repeating

45. Blue Cross Medicare Supplements • SELECT Plans • Medicare SELECT is a type of Medigap insurance policy which requires the member to utilize a contracted network of physicians or hospitals in order to receive full plan benefits. • ALL Blue Cross of California Medigap plans are SELECT plans with the exception of Standard Plan A

46. Blue Cross Medicare SupplementsCommon Guarantee Issue Rules:

47. Blue Cross Medicare Supplements • Enrollment Tips • The applicant MUST have BOTH Parts A & B of medicare - check their medicare card! • You must provide an Outline of Coverage and the Guide to Medicare at the point of sale • Applicant must complete the medical health questions, signature, and date THEMSELVES • All questions - including the question regarding Prescription drug usage - must be completed regardless of plan applied for or whether the member is in a guarantee issue period

48. Blue Cross Medicare Supplements • Enrollment Tips • If the member is coming from a Senior HMO plan, they MUST disenroll prior to becoming effective on the supplement plan. If they fail to do so, any and all resulting claims will be the members responsibility! • Applications may be submitted up to 90 days prior to the requested effective date. • Applications must be RECEIVED in Senior Services by the last BUSINESS day of the month to receive a 1st of the following month effective date.

49. Blue Cross Medicare Supplements • Enrollment Tips • Applications received after the 1st of the month and prior to the 15th of the month will receive a 15th of the month effective date - unless a specific effective date that falls AFTER the receipt date is specified. • Any effective date other than the 1st or 15th must be the result of loss of coverage and the applicant must provide proof in the form of a letter or phone number.

50. Blue Cross Medicare Supplements • Changing Supplement Plans within Blue Cross • Blue Cross will not process any changes (including disenrollments) until the “paid-to-date”. • If members are changing plans, make sure they receive the appropriate outline of coverage. • Both downgrades and upgrades in coverage require a new application. • Changing from Frozen (inactive) to Active Plans ALWAYS requires underwriting.