New Jersey School Employees Health Benefits Program. Plan Year 2015 Rate Renewal Recommendation Report. January 1, 2015 December 31, 2015

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1 New Jersey Plan Year 2015 Rate Renewal Recommendation Report January 1, 2015 December 31, 2015 Prepared by Aon Hewitt

2 TABLE OF CONTENTS Subject Page Executive Summary 1 Historical Overview 12 Trend Analysis 20 Financial Projections 23 Minimum Value 25 Renewal Rate Development 26 Exhibits 31 1 Enrollment Projections 2 Trend Analysis 3 Large Claim Analysis 4 Aggregate Costs 5 Plan Year 2015 Premiums 6 Projection Assumptions 7 Plan Year 2015 Plan Option Summary 8 Other Possible Benefit Changes

3 Rate Renewal Recommendation Report For Plan Year 2014 Executive Summary The purpose of this report is to recommend premium levels for the School Employees Health Benefits Program (SEHBP) for January 1, 2015 through December 31, Benefit Plans Maintained by the SEHBP The State of New Jersey operates the SEHBP as a multiple-option program for participating Local Education Employees and Retirees, with the following medical plan options for Plan Year 2015: Two self-insured Preferred Provider Organization (PPO) plans NJ DIRECT, administered by Horizon, and the Freedom PPO, administered by Aetna. In Plan Year 2015, both Horizon and Aetna will offer five options under their respective PPO plans. The details of these options are summarized in Exhibit 7. These plans are available to all employees and retirees (except for the 2035 option, which is only offered to Active Employees). HMO plans are administered by Aetna and Horizon. There are four HMO benefit options, summarized in Exhibit 7, which are available to all employees and retirees (except for the HMO2035 option, which is only offered to Active Employees). 1

4 Two High Deductible plans are administered by Aetna and Horizon. The plans are summarized in Exhibit 7. Employees may select the $1,500 high deductible option and non-medicare-eligible Retirees may select the $4,000 high deductible option. Active Employees may also be enrolled in a Prescription Drug Plan available under the SEHBP, which is administered by Express Scripts. Local Education employers may select this plan, sign up for prescription drug coverage under the medical plan (which is also administered by Express Scripts), or purchase prescription drug coverage from an outside vendor. If an employer selects SEHBP prescription drug coverage, the prescription drug benefit option is linked to the medical plan selection. The prescription drug benefit options are summarized in Exhibit 7. SEHBP Retirees also have Prescription Drug Plans options which are linked to the medical plan selection and are summarized in Exhibit 7. The Retiree Prescription Drug Plans are administered by Express Scripts. Recommended Renewal Increases Aon Hewitt is recommending overall increases of 10.3% for Active Employees, 9.3% for Early Retirees, and 6.8% for Medicare Retirees. For all groups combined, the recommended increase is 9.4%. Note that the Active increase reflects the impact of a 7.9% increase in Single and Employee+Spouse rates, an 11.9% increase in the Family rates, and a 14.4% increase in 2

5 Employee+Child(ren) rates (see the next section for changes to the Child(ren) load). The recommended renewal increases for Plan Year 2015 by benefit plan are listed below. Renewal increases were calculated separately for the PPO (which includes the high deductible plans), the HMO, and the Prescription Drug Plans. Ee + Spouse Ee + Child(ren) Total Single Family Actives PPO Medical 10.9% 8.5% 8.5% 12.6% 15.1% HMO Medical 10.7% 7.3% 7.3% 11.3% 13.7% PPO Rx 5.3% 3.1% 3.1% 7.0% 9.3% HMO Rx 5.3% 3.1% 3.1% 7.0% 9.3% Total 10.3% 7.9% 7.9% 11.9% 14.4% Early Retirees PPO Medical 8.5% 8.5% 8.5% 8.5% 8.5% HMO Medical 11.5% 11.5% 11.5% 11.5% 11.5% PPO Rx 11.0% 11.0% 11.0% 11.0% 11.0% HMO Rx 16.0% 16.0% 16.0% 16.0% 16.0% Total 9.3% 9.3% 9.3% 9.3% 9.3% Medicare Retirees PPO Medical 2.8% 2.8% 2.8% 2.8% 2.8% HMO Medical 6.0% 6.0% 6.0% 6.0% 6.0% PPO Rx 10.0% 10.0% 10.0% 10.0% 10.0% HMO Rx 15.0% 15.0% 15.0% 15.0% 15.0% Total 6.8% 6.8% 6.8% 6.8% 6.8% Grand Total 9.4% 7.9% 7.9% 10.4% 12.0% Note that if the Legacy Plans and the New Plans were rated on their own experience, the renewal increase would be 9.5% for Legacy Plans and a 9% decrease for New Plans. These premium increases for Plan Year 2015 are projected to produce a gain of $28 million for Active Education and no loss or gain for Education Retirees. The 3

6 Active gain will be added to the Claim Stabilization Reserve for Active Education. The table below shows the expected changes in the projected claim stabilization reserve. For Actives, the target Claim Stabilization Reserve is equivalent to 2.0 months of plan costs. Since the Active reserve is projected at 1.1 months of plan costs as of 12/31/2015, the Active recommended renewal increase includes a 2% margin to help build the reserve up to target level. The Retiree target reserve level has been set to $0, since the State is responsible for 90% of Education retiree claim payments. The Education Retiree premiums do not include any margin. SEHBP Projected Claim Stabilization Reserve (in $millions) Total Active Retirees 12/31/2013 $399 $159 $240 12/31/2014 $278 $141 $137 12/31/2015 $306 $169 $137 Months of Plan Costs at 12/31/

7 Employee+Child(ren) and Employee+Family Premium Increases SEHBP premiums are developed using fixed relative values for the difference in premiums among coverage tiers (Single, Employee+Child(ren), Employee+Spouse, and Employee+Family). The Plan Year 2014 premiums rated child(ren) coverage at 65% of employee costs. The increase in the number of covered dependent children as a result of Federal Healthcare Reform resulted in a 21% increase in the relative cost of a Child(ren) coverage unit from 72% of employee cost in Plan Year 2010 to 87% of employee cost in Plan Year The Plan Year 2015 premiums increase the cost of Child(ren) coverage to 75% of Single coverage. This is a continuation of the gradual increase in Child(ren) premiums to bring their premiums closer to their actual experience. There is no change in the Child(ren) load for Retirees. The table below compares the Active coverage tier factors for Plan Year 2015 with Plan Year 2014: Coverage Tier PY2014 PY2015 Increase Single % Ee+Child(ren) % Ee+Spouse % Ee+Family % Employee/Retiree Contribution Changes Prior to Chapter 78, PL 2011, Active employees who were covered by the SEHBP were required to contribute 1.5% of their salary for health care coverage. Chapter 78, which was effective July 1, 2011, replaced this contribution formula with a percentage of premium contribution formula. The percentage of premium varies by salary/pension tier and by coverage tier (Single, Employee+Child(ren), 5

