Lorain County Public Health 2019 Marketing Summary

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Isaac Hoover
5 years ago
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1 Lorain County Public Health 2019 Marketing Summary In 2018, LCPH moved to a partially self-funded plan with MMO. MMO is paid an administration fee to process claims. MMO also provides the stop loss insurance for LCPH. LCPH purchased two stop loss policies from MMO. One policy called individual stop loss (ISL) that protects LCPH from paying claims for any individual on the plan that would exceed $50,000 in claims. The second policy called aggregate stop loss, which protects the entire group from a catastrophic claims year. Additionally, LCHP offers a health reimbursement account through TASC. USI calculated the health reimbursement claims and HRA admin fee into the renewal calculations to provide a complete cost summary for the medical plan. USI Fee is calculated and is included in the MMO admin fee and will remain unchanged for USI calculates the fee on a (PEPM) per employee per month bases and not as a percent of total premium. USI consulting fee is $25 per employee per month. The overall health plan renewal increase is $149,479 for 2019 for the existing plan with 50K ISL. To reduce the renewal increase of $149,479; USI is recommending eight cost savings solutions for the 2019 plan year to achieve a flat renewal increase: 1: Renew MMO as the administrator and continue to purchase stop loss 2: Increase ISL level from $50,000 to $75,000 3: Modify the medical plan design 4: Terminate the health reimbursement program with TASC 5: Change funding for dental and vision 6: Wellness Program Changes 7: Offer Health Savings Account contribution 8. Consider increasing employee contributions 7% is recommended in order for LCPH to achieve a flat increase in cost in 2019 USI conducted an independent renewal underwriting analysis to identify cost savings opportunities and provides a basis to negotiate pricing. USI is making the following seven recommendations for the 2019 plan year: Recommendation #1: Renew with MMO as the claims payor and continue to purchase stop loss. Recommendation #2: Increase ISL level from $50,000 to $75,000 USI conducted an analysis to determine if the premiums savings from moving to a higher stop loss would offset any additional claims risk. Basically we ask this question: If LCPH had the same number of high claimants in 2019 with the lower stop loss premium would LCPH save money? The answer is yes, the below chart illustrates a change in the stop loss level (from $50k to $75k) and how would that change impact the overall exposure to the plan. 1

2 $50k ISL Current Plan Design $50k ISL Renew Same Plan Design $75k ISL New Plan Design Recommended Stop Loss Premium $262,448 $333,315 $264,842 Difference $70,867 Increase $2,394 Increase Cost Avoidance/ Plan $68,473 Savings The LCPH plan would be taking on more claims risk by moving to the increased stop loss level. How do you determine if changing the stop loss limit is worth the savings to take on more claims risk? The rule of thumb -the savings should be more than 2.5 high claimants (people) going over stop loss limit. LCPH would pass this initial test. Current High Claimants on Plan Total Claim $50,000 ISL $75,000 ISL High Claimant #1 $93,322 $50,000 $75,000 High Claimant #2 $59,593 $50,000 $59,5936 Claims paid by LCPH $100,000 $134,593 How much more would LCPH pay in claims? $34,593 Savings in premium would be $68,473 for the additional claims risk $34,593. LCPH passed the test. Recommendation #3: Modify the medical plan design USI is recommending a plan design change to encourage consumerism and to migrate into a plan that is in line with other agencies/employers in NE Ohio. The current HRA plan was put in place when LCPH was fully insured. It is a way to obtain premium savings while self-funding a small portion of the plan. Now that LCPH is selffunding the entire plan, LCPH should eliminate the HRA component. If HRA is eliminated, the medical plan design must change since the deductible is very high. In addition, LCPH is currently paying two administration fees one with TASC and the other is MMO. Eliminating the HRA admin fee would save $8,000 per year. Employers and public sector employers are moving away from a $0 dollar deductible plans. USI provided two plan options for LCPH to consider. Both plans are included as an addendum #1. USI is recommending the $1,500/$3,000 plan. This plan is considered a high deductible health plan that meets the IRS rules to offer an employee owned Health Savings Account. If an employee meets the deductible, the plan will pay 100% of all medical and prescriptions for the remainder of the year. Employees will be able to put money in an account tax free (up to the IRS limits) called a Health Savings Account. Recommendation #4: Terminate the health reimbursement program with TASC Terminating the health reimbursement program will save $8000 in administration fees for the 2019 plan year. In addition, the $352,740 in projected medical and prescription reimbursements. Total annual HRA allocation is $497,000. 2

