Health Care Update. FY 19 Health Care Strategy. December 12, /12/2017

Transcription

1 Health Care Update FY 19 Health Care Strategy December 12,

2 Strategic Approach to Help Manage Costs 3 Tier Approach Cost Containment Evaluate/Enroll in Health Management Programs offered by Cigna and Express Scripts Increase Enrollment in the High Deductible Health Plan Realign Premiums Based on Claim Utilization for each Health Plan Reduce the Excise Tax Liability Employee Engagement and Education Increase Cost Awareness and Comparisons through Communication Campaigns Influence Behavior Change by Creating a Culture of Healthy Living Enhance Wellness Programs Improve Workforce Health through targeted programs like Naturally Slim Increase Employee Participation in Wellness Programs through Wellness Ambassadors Show Progress towards Health Improvements Changes are necessary to remain competitive and to increase personal responsibility 2

3 Strategic Approach to Help Manage Costs 3 Tier Approach Cost Containment Evaluate/Enroll in Health Management Programs offered by Cigna and Express Scripts Increase Enrollment in the High Deductible Health Plan Realign Premiums Based on Claim Utilization for each Health Plan Reduce the Excise Tax Liability Employee Engagement and Education Changes are necessary to remain competitive and to increase personal responsibility Enhance Wellness Programs 3

4 Administrative Actions Possible Considerations: Express Script offers the Advanced Utilization Management Program This is not a plan design change It safeguards the plan to only pay for medications for approved conditions Helps drive consumers to choose the least expensive medication first, instead of a more expensive medication (if not needed) Monitors to ensure medications are filled at the proper approved quantity as recommended by the manufacturer. Potential cost avoidance of $1.4 million with existing prescriptions and does not include cost avoidances for future medications in the pipeline. Cost Containment 4

5 Federal Government Health Care Reform Timeline Deferred W2 Reporting to show cost of major medical health benefits. FSA Limits limit contributions to $2,500. PCORI Fee Patient- Centered Outcomes Research Institute, Employers pay a tax for each covered enrollee. $1 per enrollee in 2013 and $2 per enrollee until This tax helps support the institutions research. Transitional Reinsurance Fee Employers pay a tax for each enrollee/ covered life. $63 per enrollee in 2014 and $44 per enrollee in This tax is to help stabilize insurance premiums in the market place, similar to a stop-loss insurance. Minimum Essential Coverage Reporting Starting in 2015/2016 Employers must report to the IRS on the employees receiving health care coverage, dates of coverage, premiums, etc. Excise Tax also known as Cadillac Tax. 5

6 What is the Excise Tax? If the cost of health care provided to an employee or to a family exceeds a threshold set by the Federal government, employers will be charged a 40% excise tax on amounts over the thresholds ($10,200 individual/$27,500 family) Was Now Year Total Liability Active OAP Plan Active POS Plan Active HDHP Plan 2020 $162,000 $0 $162,000 $0 Source: (Aon Hewitt Consulting) 6

7 Self-Insurance Fund (UPDATE) 2017 LCPS DRAFT CAFR 2017 Healthcare 2017 Workers Comp 2017 STD & VDLP FY2017 Self Insurance Revenue (including Transfers) $174,825,469 $4,000,000 $1,645,452 $180,470,921 Sel-Insurance Expenses & Claims $161,294,161 $4,128,190 $1,645,452 $167,067,803 Net Income (Loss) $13,531,308 ($128,190) $0 $13,403,118 Transfer In $10,705,237 $196,221 $0 $10,901,458 Transfer In County ($20,553,689) ($3,270,989) $0 ($23,824,678) Change in Net Assets $3,682,856 ($3,202,958) $0 $479,898 Net Assets Beginning $20,553,689 $3,270,989 $0 $23,824,678 Net Assets Ending $24,236,545 $68,031 $0 $24,304,576 FY18 LCPS Updated Projection 2018 Healthcare 2018 Workers Comp 2018 STD & VDLP FY2018 Self Insurance Revenue (including Transfers) $188,000,000 $4,000,000 $1,650,000 $193,650,000 Sel-Insurance Expenses & Claims $188,000,000 $4,000,000 $1,650,000 $193,650,000 Net Income (Loss) $0 $0 $0 $0 Transfer In $0 $0 $0 $0 Transfer In County $0 $0 $0 $0 Change in Net Assets $0 $0 $0 $0 Net Assets Beginning $24,236,545 $68,031 $0 $24,304,576 Net Assets Ending $24,236,545 $68,031 $0 $24,304,576 7

8 2019 LCPS Health Care Premiums 2019 Monthly Rates OAP (EE Share) OAP (LCPS Share) EE Only $19.36 $ EE + Child $ $ EE + Spouse $ $1, EE + Family $ $1, Monthly Rates HDHP (EE Share) HDHP (LCPS Share) EE Only $9.86 $ EE + Child $22.18 $1, EE + Spouse $ $1, EE + Family $ $1, Monthly Rates POS (EE Share) POS (LCPS Share) EE Only $ $ EE + Child $ $1, EE + Spouse $ $1, EE + Family $ $1, : 5.8% premium increase OAP & POS ONLY Historical Premium Increases % increase % increase % increase % increase % increase % Increase 8

9 Strategic Approach to Help Manage Costs 3 Tier Approach Cost Containment Evaluate/Enroll in Health Management Programs offered by Cigna and Express Scripts Increase Enrollment in the High Deductible Health Plan Realign Premiums Based on Claim Utilization for each Health Plan Reduce the Excise Tax Liability Employee Engagement and Education Increase Cost Awareness and Comparisons through Communication Campaigns Influence Behavior Change by Creating a Culture of Healthy Living Enhance Wellness Programs Changes are necessary to remain competitive and to increase personal responsibility 9