8 Employee+Spouse/Partner, or Family). The new contribution table is being phased in over 4 years. Local Education employers have the option to adopt this contribution schedule in full or make adjustments to their contribution schedules and benefit plans that produce savings that are at least as much as the Chapter 78 changes. It is anticipated that these contribution increases will motivate a small number of employees to migrate to the lower-cost benefit plans, and Plan Year 2015 enrollment projections assume that 0.5% of the active enrollment in the Legacy Plans will migrate to lower-cost plans from Plan Year 2014 to Plan Year Benefit Design Changes NJWELL: Since 1/1/2014, Active employees and spouses are covered by NJWELL, a Wellness program that provides incentives for learning their numbers in Plan Year 2014 and then taking steps to healthier lifestyles in Plan Year 2015 and beyond. Since the program is still in the initial stages, it is too early to update our original projections for participation and health improvements. The Plan Year 2015 renewal uses the projections presented to the Plan Design Committees in 2013 when they approved NJWELL, which reflect the following expected net cost per employee (NJWELL program costs and incentives reduced for projected savings): Net Cost Per Employee PY2014 PY2015 $97 $63 6

9 Note that starting in Plan Year 2016, it is projected that NJWELL claim savings will exceed NJWELL administrative and incentive costs and produce a Net Savings per Employee of $70. Retiree Prescription Drugs: The renewal projections assume that retiree prescription drug copays and out-of-pocket maximums will increase as detailed in the table below. These changes are estimated to reduce projected Plan Year 2015 prescription drug costs by approximately 1.6% for the SEHBP: SEHBP Retirees PPO HMO Retail Generic Copay $10 $11 $6 $7 $7 $8 $3 $3 Retail Preferred Brand Copay $21 $23 $13 $14 $17 $19 $19 $21 Retail Non-Preferred Brand Copay $42 $46 $26 $28 $36 $39 $48 $52 Mail Generic Copay $5 $6 $5 $6 $5 $6 $5 $6 Mail Preferred Brand Copay $31 $34 $19 $21 $41 $45 $37 $40 Mail Non-Preferred Brand Copay $52 $57 $31 $34 $91 $99 $95 $103 Out-of-Pocket Maximum $1,411 $1,533 $1,411 $1,533 $1,411 $1,533 $1,411 $1,533 Federal Healthcare Reform In-Network Out-of-Pocket Maximum: Effective 1/1/2015, Federal Healthcare Reform requires that in-network medical and prescription drugs benefits have a combined out-of-pocket maximum no greater than $6,600 Single / $13,200 Family. This renewal assumes that the $6,600 Single / $13,200 Family innetwork out-of-pocket maximum will apply to all plans, except the High Deductible plans which already have out-of-pocket maximums which comply with this regulation. This benefit change is not expected to have a significant impact on projected costs. 7

10 Transitional Reinsurance Fee: This is a three-year fee program, starting in 2014, to stabilize the cost of individual and small group insurance offered through public health insurance exchanges. Employer group health plans will be assessed fees to help mitigate anticipated large losses due to adverse selection in the public health insurance exchanges. The annual fee for Plan Year 2014 was $63 and the annual fee for Plan Year 2015 is $44 per non-medicare member (i.e., employees/retirees/dependents). Comparative Effectiveness Fee: The Comparative Effectiveness Research Fee will increase with inflation in The estimated Plan Year 2014 cost of $2.12 per member per year is assumed to be increased at a 6% inflation rate (per capita increase in National Health Expenditures) for Plan Year Public Health Insurance Exchanges: The exchanges that are mandated by Federal Healthcare Reform beginning in 2014 are assumed to have minimal impact on enrollment and cost levels within the SEHBP due to the SEHBP s low employee contributions and rich benefit designs. Full-Time Employee Definition: The Patient Protection and Affordable Care Act (Affordable Care Act) defines full-time employees as employees who work 30 or more hours per week. The employer mandate which is applicable to full-time employees is essentially first effective 1/1/2015, and Local Employers may desire to change its definition of full-time and part-time employees for Plan Year We are assuming that a change in the full-time definition would have minimal impact on the claim experience for Plan Year

11 Minimum Value: Effective 1/1/2015, the Affordable Care Act requires employers to offer plans that have a minimum value of at least 60% (i.e., the plan s share of total allowed costs of benefits provided under the plan is at least 60% of such costs). All of the SEHBP plans were tested and have a minimum value in excess of 60% (more details are included in the Minimum Value section of this report). New Jersey State Mandates Breast Evaluation and Other Medically-Necessary Testing: Effective January 2015, this mandate requires insurers to cover breast evaluations, other additional medically-necessary testing under certain circumstances, and mammogram reports. Projected Plan Year 2015 medical costs will be increased 0.5% to reflect the assumed increase in cost due to this mandate. Other Possible Benefit Changes Chapter 78, PL 2011 established a School Employees Health Benefits Plan Design Committee which has the responsibility to modify and create plans from which eligible Local Education employees can choose coverage. The suggested rate increases in this Plan Year 2015 renewal report could be reduced through the benefit design changes suggested in Exhibit 8. Many of these benefit design changes would reduce projected costs for Plan Year 2015 and would also decrease future trends. 9

12 Vendor Changes Medical Vendors: Aon Hewitt assumes that Horizon and Aetna will be the only medical vendors in Plan Year 2015 and that both vendors will offer all benefit options. Note that the Horizon HMO options will only offer a New Jersey provider platform. Prescription Drug Vendor: Aon Hewitt assumes Express Scripts will administer all of the prescription drug plans in Plan Year We are assuming the prescription drug discounts for Plan Year 2015 will be based on Prescription Brand Rebates as outlined in Express Scripts March 2014 proposal for the one year contract extension for Plan Year This contract extension is projected to reduce prescription drug costs 2% and increase prescription drug guaranteed rebates 33%. Financial Results The Plan Year 2013 projected gain is $137 million which is a small increase over the $134 million gain projected in the Plan Year 2014 renewal analysis. The Plan Year 2014 projection is a $20 million loss, which is a 2% increase in the loss ratio from the Plan Year 2014 Renewal Report which projected a $37 million gain. The increase in cost is largely due to higher trends in the first quarter of Plan Year 2014, especially for prescription drugs. The Plan Year 2015 renewal premiums are projected to produce a gain of $28 million for Actives and no loss or gain for Retirees. The Active gain will be added 10

13 to the Claim Stabilization Reserve. The Plan Year 2015 aggregate projected costs are $2.83 billion: $1.76 billion for Actives and $1.07 billion for Retirees. 11