3 Total Annual Cost Avoidance: *$360,740 + $8,000 Tasc admin fee (*annualized expected total based on utilization through Aug) Recommendation #5: Change funding for dental and vision Employees currently use HRA funds to help offset dental and vision expenses throughout the year. Today, LCPH pays $50,982 in fully insured premiums with MetLife. In addition, employees currently use about $40,061 in heath reimbursements under the TASC card for dental expenses. The total annual dental expense is about $91k. Currently both the dental and vision plans are paid for by LCPH and are fully insured with MetLife. LCPH should eliminate the fully insured premium and move both these plans to a self-funded platform, LCPH would save about $30,512 in dental cost and about $39,517 in vision premium and reimbursements. Total Savings for this change: $69,872 The actual plan designs will not change. USI also evaluated a buy up option that would allow employees an opportunity to purchase a larger dental max and increase the orthodontia benefit. After reviewing the premium for this plan, it would not save employees money. USI is not recommending an additional buy up dental plan. USI s recommendation is to keep the current plans. Recommendation #6: Wellness Program Changes LCPH currently offers a wellness bonus if employees participates in certain wellness activities. Employees can earn $500 that can be applied to the HRA to pay medical bills or they can receive an after tax bonus that is about $325. USI recommends changing the contribution and wellness activities in order to earn the new health savings account deposit. USI will roll out the new wellness program requirements in December. New Wellness Program Structure Employee and enrolled spouses will need to earn all points in order to achieve the incentive. 1. Earn 1,000 point to earn $500 for single coverage and $1000 for family coverage 200 Points -Obtain an annual physical with a primary care doctor and with bloodwork. 200 Points - Complete (two) age appropriate preventive screenings 200 Points Sign a non-tobacco use affidavit or participate in smoking cessation program 400 Points to be determined by wellness committee Recommendation #7: Offer Health Savings Account Employer Contribution: In order to assist employees with the deductible, USI recommends offering an upfront HSA contribution. USI illustrated a $500/$1,000 deposit based on current enrollment in the plan calculations in addendum #1. For the 2019 plan year, employees will be awarded the HSA contribution. The introduction of the HSA contribution will be explained as a part of the wellness program. Below are two options to consider for the first year contribution. First year: Offering an employer high deductible health plan contribution of $500/single coverage and $1000/family coverage to help offset first year expenses. Option #1 o Total Singles on plan: 30 / $500 * 30 = $15,000 o Total Families on plan: 56 / $1,000 * 56= $56,000 o Total Employer Contribution for 2019: $71,000 3

4 Option #2 o Total Singles on plan: 30 / $750 * 30 = $22,500 o Total Families on plan: 56 / $1,500 * 56= $84,000 o Total Employer Contribution for 2019: $106,500 Second year: Employees can earn health savings account funds by participating in wellness activities in The wellness activities need to be determined and rolled out during this year s open enrollment meetings. This will allow employees and spouses 12 months to complete the wellness requirements in order to earn the 2020 HSA contribution. Option #1 o Total Singles on plan: 30 / $500 * 30 = $15,000 o Total Families on plan: 56 / $1,000 * 56= $56,000 o Total Employer Contribution for 2019: $71,000 Option #2 o Total Singles on plan: 30 / $750 * 30 = $22,500 o Total Families on plan: 56 / $1,500 * 56= $84,000 o Total Employer Contribution for 2019: $106,500 Employees will be required to open a bank account in order to receive the LCHP funds. In addition, employees are able to elect additional pre-tax dollars in addition to LCPH s contribution to deposit into their accounts. The 2019 IRS limits for HSA contributions are $3,500 for single coverage and $7,000 for family coverage. Employees are able to build a Health Savings Account to save for future expenses. These funds can also be used for dental and vision expenses. Recommended bank for employee health savings accounts: Key Bank Recommendation #8. Consider increasing employee contributions Below are three scenarios for consideration. Based on the recommendations above the annual cost for the 2019 plan year will be $1,642,695. Currently the employees pay $15.50/single coverage and $43.00/family coverage bi-weekly. That is $33.58/single and $93.17/family per month. LCPH collects about $74,698 in employee contributions each year. The current contribution is 4.5% of the expected overall cost for Option 1: No change in contributions Bi-weekly Employee Only Family Coverage $ No Change in Employee Contribution Total Expected Employer Cost $1,642, Annual Employee Contribution $74, Percent of Total Spend 4.5% Option 2: Increase contributions to cover 7% of the overall cost. New Bi-weekly Rates 4

5 Employee Only Coverage $31.50 Family Coverage $ Change Employee Contribution 7% USI Recommendation -Total Expected Employer Cost $1,642, Annual Employee Contribution $115, Percent of Total Spend 7.0% Single employees will pay $16 more per pay and families will pay $19.50 more per pay. Option 3: Increase contributions to cover 10% of the overall cost New Bi-weekly Rates Employee Only $51.50 Family Coverage $ Change Employee Contribution 10% Total Expected Employer Cost $1,642, Annual Employee Contribution $163, Percent of Total Spend 10.0% Single employees will pay $36.00 more per pay and families will pay $42.00 more per pay. Final calculations are provided on the next page. 5

