BlueCross BlueShield of Western New York is a division of HealthNow New York Inc., an independent licensee of the BlueCross BlueShield Association.

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Defined ContributionControl your costs and

empower your employees

Defined contribution Not just a buzzword, a realitySimplifying health insurance and minimizing cost volatility for our employer groups is something that BlueCross BlueShield of Western New York is committed to. As part of this commitment, we’ve developed a defined contribution solution that allows employers to control health care costs and offer plan options that fit employees’ needs.

DEFINED CONTRIBUTION, DEFINEDDefined contribution is an approach to funding health care plans, whereby employers provide employees with a fixed amount of money to offset their health insurance costs.

EMPLOYER PROVIDES FIXED (DEFINED) AMOUNT

EMPLOYER OFFERS SUITE OF PLAN OPTIONS

EMPLOYEE SHOPS FOR COVERAGE THAT MEETS THEIR NEEDS

EMPLOYEE APPLIES EMPLOYERS’ CONTRIBUTION TOWARD PREMIUM OF SELECTED PLAN

BRONZESILVER GOLD

PLATINUM

EMPLOYERS CAN:

• Save on premiums

• Offer more cost-saving plan options

• Budget more effectively

EMPLOYEES CAN:

• Lower their out-of-pocket costs

• Choose a plan that meets their needs

• Control how they spend their dollars

EVOLUTION OF DEFINED CONTRIBUTION• Employers’ and employees’ health care spend has increased

• Defined contribution plans have displaced defined benefit plans in adoption over the last 20 years

• Funding defined benefit plans comes with risk and uncertainty

• Defined contribution plans infuse predictability and limit plan sponsors’ costs

REDEFINING DEFINED CONTRIBUTIONTHE BLUECROSS BLUESHIELD OF WESTERN NEW YORK SOLUTION

$11,480

$18,142

$8,508

$2,973

$12,865

$5,277

58% Total Premium Increase

78% Employee Contribution Increase

Employee Contribution Employer Contribution

2006 2016

Average annual health insurance premiums and employee contributions for family coverage, 2006-2016

We combine our unique expertise in defined contribution, with innovative plan designs and plan administration technology to help employers spend

less time managing health care benefits and more time running their business.

*Minimum of 6% savings compared to our other plans; savings may vary based on plan design†BlueConnect currently available for small groups; available for large groups in 2018

DEFINED BENEFIT

Limited choice and plan options

DEFINED CONTRIBUTION

Multiple choices and plan options

FULL NETWORK TIERED BENEFIT PLANSKey components of a defined contribution strategy

align Lower cost-share options for members who choose Kaleida Health providers and other select hospitals and facilities

focus Lower cost-share options for members who choose Catholic Health providers and other select hospital and facilities

Groups that have tiered benefit plans experience a lower trend over groups who do not have a tiered benefit plan.

22%-31% less

CLAIMS EXPENSE

in a tiered benefit plan than it is in a non-tiered benefit plan

favorable 3 year trendalign members other members

annualized vs.

Data based on align membership over three year period; focus introduced in 2016

5.2% 8.1%

GROUPS THAT OFFER align AS AN OPTION:

PROVEN RESULTSMore effectively managing your health care spend year over year

Premium Savings*

Offering align and focus side by side is an effective way to implement a defined contribution strategy

• Opportunity for employers to save on monthly premiums

• Employees can lower out-of-pocket costs

FULL NETWORK TIERED BENEFIT PLANS LOWER EXPENSES AND TREND

FULL NETWORK TIERED BENEFIT PLANS POSITIVELY IMPACT OTHER COST DRIVERS

• Defined contribution strategy establishment

• Employee education and resources

• Plan/benefit utilization review and recommendations

• Full network tiered benefit plans

• Minimum premium savings of 6%*

• Access to full Blue network

• Choice of plan that meets your/your employees’ needs

• Real-time plan administration

• Easily set contribution amount

• 24/7 online access; paperless experience

• Employee level enrollment

STRATEGY DEVELOPMENT

INNOVATIVE PLAN DESIGNS

(alignSM and focusSM)

ENABLING PLAN ADMINISTRATION

TECHNOLOGY†

SUPPORTING YOUR STRATEGY EVERY STEP OF THE WAY

TIERED BENEFIT DESIGNS ARE INCREASING

of BlueCross BlueShield members choose a full network tiered benefit plan when given a choice

22% lower allowed PMPM

13% higher compliance of routine physicials

20% lower rate of ER/UC visits

25% lower instance of higher cost claimants

Source: BlueCross BlueShield of Western New York experience rated and self funded population, 2014-2016

BRONZESILVER

GOLDPLATINUMPLAN

Source: BlueCross BlueShield of Western New York align membership over three year period; focus introduced in 2016