14 Historical Overview Vendor Changes Effective 1/1/2013, Cigna HMO was replaced by Horizon HMO. Aetna expanded its benefit options to include PPO as well as HMO plans, and Horizon expanded its benefit options to include HMO as well as PPO plans. Benefit Changes Exhibit 7A provides a summary of the current benefit options for Actives and Exhibit 7B provides a summary for Retirees. Medical Plans The following plan option was added 1/1/2014: 2035 HMO and PPO benefit options include a $20 copay for general practitioners, a $35 copay for specialists and 20% coinsurance after a $200 deductible for all other in-network services. Out-of-network benefits are covered with an out-of-pocket maximum of $6,500 and $13,000 for single and family coverage, respectively. These options are not available to Retirees. Prescription Drug Plans The benefit plans which were in effect prior to 1/1/2012 (the Legacy Plans) have different prescription drug card plans for Actives and Retirees: 12

15 For Active Employees, SEHBP employers can select the SEHBP prescription drug card plan, prescription drug coverage under the medical plan, or purchase prescription drug coverage from an outside vendor. All Retirees have prescription drug card plans which have copays and outof-pocket maximum limits that usually increase each year based on plan experience. For Plan Year 2012, Retiree Rx copays were frozen at Plan Year 2011 levels, with the exception of the Mail Generic copay which was reduced to $5. In Plan Year 2013, Retiree Rx copays received a partial index increase. For Plan Year 2014, the Retiree prescription drug card copays and out-of-pocket maximum limits increase based on the indexing formula (Exhibit 7 details the plan cost-sharing components). The new benefit plans which were added 1/1/2012 and 1/1/2014 (the New Plans) have prescription drug plans which are linked to the medical plan selection and are detailed in Exhibit 7. Aetna Medicare Advantage Aetna PPO and HMO plans cover Aetna Medicare-eligible members under a Medicare Advantage Plan. Horizon NJ DIRECT and HMO plans cover Horizon Medicare-eligible members with a self-insured plan that supplements Medicare. 13

16 Federal Healthcare Reform Federal Healthcare Reform (the Affordable Care Act and the Health Care and Education Reconciliation Act) includes an array of changes that phase in over a number of years. Early Retiree Reinsurance Program (ERRP); The ERRP program reimbursed plan sponsors for 80% of claims costs of early retiree (i.e., between ages 55 and 64) claimants (and/or their eligible dependents) who had total claims costs between $15,000 and $90,000 during the Plan Year. The program was effective 6/1/2010 and was funded with $5 billion in federal funds. The State has received approximately $99 million in ERRP reimbursements, which have been applied against Plan Year 2012 and 2013 premiums Local Education Early Retiree Premiums were reduced $37 million in Plan Year 2012 and $9 million in Plan Year 2013, with the remainder of the ERRP funds applied to State and Local Government Retiree Premiums. The State does not anticipate receiving any further ERRP reimbursements. Coverage of Dependent Children to Age 26: Prior to 1/1/2011, the SHBP covered dependent children until the end of the calendar year in which they turned 23. This Affordable Care Act provision extends coverage through the end of the calendar year in which they turn 26, without regard to financial dependency, residency, student status, marital status, or employment status. Under Federal Healthcare Reform, these children can be covered under a parent s plan without a separate additional premium (although the employee 14

17 may have to change to Family or Employee+Child(ren) coverage). In Plan Year 2011, members per employee increased 4%. The impact of this change is reflected in the relative cost of Child(ren) coverage which increased from 72% of the average employee claim cost in Plan Year 2010 to 87% in Plan Year Many of these adult children were covered under Chapter 375 (which offers coverage to adult children to age 31), where they paid a separate Adult Child premium for their coverage. Comparative Effectiveness Fee: Beginning in 2012, the Affordable Care Act imposed a fee to fund medical outcomes research. The fee is $1 per member per year in 2012, $2.00 per member per year in 2013, estimated $2.12 per member per year in 2014, and projected to be $2.25 per member per year in 2015, which is projected to increase Plan Year 2015 costs by $0.9 million. Transitional Reinsurance Fee: This is a temporary (three-year) fee starting in 2014 to stabilize the cost of individual and small group insurance offered through State and Federal health insurance exchanges. The fee for Plan Year 2015 is $44 per member (i.e., employees/retirees/dependents) per year for Actives and Early Retirees, which increases projected Plan Year 2015 cost by $13.0 million. Out-of-Pocket Maximum: Effective 1/1/2014, in-network medical coverage is required to include an overall out-of-pocket maximum limits of $6,350 Single / $12,700 Family. This change was implemented for all the SEHBP plans with the exception of NJ DIRECT10 and the High Deductible 15

18 plans which already had in-network out-of-pocket maximum limits less than the ACA maximum. Effective 1/1/2015, the mandated out-of-pocket maximum limits must cover both medical and prescription drug cost sharing and has been increased to $6,600 Single / $13,200 Family. The 2015 change impacts all SEHBP plan options except the High Deductible plans. For Local Actives with prescription drug coverage outside of the SEHBP, the Medical in-network out-of-pocket maximum will be set at $5,300/$10,600 and Local Education Employers will need to have a prescription drug program with an in-network out-of-pocket maximum of $1,300/$2,600 or less to comply with the federal mandate. New Jersey State Mandates Effective January 2015, a mandate requires insurers to cover breast evaluations, other additional medically-necessary testing under certain circumstances, and mammogram reports. Projected Plan Year 2015 medical costs will be increased 0.5% (or $10.4 million) to reflect the increase in cost due to this mandate. Employee Contribution Changes Effective 7/1/2012, most Active Employees were impacted by the new Chapter 78, PL 2011 premium contribution formula. Contributions are percentages of premium rates which vary by salary tier and by coverage tier (Single, Employee+Child(ren), Employee+Spouse/Partner, or Family). The percentages increase each year and will reach the full mandated level on 7/1/

19 Retiree Contribution Changes Chapter 78, PL 2011 requires certain retirees to pay a portion of their health care premium when they retire. Active employees who had 20 or more years of service credit as of the effective date of Chapter 78 are grandfathered and pay nothing for retiree health coverage. Eligibility Changes Coverage of Adult Children to Age 31 New Jersey currently mandates the coverage of adult children under age 31 at a premium level that is equivalent to the child rate included in the standard premium tables, loaded 2% for additional expenses. Under the recommended revision to premium relativities for Plan Year 2015, the adult child rate will be equivalent to 76.5% of the Single employee rate. Federal Healthcare Reform increased the SEHBP maximum age for dependent children from 23 to 26 and as a result Local Education enrollment for this coverage dropped from 3,107 in December 2010 to 1,294 in December 2011, and has decreased since then to 1,079 as of May Part-time Coverage Part-time employees may enroll in any of the SEHBP plans. Currently, 357 State and Local part-time employees participate, so the experience is only partially credible. For Plan Year 2013, the costs for part-time employees were approximately 2% less than the premium collected. Losses over the prior 3 17

