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AARP Dental Insurance Plan

Serving the individual dental insurance needsof the 50+ population

Dr. Lowell Daun

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Available dental programs for individuals

• Dental Discount Plans– Not insurance– Percentage discount for specific dental treatments

• HMO– Capitation plan – Pre-assigned provider office

• PPO– Fee-for-Service program– Extensive provider network with providers agreeing to pre-

negotiated reduced rates– The ability to see an out-of-network dentist at a higher out-of-

pocket cost

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AARP Program Accessibility

• Available in 49 states plus DC and Virgin IslandsAARP National Rollout February 1, 2007

AARP Dental Insurance Plan

Green means approvedRed means not approved

Version date 02.01.07

Arizona(AZ)

DN

Utah(UT)DDICNevada

(NV)DDIC

Oregon(OR)

DN

Idaho(ID)DN

Washington(WA) DN

Montana (MT)DDIC

Wyoming(WY)

DNNebraska

(NE)DN

Colorado(CO)

DN

Kansas (KS)

DN

Texas (TX)DDIC

Oklahoma (OK)

DN

South Dakota(SD)

DN

North Dakota (ND)

DN

Iowa (IA)DN

Arkansas (AR)

DN

Missouri (MO)

DN

Alabama(AL)DDIC

Tennessee (TN)DDIC

Wisconsin (WI)DN

Pennsylvania (PA)DDICOhio (OH)

DN

New Mexico(NM)

DN

Maine (ME)

DN

New York (NY)DDIC

Florida(FL)DDIC

Vermont (VT) DNNE

New Hampshire (NH) DNNE

Michigan(MI) DN

Alaska (AK) DDIC

California(CA)

DN

Minnesota (MN)

DN

Louisiana (LA) DDIC

Missi-ssippi(MS)DDIC

South Carolina(SC) DN

North Carolina (NC) DN

Kentucky (KY) DN

Illinois(IL)DN

Indiana (IN)DN West

Virginia(WV)DDIC Virginia

(VA) DN

Massachu-setts

(MA) DNNE

Connecticut (CT) DN

Rhode Island (RI) DN

Delaware (DE) DDIC

New Jersey (NJ) DN

Maryland (MD) DDIC

Washington D.C. DDIC

Hawaii (HI) DN

Virgin IslandsDDIC

Puerto Rico DDIC

Georgia (GA)DDIC

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Where is the plan most successful?

• California

• Florida

• New York

• Pennsylvania

• Texas

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AARP Program Benefit Design

• Choice of two benefit designs• Premium rates range from $38 - $51 monthly for

a single person• 2-year rate guarantee• 4 payment options• 12-month waiting period for major restorations,

periodontics and prosthodontics• PPO program

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AARP Program Benefit SummaryAARP Dental Insurance Plan Benefit Summary

Percentage of Allowed Amount

for Plan A

Percentage of Allowed Amount

for Plan B Delta Pays* Delta Pays* Diagnostic & Preventive 100%** 80% Periodontal Maintenance Cleanings 80% 50% Denture Repair, Rebase and Relining 80% 50% Basic Restorations & Sealants 50% 50% Oral Surgery 50% 50% Endodontics 50% 50%

After 12 Months Continuous Enrollment

Major Restorations (e.g., crowns, inlays/onlays) 50% 50% Periodontics (gum disease treatment) 50% 50% Prosthodontics (bridges & dentures) 50% 50% Temporomandibular Joint Dysfunction (TMJ) 50% 50%

Deductibles and Maximums Per Enrollee

Calendar Year Deductible $50 $100 Calendar Year Maximum Benefit $1,200 $1,000 Temporomandibular Joint Dysfunction (TMJ) treatment—Lifetime Maximum

$300 $300

Additional Benefits Available With Payment at the Annual Rate Level

Dental Accident 100% N/A Lifetime Maximum—Dental Accident $1,000 N/A

* Benefit level available only when visiting a Delta Dental PPO dentist.** No deductible required for diagnostic or preventive services under Plan A.

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Who purchases this plan?

• Individuals 50 and over, such as:– Retirees without dental benefits– Working adults without employer-sponsored benefits

• Typical psychographics:– Affluent in terms of household income and net worth– Well-educated– Aged 60-75– Female– Married– Financially savvy, like to shop, technically savvy, live the fine

life

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What makes this population different?

• Lack of availability to true private dental insurance– Less than two out of every ten older Americans are covered

by private dental insurance (DHHS “Oral Health in America – 2003)

– No more than 20% of Americans 75 years of age and over have dental insurance (Centers for Disease Control and Prevention – 2005)

– Oral Health America gave the nation on average a final grade of a “D” for private dental coverage in a special grading report on “The oral health of Older Americans” (Oral Health in America – September 2003)

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Comparable dental programs

• Only one other individual/voluntary program is available to this population: TRICARE Retiree Dental Program– Department of Defense contract for retired military and their

eligible dependents, administered by Delta Dental– Very similar to AARP Dental Insurance Plan’s benefit

structure with comprehensive coverage– 100% voluntary, premiums paid by the enrollee

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Key elements of a successful dental plan

• Understanding the needs of the senior market–Comprehensive coverage–Affordable price–Network size–Quality of network dentists

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Marketing channels

• Direct Mail– to current AARP members

• Print Advertising– in AARP publications

• Online Advertising– aarp.org and other sites of interest to

seniors

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What else do they want?

• Third cleaning

• Implants

• No waiting periods

• Increased maximums

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Program Administration

• Administrative Requirements– More complex than with the traditional commercial client

• Call volume

• Regulatory requirements

• Enrollment Rollout– Original forecasts assumed all states approved by September

2004– Many key states (including CA, FL, NJ, NV, & WA) were not

available until early 2005– As of June 2007, the only remaining state is MA

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Program Utilization

• The first members to join the plan were the most costly members

• Once the demand was met, the experience and needs were more favorable

• Maximum Utilization– First year members rarely reach their annual maximum– Once full benefits are reached, the number of members

reaching their maximum increase towards normative levels – Utilization is remaining higher than expected overall

• Procedures being used are closely resembling Delta Dental’s Commercial experience with this demographic

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AARP Program Results to Date

• As of June 2007– 182,222 total members

• Most successful product launch among AARP Healthcare Option (HCO) products

• Highest requested product among HCO products in 2005—2006

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Innovations

• Plan designed with the senior market in mind–Periodontal maintenance cleanings and

denture repair 1st year benefits

• Expanded benefits under consideration–Third cleaning–Implants

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AARP Dental Insurance PlanContact Information

• Toll free: 1- 866-583-2085

• Web site: www.deltadentalins.com/aarp