10 Administrative Actions Monthly E-Magazines and Open Enrollment Guide Promoting our message of healthy living, consumerism and tools & resources for cost comparison Participate in a Community Supported Agriculture (CSA) Local Farmers Encourage Healthy Eating and Nutrition The Naturally Slim Program Improvement of Biometric Screening results through weight management Employee Engagement & Education / Enhance Wellness Programs 10

11 Strategic Approach to Help Manage Costs 3 Tier Approach Cost Containment Evaluate/Enroll in Health Management Programs offered by Cigna and Express Scripts Increase Enrollment in the High Deductible Health Plan Realign Premiums Based on Claim Utilization for each Health Plan Reduce the Excise Tax Liability Employee Engagement and Education Increase Cost Awareness and Comparisons through Communication Campaigns Influence Behavior Change by Creating a Culture of Healthy Living Changes are necessary to remain competitive and to increase personal responsibility Enhance Wellness Programs Improve Workforce Health through targeted programs like Naturally Slim Increase Employee Participation in Wellness Programs through Wellness Ambassadors Show Progress towards Health Improvements 11

12 Administrative Actions Introduction of the Move with Purpose Program To reinforce and Promote our message of healthy living, and fitness Move with Purpose Program Enhance Wellness Programs 12

13 Retirement Plan Considerations Strategic Approach for FY19 13

14 LCPS Retirement Plan Offerings 403(b) Elective Deferral Program A voluntary retirement savings program. Options include pre-tax or Roth (aftertax) contributions through payroll deductions. Investment options include a selection of mutual funds provided through Lincoln Financial Group. Contribution Limit for 2018 Calendar Year is $18,500 Employees age 50 or over can make catch-up contributions of up to $6, Deferred Compensation Program A voluntary supplemental retirement savings program utilizing the Virginia Retirement Systems program. Employees can invest in a variety of funds through payroll deductions. Contribution Limit for 2018 is $18,500 Employees age 50 or over can make a catch-up contributions of up to $6,000 14

15 Local School Divisions: Retirement Plan Offerings School Division Alexandria Arlington Fairfax Loudoun Prince William Falls Church Separate Retirement Plan Offered No, VRS Retirement Plan Only Yes, 401(a) match of 0.4% of salary or $240, whichever is greater Yes, a Supplemental Retirement plan of 5.6% of salary No, VRS Retirement Plan Only Yes, 403(b) match of up to 2% of salary after 15 years employment No, VRS Retirement Plan Only 15

16 Current LCPS Retirement Plan Designs Benefit Plan 1 Plan 2 Hybrid Plan 1 Normal Retirement Age Age 65 with at least 5 yrs of service Social Security Normal Retirement Age with 5 years of service Social Security Normal Retirement Age with 5 years of service Early Retirement Age Age 50 with 10 years of service or age 55 with 5 years of service Age 60 with 5 years of service Age 60 with 5 years of service Early Retirement Reductions Fore each year prior to NRA, reduced 6.0% per year for first 5 years, 4.8% per year for the next 5 years and 6.0% per year earlier than age 55 Actuarial reduction from NRA Actuarial reduction from NRA Unreduced Early Retirement Age 50 with at least 30 years Age plus service is at least 90 (Rule of 90) Age plus service is at least 90 (Rule of 90) Benefit Formula 1.7% times years of service times final compensation; AFC is highest 36 months 1.7% times years of service up to January 1, 2013 plus 1.65% times years of service thereafter, times final compensation (AFC); AFC is highest 60 months 1.0% times years of service times final compensation (AFC); AFC is highest 60 months Source: (Segal Consulting) 16

17 Current Retirement Plan Contributions Benefit Plan 1 Plan 2 Hybrid Plan 1 Defined Benefit Plan Employee Contributions (MANDATORY) Defined Contribution Plan Employee Contributions (MANDATORY) Hybrid Plan ONLY Define Contribution Plan Additional Employee Contributions to maximize the Employer Match (VOLUNTARY) Hybrid Plan ONLY Hybrid Plan Voluntary Employee Contributions Eligible for Employer Match 5.0% of pay 5.0% of pay 4.0% of pay N/A N/A 1.0% of pay for employee & 1.0% of pay for employer match N/A N/A Up to 3.0% of pay for employee (To maximize the employer match) Hybrid Plan Employer Match N/A N/A Up to 1.5% of pay for employer match Source: (Segal Consulting) 17

18 Current LCPS Retirement Plan Income Replacement Ratio 18

19 Source: (Segal Consulting) 19

20 Source: (Segal Consulting) 20

21 89% 86% 87% 71% Source: (Segal Consulting) 21

22 72% 69% 59% 70% Source: (Segal Consulting) 22

23 57% 54% 49% 55% Source: (Segal Consulting) 23

24 Possible Employer Match for 403b plan - 0 to 9 Years of Service will receive up to maximum 0.50% of pay - 10 to 19 Years of Service will receive up to maximum 1.00% of pay - 20 to 29 Years of Service will receive up to maximum 1.50% of pay - 30 or more Years of Service will receive up to maximum 2.00% of pay Source: (Segal Consulting) 24

25 Employee Salary and Years of Service Information Source: (Segal Consulting) 25

26 LCPS Estimated Employer Matching Contribution Costs Source: (Segal Consulting) 26

27 Health Care Update FY 19 Health Care Strategy December 12,