20 years range from 4% to 19% of premium, so Aon Hewitt recommends that the current 10% rate load be continued for Plan Year Enrollment Changes Exhibit 1A shows historical enrollment patterns from January 2012 through May 2014 and Aon Hewitt s projection of enrollment from June 2014 through December This projection assumes that Local Education Active will increase 2% per year in Plan Years 2014 and 2015, Early Retiree enrollment will reduce 3% in Plan Year 2014, and Medicare Retiree enrollment will increase 6% in Plan Years 2014 and Exhibit 1B shows the projected distribution of enrollment among benefit options and assumes that 0.5% of enrollment in NJ DIRECT15 will migrate to the lowercost benefit options for Plan Year Exhibit 1C shows enrollment by benefit option and coverage tier as of 5/1/2014. Demographic Changes The Active Employee average age did not change from Plan Year 2013 to Plan Year The average HMO employee age increased 0.7 years from Plan Year 2013 to Plan Year 2014, while the PPO average age was also stable. The average age of employees enrolled in the new benefit options was approximately 2.5 years older than employees in the Legacy Plans in Plan Year 2013, but has decreased in Plan Year 2014 to the point where it is approximately 4.2 years younger than the Legacy Plans. 18

21 Average Employee Age 4/1/2013 4/1/2014 Change Legacy PPO Plans Legacy HMO Plans Legacy Total New Plans Total ` 19

22 Trend Analysis The claim trends assumptions that we are recommending for the Plan Year 2015 renewal are: Medical Prescription Drugs PPO Active 8.3% 9.0% PPO Early Retiree 8.3% 10.5% PPO Medicare Retiree 4.5% 10.5% HMO Actives 7.0% 9.0% HMO Retirees 7.0% 9.0% Horizon trends were used to develop the PPO trend assumptions shown above and Aetna trends were similarly used for HMO plans. The Medicare retiree trend assumptions do not reflect the Aetna Medicare Advantage premium increases, which are 7.8% for PPO and 3.3% for HMO plans. Exhibit 2A presents historical SEHBP medical trend experience and Aon Hewitt s trend assumptions for Plan Year Exhibit 2B presents similar prescription drug trend experience and assumptions. These experience trends are based on estimated incurred claim trends from 4/1/2012-3/31/2014. The claim costs in these exhibits have been normalized for estimated benefit and vendor changes. Medical Trends: Aon Hewitt recommended trends are based on SEHBP experience adjusted for expected future changes and vendor recommended trends. The two-year average experience trends for Horizon Actives are 8.3%. Trends for Horizon Early Retirees have been lower than those for Actives in 20

23 recent years, but have usually been higher. The Aon Hewitt recommended trend combines the Active and Early Retiree experience to develop a recommended PPO trend of 8.3%. Due to the continued favorable experience on the Medicare Retiree group, the Aon Hewitt recommended trends have been reduced from 5.0% (in Plan Year 2014 Renewal Report) to 4.5%. The Medical trends for Aetna have been reduced to 7.0% from 7.5% (in the Plan Year 2014 Renewal Report) to incorporate the favorable experience in these plans. Prescription Drug Trends: Aon Hewitt recommended trends are based on experience trends, input from Express Scripts, and the Aon Hewitt trend survey. Local Active claim experience in 2013 showed a big increase which is due to a one-time change in claim processing for MM Rx. Recent claim experience is showing increasing trends, and it is anticipated that prescription drug trends will remain high through 2015 due to increasing utilization of specialty drugs, including new hepatitis C medication and the increasing use of high-cost compound drugs. The recommended prescription drug trends for Plan Year 2015 are higher than the two-year average trends, but less than the most recent annual trend. The claim trends that Aon Hewitt are recommending for the Plan Year 2015 renewal are listed in the chart on Page 20. Note that these trends do not reflect a projected 2% decrease in prescription drug claims as a result of better pricing terms anticipated in the ESI contract extension. Plan Year 2015 prescription 21

24 drug costs will be trended using the values in the table on Page 20 and then reduced 2% for the assumed ESI contract extension. 22

25 Financial Projections Aggregate Financial Projections Using the assumptions detailed in Exhibit 6 and the methodology described in this report s Renewal Rate Development Section, Aon Hewitt updated estimated costs for Plan Years 2013, 2014 and Plan Year 2015 renewal premiums were developed to produce a 2% gain for Actives and no loss or gain for Retirees. The Active gain is included to help bring the Claim Stabilization Reserve closer to the target level of 2.0 months of Plan costs. Projected Financial Results (in $ millions) PPO10 PPO15 HMOs New Plans Total Plan Year 2013 Premium Rates x Enrollment 1, ,380.1 Incurred Claims 1, ,169.2 Administrative Charges Net Gain (Loss) Plan Year 2014 Premium Rates x Enrollment 2, ,558.5 Incurred Claims 2, ,477.1 Administrative Charges Net Gain (Loss) (21.4) 7.4 (7.2) 1.1 (20.1) Plan Year 2015 Premium Rates x Enrollment 2, ,862.4 Incurred Claims 2, ,739.4 Administrative Charges Net Gain (Loss) More detailed aggregate projections are attached in Exhibit 4. The losses and gains displayed in this table and in Exhibit 4 assume that all premiums are fully funded. 23

26 Administrative Fees The table below compares projected Plan Year 2015 administrative fees per subscriber per month with Plan Year 2014 fees: PY2014 PY2015 Change Aetna PPO $31.31 $ % Horizon NJ DIRECT $22.37 $ % Aetna HMO $42.82 $ % Horizon HMO $35.09 $ % Aetna HDHP $32.69 $ % Horizon HDHP $26.95 $ % Express Scripts Rx Card $4.30 $ % Express Scripts HDHP $5.25 $ % EGWP $13.37 $ % Horizon MM RX $0.25 $ % 24

27 Minimum Value Under the Affordable Care Act, beginning in 2014, eligible individuals who purchase coverage under a qualified health plan through a state health insurance exchange may receive a premium tax credit or cost-sharing subsidy unless they are eligible for other health care coverage, including coverage under an employer-sponsored health plan that is affordable to the employee and provides minimum value. A plan fails to provide minimum value if the plan s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs. The 2015 SEHBP plans were tested using the Minimum Value calculator provided by Health and Human Services (HHS) and the Internal Revenue Service (IRS). All the SEHBP plans have a minimum value greater than the 60% minimum requirement with values ranging from 66% for the $4,000 High Deductible plan up to 94% for the Active NJ DIRECT10 plan. 25

28 Renewal Rate Development Rating Methodology Exhibit 4 shows the aggregate projected costs for Plan Years 2013, 2014, and 2015, separately for each PPO, HMO, and HDHP plan. Costs were projected separately for Actives, Early Retirees, and Medicare Retirees, and for medical claims, prescription drug claims, administrative costs, and aggregate premiums. Plan Year 2015 premium increases were calculated separately for Actives, Early Retirees, and Medicare Retirees, and by coverage type: PPO, HMO, and prescription drugs. Aetna experience was used to develop the HMO premium increases, Horizon experience for the PPO premium increases, and Express Scripts experience for the prescription drug premium increases. Active premium increases were set to achieve a 2% gain in order to help rebuild the Claim Stabilization Reserve. Retiree premium increases were set to achieve no loss or gain. Medical and Prescription Drug Claim Projections 1. Using claim data and claim triangles supplied by Horizon and the HMOs, Aon Hewitt estimated completed incurred claims for Plan Year 2013 and the first quarter of Plan Year 2014, separately for each benefit plan, for medical versus prescription drugs, and for Actives, Early Retirees, and Medicare Retirees. 26