6 Lorain County Public Health Plan Design Illustration Estimated Cost Projections Addendum #1 Lorain County Public Health Current Plan Current Plan Current Plan New Plan Design New Plan Design New Plan Design New Plan Design Option 1 Option 1 Option 2 Option 2 Renewal - $50k ISL Renewal - $75k ISL $50k ISL $75k ISL $50k ISL $75k ISL HDHP HDHP HDHP PPO PPO HDHP Option HDHP Option Annual Deductible (Individual - $4k/Family $6,500) - First $ Coverage $0.00/$0.00 $0.00/$0.00 $0.00/$0.00 Annual Deductible (Individual/Family) $1,000/$3,500 $1,000/$3,500 $1,000/$3,500 $1,500/$3,000 $1,500/$3,000 MMO Annual Deductible (Individual/Family) $5000/$10,000 $5000/$10,000 $5000/$10,000 $500/$1,000 $500/$1,000 Coinsurance 100% 100% 100% 100% 100% 100% 100% Out-of-Pocket Max (Individual/Family) $5000/10,000 $5,000/10,000 $5,000/10,000 $500/$1,000 $500/$1,000 $1,500/$3,000 $1,500/$3,000 PCP Office Visit Copay 100% aft Ded 100% aft Ded 100% aft Ded $10 $10 No Copay No Copay Specialist Office Visit Copay 100% aft Ded 100% aft Ded 100% aft Ded $20 $20 No Copay No Copay Emergency Room Copay $100 $100 $100 $100 copay $100 copay 100% aft Ded 100% aft Ded Emergency Room Coinsurance 100% aft Ded 100% aft Ded 100% aft Ded n/a n/a 100% aft Ded 100% aft Ded Urgent Care Copay 100% aft Ded 100% aft Ded 100% aft Ded $50 $50 100% aft Ded 100% aft Ded Retail Generic Copay 100% aft Ded 100% aft Ded 100% aft Ded $5.00 $ % aft Ded 100% aft Ded Brand Preferred Copay 100% aft Ded 100% aft Ded 100% aft Ded $25.00 $ % aft Ded 100% aft Ded Non-Preferred Copay 100% aft Ded 100% aft Ded 100% aft Ded $50.00 $ % aft Ded 100% aft Ded Specialty $150 copay $150 copay 100% aft Ded 100% aft Ded Mail Order (2.5 times) Generic Coinsurance 100% aft Ded 100% aft Ded 100% aft Ded $12.50 $ % aft Ded 100% aft Ded Brand Preferred Coinsurance 100% aft Ded 100% aft Ded 100% aft Ded $62.50 $ % aft Ded 100% aft Ded Non-Preferred Coinsurance 100% aft Ded 100% aft Ded 100% aft Ded $ $ % aft Ded 100% aft Ded Specialty n/a n/a Lorain County Public Health HRA (TASC) HRA HRA HRA HRA HRA HSA HSA EE Only $4,000 $4,000 $4,000 $0 $0 $500 $500 Family $6,500 $6,500 $6,500 $0 $0 $1,000 $1,000 Contribution based on Wellness Credits Earned Yes Yes MMO Firm Renewal Options *Non-Embedded HDHP *Non-Embedded HDHP MMO Admin Fee $50,062 $51,414 $51,414 $51,414 $51,414 $51,414 $51,414 USI Consulting Fee $25,800 $25,800 $25,800 $25,800 $25,800 $25,800 $25,800 Tasc Admin Fee $8,000 $8,000 $8,000 $0 $0 $0 $0 Expected Plan Cost - Stop Loss Premium (Fixed) $262,448 $333,315 $258,165 $343,377 $269,042 $339,353 $264,842 Total Fixed Cost $346,310 $418,530 $343,379 $420,591 $346,257 $416,567 $342,056 % Difference 21% -1% 21% 0% 20% -1% MMO's Expected Claims $906,518 $983,778 $1,013,216 $1,417,131 $1,481,674 $1,243,989 $1,300,639 HRA Expected Plan Cost $497,000 - Adjusted based current utilization thru Aug $352,740 $352,740 $352,740 $0 $0 $0 $0 Total Expected Plan Cost (Fixed +Claims) $1,605,568 $1,755,048 $1,709,335 $1,837,722 $1,827,931 $1,660,556 $1,642,695 *Net Estimated Annual Employee Contributions -$74,698 -$74,698 -$74,698 -$74,698 -$74,698 -$74,698 -$74,698 Total Net Annual Expected Cost $1,530,870 $1,680,350 $1,634,637 $1,763,024 $1,753,233 $1,585,858 $1,567,997 $ Change $149,479 $103,767 $232,154 $222,362 $54,988 $37,127 % Change 10% 7% 15% 15% 4% 2.4% Total Net Annual Expected Cost $1,530,870 $1,680,350 $1,634,637 $1,763,024 $1,753,233 $1,585,858 $1,567,997 **High Deductible Health Plan- Employer Contributions n/a n/a n/a n/a n/a $71,000 $71,000 Potential Total Net Annual Expected Cost based on H.S.A Contributions $1,656,858 $1,638,997 8% 7% Aggregate SL - Max Plan Cost if Catastrophic Claims Year $2,000,992 $1,962,640 $2,192,005 $2,198,349 $1,971,553 $1,967,855 Enrollment --Total EE -30 / Total Family -56 *Current Bi-Weekly Employee Contribution $15.50 / Family $43.00 **H.S.A contribution total is based on $500 single and $1,000 for family coverage

HRA Product Offerings

HRA Product Offerings HRA Plan Designs Standard 213(d) HSA Compatible (Limited) Deductible Only RX Only including OTC Percentage Payment All Medical and RX All Medical and RX Employee Pays First Deductible