Cigna 2010 Annual Report Download - page 23

CIGNA CORPORATION  2010 Form 10K 3
PARTI
ITEM 1 Business
Health Care section of the MD&A beginning on page 48 of this
Form 10-K refl ects both the product type and funding arrangement.
Approximately 80% of medical customers are enrolled in self-insured
plans, with the remainder split fairly evenly between guaranteed
cost and experience-rated insured plans. Approximately 90% of our
medical customers are enrolled in self-insured and experience-rated
plans, in which lower medical costs directly benefi t our corporate
clients and their employees.
CIGNA also off ers guaranteed cost medical insurance to individuals;
see the “markets and distribution” section for additional information
about the Company’s off erings in the individual market.
Commercial Medical
CIGNA HealthCare provides a wide array of products and services
to meet the needs of employers, other sponsors of health benefi t
plans and their plan participants (i.e., employees/customers and their
eligible dependents), and individuals, including:
Network and Open Access Plus Plans
CIGNA HealthCare off ers a product line of indemnity managed
care benefi t plans on an insured (guaranteed cost or experience-
rated) or self-insured basis. Premiums for insurance policies written
on a guaranteed cost or experience-rated basis are reported in the
appropriate premium category in the revenue table included in the
Health Care section of the MD&A beginning on page 48 of this
Form 10-K. For self-insured plans, where a majority of the Company’s
customers are enrolled, revenues consist of administrative fees and are
included in fees in the revenue table.
 ese plans use meaningful coinsurance diff erences to encourage the
use of “in-network” versus “out-of-network” health care providers.
 ey also encourage the use of and give customers the option to
select a primary care physician and use a national provider network,
which is somewhat smaller than the national network used with the
preferred provider (“PPO”) plan product line.  e Network, Network
Open Access, and Open Access Plus In-Network products cover only
those services provided by CIGNA HealthCare participating health
care professionals (“in-network”) and emergency services provided
by non-participating health care professionals (“out-of-network”).
 e Network point of service (“POS”), Network POS Open Access and
Open Access Plus plans (“OAP”) cover health care services provided
by participating, and non-participating health care professionals, but
the customers’ cost-sharing obligation is generally greater for out-of-
network care.
Preferred Provider Plans
CIGNA HealthCare also off ers a PPO product line that features a
national network with even broader access than the Network and
Open Access Plans with a somewhat higher medical cost, no option
to designate a primary care physician, and in-network and out-of-
network coverage with greater member cost-sharing for out-of-
network services. Like Network and Open Access Plus Plans, the PPO
product line is off ered on an insured (guaranteed cost or experience-
rated) or self-insured basis, with a majority of the customers being in
self-insured plans.
Health Maintenance Organizations
In most states, Commercial and Medicare HMOs are required by
law to provide coverage for all basic health services and plans may
only be off ered on a guaranteed cost basis.  ey use various tools to
facilitate the appropriate use of health care services through employed
and/or contracted health care professionals. HMOs control unit costs
by negotiating rates of reimbursement with health care professionals
and facilities and by requiring advanced authorization for coverage
of certain treatments. CIGNA HealthCare off ers HMO plans
that require customers to obtain all non-emergency services from
participating health care professionals as well as POS HMO plans
that provide some level of coverage for out-of-network care from
non-participating health care professionals and facilities.  e out-of-
network coverage is generally provided through separate insurance
coverage that is sold with the HMO benefi ts.
Voluntary Plans
CIGNA HealthCare’s voluntary medical products are off ered to
employers with 51 or more eligible employees and are designed to
provide hourly and part-time employees with limited coverage that
is more aff ordable than comprehensive medical plans. CIGNA
Voluntary products have annual and, in some cases, lifetime
maximums, which are prohibited under the Patient Protection and
Aff ordable Care Act eff ective September 23, 2010. However, the
Department of Health & Human Services (HHS) has approved
a one-year waiver of these limitations for plans in eff ect as of
September 23, 2010. CIGNA intends to submit a waiver request for
subsequent years through and including 2013. Annual benefi t limits
are prohibited beginning January 1, 2014.
CIGNA Choice Fund® suite of Consumer-Directed
Products
In connection with many of the products described above, CIGNA
HealthCare off ers the CIGNA Choice Fund suite of consumer-
directed products, including Health Reimbursement Arrangements
(“HRA”), Health Savings Accounts (“HSA”) and Flexible Spending
Accounts (“FSA”).
•An HRA allows plan sponsors to choose from a variety of benefi t
plan designs which usually include a high deductible feature and
allows employees to fund un-reimbursed health care expenses with
reimbursement account funds that can be rolled over from year to
year.
•HSA plans allow plan sponsors to choose from a variety of benefi t
plan designs and funding options and combine a high deductible
payment feature for a health plan with a tax-preferred savings
account off ering mutual fund investment options. Funds in an HSA
can be used to pay the deductible and other eligible tax-deductible
medical expenses and can be rolled over from year to year.
• e HRA and HSA products for employers with generally more
than 50 but fewer than 250 employees are now available in 49 states.
•An FSA pays for certain health care-related expenses, that are either
not covered or only partially covered by health care plans, with pre-
tax contributions by employees. Unused FSA account funds cannot
be rolled over from year to year; they are forfeited by the employee.