29 2. Capitation and other similar fixed claim charges were added to the incurred claims to arrive at projected incurred claims. 3. Estimated incurred claims from 1/1/ /31/2013 were divided by average covered members to get average claims per member per year. Covered members were based on historical billing enrollment data by coverage tier and adjusted with assumptions for the number of members per coverage tier. 4. Claims per member were projected from the mid-point of the experience period to the mid-point of Plan Year 2015 using the annual trend rates listed in the Trend Analysis section of this document. 5. Projected medical claim costs were increased 0.5% to reflect the cost impact of the New Jersey State mandate requiring coverage of breast evaluation and other medically-necessary testing for Plan Year Retiree prescription drug costs were decreased 1.0% in Plan Year 2014 and 1.6% in Plan Year 2015 to reflect the impact of the prescription drug copay and out-of-pocket limit increases. Active and Retiree prescription drug costs were decreased 2% to reflect the projected savings under the Express Scripts contract extension. 7. Early Retiree costs were reduced $9 million in Plan Year 2013 due to Early Retiree Reinsurance Program payments received by the plan. 27

30 8. Aggregate claims for Plan Year 2015 are the product of projected enrollment and the projected claims per member. 9. Plan Year 2015 projected Aetna Medicare Advantage PPO premiums were increased 7.8% and HMO premiums were increased 3.3% over Plan Year 2014, based on Aetna s renewal. 10. Plan Year 2014 Prescription Drug manufacturers rebates were projected based on guarantees from Express Scripts and the historical experience of actual rebates versus guaranteed rebates. Plan Year 2015 rebates use the guaranteed rebate amounts. 11. EGWP projections include monthly CMS payments per Medicare-eligible retiree for prescription drug coverage, an annual CMS payment for reinsurance on catastrophic claims, and prescription drug manufacturers coverage gap reimbursement payments. These amounts were projected based on payments received through April 2014 combined with projections from Express Scripts. The credits are projected at $174 million for Plan Year 2013, $167 million for Plan Year 2014 and $181 million for Plan Year The Plan Year 2015 projected Education Surcharge is $24 million and this is used as a credit against projected Early Retiree Costs. 28

31 13. Total SEHBP projected Plan Year 2015 claim costs are the sum of projected medical and prescription drug claims reduced for Early Retiree Reinsurance Plan payments, payments from CMS related to EGWP Plus Wrap, the Education Surcharge, and prescription drug rebates. Administrative Cost Projection The administrative cost projection includes administrative charges, as well as some miscellaneous cost items: 1. Administrative fees are contractual ASO fees per employee per year multiplied by the projected average enrollment for that year. 2. Overhead charges, which are internal the State of New Jersey administrative costs charged against the plans, projected at $4.4 million for Plan Year $2 per member per year for the Comparative Effectiveness Fee for Plan Year 2013, $2.12 for Plan Year 2014, and $2.25 for Plan Year 2015 as required by Federal Healthcare Reform. 4. $63 per non-medicare Member per year for the Transitional Reinsurance Fee for Plan Year 2014 and $44 for Plan Year 2015, as required by Federal Healthcare Reform. This fee was not applicable in Plan Year Projected investment income of $0.5 million was used to reduce projected administrative costs for Plan Year

32 6. NJWELL expenses (net of projected savings), projected to be $97 per employee for Plan Year 2014 and $63 per employee for Plan Year Margin 1. Active premiums were increased 2% because the Active Claim Stabilization Reserve at the end of Plan Year 2015 is projected at 1.1 months of Plan costs, which falls short of the 2.0 months target reserve. 2. Retiree premiums include no margin since the State is responsible for covering the costs of approximately 90% of Education Retirees. Projected Premiums 1. Plan Year 2015 premiums were developed by applying the premium increase percentages listed in the Executive Summary section of this document to the Plan Year 2014 premium rates. 2. Aggregate Plan Year 2015 premium is calculated by multiplying projected Plan Year 2015 enrollment by Plan Year 2015 premiums. 30

33 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 1A Enrollment Projections Local Education Enrollment 250,000 Actives Early Retirees Medicare Retirees 200, , ,000 50, Actives Assumes enrollment for will increase about 2% in Plan Years 2014 and Retirees Assumes that enrollment will continue to increase at 3% in Plan Year 2014 and 5% in Plan Year

34 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 1B Actives Plan Year 2015 Plan Distribution Plan Year 2014 Local Education Employees PPO 10 PPO 15 PPO 1525 PPO 2030 PPO 2035 HD4000 HD1500 HMO 10 HMO 1525 HMO 2030 HMO 2035 Assumes that 87% of employees will remain in $10 copay plans. Assumes 91% of employees will enroll in the PPO plans, 9% in the HMO plans and less than 1% in the HDHP plans. Assumes 98% of employees will remain in legacy plans with only 2% in the new benefit options. Assumes enrollment will be split 89% to Horizon and 11% to Aetna. Actives Horizon Aetna Total PPO % 1.4% 78.2% PPO % 0.3% 11.0% PPO % 0.2% 0.8% PPO % 0.2% 0.5% PPO % 0.0% 0.1% HD % 0.0% 0.0% HD % 0.0% 0.0% HMO % 8.6% 9.0% HMO % 0.1% 0.2% HMO % 0.1% 0.2% HMO % 0.0% 0.0% Total 89.1% 10.9% 100.0% 32

35 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 1B Retirees Plan Year 2015 Plan Distribution Plan Year 2014 Local Education Retirees PPO 10 PPO 15 PPO 1525 PPO 2030 HD4000 HMO 10 HMO 1525 HMO 2030 Assumes that 91% of retirees will remain in $10 copay plans. Assumes 94% of retirees will enroll in the PPO plans, 6% in the HMO plans and 0% in the HDHP plan. Assumes 100% of retirees will remain in legacy plans with less than 1% moving to new benefit options. Assumes enrollment will be split 93% to Horizon and 7% to Aetna. Retirees Horizon Aetna Total PPO % 0.8% 84.5% PPO % 0.1% 8.7% PPO % 0.1% 0.3% PPO % 0.1% 0.2% HD % 0.0% 0.0% HMO % 6.2% 6.3% HMO % 0.0% 0.0% HMO % 0.0% 0.0% Total 92.7% 7.3% 100.0% 33

36 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 1C Actives May 2014 Enrollment Member + Spouse Parent + Single /Partner Family Child(ren) Total EDUCATION ACTIVES Medical Plans Horizon 10 PPO 23,195 13,289 29,716 7,946 74,146 Horizon 15 PPO 3,955 1,649 4,069 1,299 10,972 Horizon 1525 PPO Horizon 2030 PPO Horizon 2035 PPO Horizon HD Horizon HD Horizon Legacy HMO Horizon 1525 HMO Horizon 2030 HMO Horizon 2035 HMO Horizon Total 27,788 15,067 34,139 9,391 86,385 Aetna 10 PPO ,415 Aetna 15 PPO Aetna 1525 PPO Aetna 2030 PPO Aetna 2035 PPO Aetna HD Aetna HD Aetna Legacy HMO 2,460 1,240 3,095 1,432 8,227 Aetna 1525 HMO Aetna 2030 HMO Aetna 2035 HMO Aetna Total 3,182 1,546 3,907 1,677 10,312 Total 30,970 16,613 38,046 11,068 96,697 34

37 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 1C Retirees May 2014 Enrollment Number of Contracts as of 5/1/2014 Member + Spouse Parent + Single /Partner Family Child(ren) Total EDUCATION RETIREES Medical Plans Horizon 10 PPO 44,130 32,518 3,585 1,409 81,642 Horizon 15 PPO 5,032 3, ,715 Horizon 1525 PPO Horizon 2030 PPO Horizon 2035 PPO Horizon HD Horizon HD Horizon Legacy HMO Horizon 1525 HMO Horizon 2030 HMO Horizon 2035 HMO Horizon Total 49,317 35,742 3,954 1,604 90,617 Aetna 10 PPO Aetna 15 PPO Aetna 1525 PPO Aetna 2030 PPO Aetna 2035 PPO Aetna HD Aetna HD Aetna Legacy HMO 3,130 2, ,025 Aetna 1525 HMO Aetna 2030 HMO Aetna 2035 HMO Aetna Total 3,465 2, ,934 Total 52,782 38,534 4,407 1,828 97,551 35

38 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 2A Medical Trend Increase in Claims/Ee Benefit + RFP Changes Claim Trend Horizon Active 4/1/2012-3/31/ % 1.2% 5.8% 4/1/2013-3/31/ % 0.7% 10.9% Average 8.3% Aon Hewitt Trend Assumption 8.3% Horizon Early Retiree 4/1/2012-3/31/ % 1.6% 5.2% 4/1/2013-3/31/ % 0.7% 9.5% Average 7.3% Aon Hewitt Trend Assumption 8.3% Horizon Medicare Retiree 4/1/2012-3/31/ % 0.8% 1.0% 4/1/2013-3/31/ % 0.6% 1.1% Average 1.1% Aon Hewitt Trend Assumption 4.5% Aetna 4/1/2012-3/31/ % 1.3% 1.7% 4/1/2013-3/31/ % 0.7% 9.7% Average 5.7% Aon Hewitt Trend Assumption 7.0% Normalizing Adjustments Increase in number of covered children per employee. Change in U&C guidelines 1/1/2013. NJ DIRECT10 claims adjusted to NJ DIRECT10 copays (for Retirees). 36

39 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 2B Prescription Drug Trend Increase in Claims/Ee Benefit Changes Claim Trend Active Rx 4/1/2012-3/31/ % -3.1% 3.8% 4/1/2013-3/31/ % 0.0% 17.5% Average 10.6% Aon Hewitt Trend Assumption 9.0% Retiree Rx 4/1/2012-3/31/ % -3.5% 7.0% 4/1/2013-3/31/ % -1.1% 12.3% Average 9.6% Aon Hewitt Trend Assumption 10.5% Normalizing Adjustments: Retiree Rx Copays and OOP maximum increased on 1/1/2014 Increase in number of covered children per employee Larger than usual move to generic drugs in 2012 increase in price discount 1/1/

40 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 3 Large Medical Claim Analysis Percent Claims Costs in Excess of $50,000 NJ DIRECT10 NJ DIRECT15 Legacy HMOs New Plans Total 35% 30% 25% 20% 15% 10% 5% 0% Employees Retirees Total Observations: The New Plans have the highest percentage of shock claim costs at 24%. 18% of Active medical claims are for individual claimant amounts in excess of $50, % of Retiree medical claims are for individual claimant amounts in excess of $50,

41 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 4A Plan Year 2013 Aggregate Costs Page 1 of 2 Legacy Plans 1525 Total Aetna PPO10 Aetna PPO15 NJ DIRECT10 NJ DIRECT15 Aetna HMO Horizon HMO Aetna PPO Horizon PPO Aetna HMO Horizon HMO Employees and Retirees Average Medical Subscribers 191,406 1, ,798 18,507 15, Incurred Medical claims $1,779,013,000 $18,404,000 $2,935,000 $1,455,928,000 $153,751,000 $138,503,000 $2,465,000 $603,000 $3,688,000 $683,000 $104,000 Capitation $22,903,000 $0 $0 $10,114,000 $1,268,000 $11,233,000 $48,000 $0 $25,000 $150,000 $3,000 Incurred Prescription Drug Claims $674,147,000 $6,321,000 $615,000 $552,033,000 $60,317,000 $52,728,000 $1,011,000 $105,000 $318,000 $286,000 $83,000 Prescription Drug Rebates ($102,190,000) ($933,000) ($88,000) ($83,771,000) ($9,173,000) ($7,913,000) ($148,000) ($15,000) ($48,000) ($42,000) ($12,000) EGWP Credits ($174,448,000) ($1,000,000) ($97,000) ($146,830,000) ($15,877,000) ($10,314,000) ($156,000) $0 ($86,000) ($43,000) ($16,000) ERRP Credits ($8,887,000) ($83,000) ($8,000) ($7,298,000) ($718,000) ($739,000) ($14,000) ($2,000) ($7,000) ($6,000) ($1,000) Education Surcharge ($21,387,000) ($199,000) ($20,000) ($17,562,000) ($1,727,000) ($1,779,000) ($34,000) ($5,000) ($16,000) ($15,000) ($2,000) Administrative Fees $73,913,000 $472,000 $86,000 $59,365,000 $7,044,000 $6,385,000 $177,000 $24,000 $111,000 $70,000 $13,000 Total Cost $2,243,064,000 $22,982,000 $3,423,000 $1,821,979,000 $194,885,000 $188,104,000 $3,349,000 $710,000 $3,985,000 $1,083,000 $172,000 Total Premium $2,380,103,000 $21,244,000 $3,370,000 $1,933,041,000 $214,951,000 $192,011,000 $4,835,000 $736,000 $3,962,000 $1,633,000 $243,000 Gain (Loss) $137,039,000 ($1,738,000) ($53,000) $111,062,000 $20,066,000 $3,907,000 $1,486,000 $26,000 ($23,000) $550,000 $71,000 Employees Average Medical Subscribers 95, ,809 9,866 9, Incurred Medical claims $1,258,884,000 $13,942,000 $2,682,000 $1,023,312,000 $111,686,000 $99,280,000 $1,873,000 $393,000 $3,354,000 $575,000 $77,000 Capitation $16,921,000 $0 $0 $7,024,000 $930,000 $8,767,000 $36,000 $0 $22,000 $88,000 $2,000 Incurred Prescription Drug Claims $151,394,000 $2,504,000 $349,000 $120,196,000 $13,011,000 $14,345,000 $463,000 $77,000 $105,000 $117,000 $32,000 Prescription Drug Rebates ($20,696,000) ($342,000) ($48,000) ($16,432,000) ($1,779,000) ($1,961,000) ($63,000) ($11,000) ($14,000) ($16,000) ($4,000) EGWP Credits NA NA NA NA NA NA NA NA NA NA NA ERRP Credits NA NA NA NA NA NA NA NA NA NA NA Education Surcharge NA NA NA NA NA NA NA NA NA NA NA Administrative Fees $33,821,000 $373,000 $77,000 $24,530,000 $3,251,000 $5,153,000 $123,000 $22,000 $84,000 $58,000 $8,000 Total Cost $1,440,324,000 $16,477,000 $3,060,000 $1,158,630,000 $127,099,000 $125,584,000 $2,432,000 $481,000 $3,551,000 $822,000 $115,000 Total Premium $1,490,343,000 $14,800,000 $2,788,000 $1,183,456,000 $142,189,000 $134,123,000 $3,866,000 $657,000 $3,444,000 $1,289,000 $176,000 Gain (Loss) $50,019,000 ($1,677,000) ($272,000) $24,826,000 $15,090,000 $8,539,000 $1,434,000 $176,000 ($107,000) $467,000 $61,000 Retirees Average Medical Subscribers 95, ,989 8,641 6, Incurred Medical claims $520,129,000 $4,462,000 $253,000 $432,616,000 $42,065,000 $39,223,000 $592,000 $210,000 $334,000 $108,000 $27,000 Capitation $5,982,000 $0 $0 $3,090,000 $338,000 $2,466,000 $12,000 $0 $3,000 $62,000 $1,000 Incurred Prescription Drug Claims $522,753,000 $3,817,000 $266,000 $431,837,000 $47,306,000 $38,383,000 $548,000 $28,000 $213,000 $169,000 $51,000 Prescription Drug Rebates ($81,494,000) ($591,000) ($40,000) ($67,339,000) ($7,394,000) ($5,952,000) ($85,000) ($4,000) ($34,000) ($26,000) ($8,000) EGWP Credits ($174,448,000) ($1,000,000) ($97,000) ($146,830,000) ($15,877,000) ($10,314,000) ($156,000) $0 ($86,000) ($43,000) ($16,000) ERRP Credits ($8,887,000) ($83,000) ($8,000) ($7,298,000) ($718,000) ($739,000) ($14,000) ($2,000) ($7,000) ($6,000) ($1,000) Education Surcharge ($21,387,000) ($199,000) ($20,000) ($17,562,000) ($1,727,000) ($1,779,000) ($34,000) ($5,000) ($16,000) ($15,000) ($2,000) Administrative Fees $40,092,000 $99,000 $9,000 $34,835,000 $3,793,000 $1,232,000 $54,000 $2,000 $27,000 $12,000 $5,000 Total Cost $802,740,000 $6,505,000 $363,000 $663,349,000 $67,786,000 $62,520,000 $917,000 $229,000 $434,000 $261,000 $57,000 Total Premium $889,760,000 $6,444,000 $582,000 $749,585,000 $72,762,000 $57,888,000 $969,000 $79,000 $518,000 $344,000 $67,000 Gain (Loss) $87,020,000 ($61,000) $219,000 $86,236,000 $4,976,000 ($4,632,000) $52,000 ($150,000) $84,000 $83,000 $10,000 39

42 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 4A Plan Year 2013 Aggregate Costs Page 2 of HD 4000 HD 1500 Aetna PPO Horizon PPO Aetna HMO Horizon HMO Aetna PPO Horizon PPO Aetna PPO Horizon PPO Employees and Retirees Average Medical Subscribers Incurred Medical claims $261,000 $1,011,000 $234,000 $416,000 $0 $2,000 $1,000 $24,000 Capitation $0 $12,000 $39,000 $9,000 $1,000 $0 $0 $1,000 Incurred Prescription Drug Claims $35,000 $188,000 $92,000 $12,000 $0 $1,000 $0 $2,000 Prescription Drug Rebates ($5,000) ($27,000) ($13,000) ($2,000) $0 $0 $0 $0 EGWP Credits $0 ($27,000) $0 ($2,000) $0 $0 $0 $0 ERRP Credits $0 ($4,000) ($3,000) ($1,000) ($1,000) ($2,000) $0 $0 Education Surcharge ($1,000) ($11,000) ($6,000) ($2,000) ($3,000) ($5,000) $0 $0 Administrative Fees $14,000 $60,000 $31,000 $43,000 $2,000 $3,000 $3,000 $10,000 Total Cost $304,000 $1,202,000 $374,000 $473,000 ($1,000) ($1,000) $4,000 $37,000 Total Premium $403,000 $1,963,000 $591,000 $805,000 $31,000 $62,000 $34,000 $188,000 Gain (Loss) $99,000 $761,000 $217,000 $332,000 $32,000 $63,000 $30,000 $151,000 Employees Average Medical Subscribers NA NA 4 21 Incurred Medical claims $261,000 $835,000 $189,000 $400,000 NA NA $1,000 $24,000 Capitation $0 $11,000 $32,000 $8,000 NA NA $0 $1,000 Incurred Prescription Drug Claims $35,000 $105,000 $46,000 $7,000 NA NA $0 $2,000 Prescription Drug Rebates ($5,000) ($14,000) ($6,000) ($1,000) NA NA $0 $0 EGWP Credits NA NA NA NA NA NA NA NA ERRP Credits NA NA NA NA NA NA NA NA Education Surcharge NA NA NA NA NA NA NA NA Administrative Fees $13,000 $49,000 $26,000 $41,000 NA NA $3,000 $10,000 Total Cost $304,000 $986,000 $287,000 $455,000 NA NA $4,000 $37,000 Total Premium $383,000 $1,692,000 $486,000 $772,000 NA NA $34,000 $188,000 Gain (Loss) $79,000 $706,000 $199,000 $317,000 NA NA $30,000 $151,000 Retirees Average Medical Subscribers NA NA Incurred Medical claims $0 $176,000 $45,000 $16,000 $0 $2,000 NA NA Capitation $0 $1,000 $7,000 $1,000 $1,000 $0 NA NA Incurred Prescription Drug Claims $0 $83,000 $46,000 $5,000 $0 $1,000 NA NA Prescription Drug Rebates $0 ($13,000) ($7,000) ($1,000) $0 $0 NA NA EGWP Credits $0 ($27,000) $0 ($2,000) $0 $0 NA NA ERRP Credits $0 ($4,000) ($3,000) ($1,000) ($1,000) ($2,000) NA NA Education Surcharge ($1,000) ($11,000) ($6,000) ($2,000) ($3,000) ($5,000) NA NA Administrative Fees $1,000 $11,000 $5,000 $2,000 $2,000 $3,000 NA NA Total Cost $0 $216,000 $87,000 $18,000 ($1,000) ($1,000) NA NA Total Premium $20,000 $271,000 $105,000 $33,000 $31,000 $62,000 NA NA Gain (Loss) $20,000 $55,000 $18,000 $15,000 $32,000 $63,000 NA NA 40

43 SEHBP Plan Year 2015 Renewal Recommendation Exhibit 4B Plan Year 2014 Aggregate Costs (1 of 2) Legacy Plans 1525 Total Aetna PPO10 Aetna PPO15 NJ DIRECT10 NJ DIRECT15 Aetna HMO Horizon HMO Aetna PPO Horizon PPO Aetna HMO Horizon HMO Employees and Retirees Average Medical Subscribers 196,486 2, ,782 19,733 14, Incurred Medical claims $1,959,727,000 $29,835,000 $4,674,000 $1,588,189,000 $179,459,000 $139,527,000 $4,718,000 $1,142,000 $5,575,000 $1,119,000 $452,000 Capitation $23,535,000 $0 $0 $11,000,000 $1,309,000 $10,909,000 $70,000 $0 $43,000 $110,000 $7,000 Incurred Prescription Drug Claims $758,226,000 $9,934,000 $1,420,000 $616,471,000 $70,068,000 $56,604,000 $1,333,000 $247,000 $727,000 $361,000 $112,000 Prescription Drug Rebates ($74,386,000) ($964,000) ($137,000) ($60,505,000) ($6,880,000) ($5,539,000) ($129,000) ($24,000) ($71,000) ($35,000) ($11,000) EGWP Credits ($166,545,000) ($1,157,000) ($122,000) ($139,900,000) ($15,304,000) ($9,722,000) ($153,000) $0 ($105,000) ($31,000) ($15,000) ERRP Credits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Education Surcharge ($23,470,000) ($380,000) ($30,000) ($19,377,000) ($1,742,000) ($1,805,000) ($46,000) ($9,000) ($25,000) ($13,000) ($3,000) Administrative Fees $101,501,000 $1,184,000 $242,000 $80,603,000 $10,234,000 $8,066,000 $315,000 $70,000 $286,000 $90,000 $38,000 Total Cost $2,578,588,000 $38,452,000 $6,047,000 $2,076,481,000 $237,144,000 $198,040,000 $6,108,000 $1,426,000 $6,430,000 $1,601,000 $580,000 Total Premium $2,558,451,000 $36,534,000 $6,285,000 $2,056,976,000 $244,328,000 $190,573,000 $6,447,000 $1,514,000 $6,845,000 $1,574,000 $603,000 Gain (Loss) ($20,137,000) ($1,918,000) $238,000 ($19,505,000) $7,184,000 ($7,467,000) $339,000 $88,000 $415,000 ($27,000) $23,000 Employees Average Medical Subscribers 97,424 1, ,879 10,885 8, Incurred Medical claims $1,391,041,000 $22,260,000 $4,076,000 $1,115,568,000 $135,545,000 $97,840,000 $3,819,000 $1,020,000 $5,098,000 $897,000 $387,000 Capitation $20,074,000 $0 $0 $9,223,000 $1,164,000 $9,399,000 $64,000 $0 $42,000 $98,000 $6,000 Incurred Prescription Drug Claims $160,898,000 $3,978,000 $848,000 $123,533,000 $16,316,000 $14,146,000 $651,000 $201,000 $304,000 $195,000 $57,000 Prescription Drug Rebates ($15,375,000) ($380,000) ($81,000) ($11,806,000) ($1,559,000) ($1,352,000) ($62,000) ($19,000) ($29,000) ($19,000) ($5,000) EGWP Credits NA NA NA NA NA NA NA NA NA NA NA ERRP Credits NA NA NA NA NA NA NA NA NA NA NA Education Surcharge NA NA NA NA NA NA NA NA NA NA NA Administrative Fees $58,042,000 $984,000 $226,000 $42,823,000 $6,193,000 $6,808,000 $248,000 $66,000 $248,000 $80,000 $31,000 Total Cost $1,614,680,000 $26,842,000 $5,069,000 $1,279,341,000 $157,659,000 $126,841,000 $4,720,000 $1,268,000 $5,663,000 $1,251,000 $476,000 Total Premium $1,597,291,000 $26,110,000 $5,425,000 $1,247,299,000 $168,057,000 $129,832,000 $5,239,000 $1,373,000 $6,068,000 $1,286,000 $517,000 Gain (Loss) ($17,389,000) ($732,000) $356,000 ($32,042,000) $10,398,000 $2,991,000 $519,000 $105,000 $405,000 $35,000 $41,000 Retirees Average Medical Subscribers 99, ,903 8,848 6, Incurred Medical claims $568,686,000 $7,575,000 $598,000 $472,621,000 $43,914,000 $41,687,000 $899,000 $122,000 $477,000 $222,000 $65,000 Capitation $3,461,000 $0 $0 $1,777,000 $145,000 $1,510,000 $6,000 $0 $1,000 $12,000 $1,000 Incurred Prescription Drug Claims $597,328,000 $5,956,000 $572,000 $492,938,000 $53,752,000 $42,458,000 $682,000 $46,000 $423,000 $166,000 $55,000 Prescription Drug Rebates ($59,011,000) ($584,000) ($56,000) ($48,699,000) ($5,321,000) ($4,187,000) ($67,000) ($5,000) ($42,000) ($16,000) ($6,000) EGWP Credits ($166,545,000) ($1,157,000) ($122,000) ($139,900,000) ($15,304,000) ($9,722,000) ($153,000) $0 ($105,000) ($31,000) ($15,000) ERRP Credits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Education Surcharge ($23,470,000) ($380,000) ($30,000) ($19,377,000) ($1,742,000) ($1,805,000) ($46,000) ($9,000) ($25,000) ($13,000) ($3,000) Administrative Fees $43,459,000 $200,000 $16,000 $37,780,000 $4,041,000 $1,258,000 $67,000 $4,000 $38,000 $10,000 $7,000 Total Cost $963,908,000 $11,610,000 $978,000 $797,140,000 $79,485,000 $71,199,000 $1,388,000 $158,000 $767,000 $350,000 $104,000 Total Premium $961,160,000 $10,424,000 $860,000 $809,677,000 $76,271,000 $60,741,000 $1,208,000 $141,000 $777,000 $288,000 $86,000 Gain (Loss) ($2,748,000) ($1,186,000) ($118,000) $12,537,000 ($3,214,000) ($10,458,000) ($180,000) ($17,000) $10,000 ($62,000) ($18,000) 41