Benefits Update. Kari Jo Zika, Director, Human Resources June 1, 2015 CMO Review

Transcription

1 Benefits Update Kari Jo Zika, Director, Human Resources June 1, 2015 CMO Review

2 FY15 FY15 Budget to Actual (Oct 14 April 15) 2,511 Subscribers/5,633 Members Budget YTD: $15,811,974 Expenses YTD: $16,486,559 Deficit: ($674,585) 14.12% higher than FY14 Contributing Factors Higher Rx Costs (maintenance & compound) High Cost Claims 66 claimants account for 39.4% spend Current National Trend is at 7-8% McGriff premium estimates based on anticipated plan costs over the total $27m budgeted amount for FY15 2

3 FY15 Health Plan Enrollment HDHP EPO % HDHP % EPO Actives % 23.6% Retirees % 36.7% Total % 25.7% *Employees Waiving Coverage in 2015 = 222 3

4 UHC Plan Performance Review Pharmacy 2014 Change to Zero Copay Maintenance Medications resulted in 33% decline in employee cost share Compounded medications have cost the plan $1m over past 15 months ($400k Jan-Mar) Mail Order & Specialty Pharmacy Low utilization in comparison to other government entities 4

5 UHC Plan Performance Pharmacy Recommendations Place a $200 prior authorization and exclude non FDA approved medications on compound meds (as soon as possible) Require mail order specialty pharmacy after one retail fill of high cost medications Scale back maintenance drug zero copay program to specific disease states: Asthma/Allergies Diabetes Heart Disease (blood pressure/cholesterol) Anti Depressants 5

6 UHC Plan Performance Medical Three High Cost Disease States Diabetes: 341 members, $3.1 million $14,623 average cost for retiree w/diabetes $12,209 average cost for active w/diabetes Emergency Room visits 14.4% above peer group 26% actively engaged in UHC clinical programs Asthma: 353 members, $2.9 million $6,851 average cost per claimant 51% dependents, 31% employees, 18% spouses Emergency room visits 35.4% above peer group Obesity: 238 members, $1.9 million $6,840 average cost per claimant Emergency room visits 3.7% higher than peer group 46% actively engaged in UHC clinical programs 6

7 UHC Plan Performance Recommendations Remove Urgent Care and ER copay from HDHP Add Primary and Specialty copay to EPO Continue promotion of UHC healthcare cost estimator (374 used in 2014) Continue to promote Wellness for Life Consider more specific disease management programs offered by UHC Consider diabetic health plan design 7

8 Health Plan Administration FY16 Cost Impact Premium rate increase of 6.5% - 7.3% based on trend and cost analysis Unknown Cost Drivers not accounted for: UHC admin fee likely to increase (last year of contract) EAP fee decrease Stop loss premium increase estimate 10% 8

9 Current Employee/City Contribution CURRENT COST SHARE HDHP EE HDHP City EPO EE EPO City Employee Only 5% 95% 10% 90% Employee/Spouse 10% 90% 20% 80% Employee/Child 5% 95% 15% 85% Employee/Family 10% 90% 20% 80% 9 Options 1. Change Percentages to ATB: HDHP: 10/90 EPO: 20/80 2. Only Change Dependent Percentages HDHP: 5/95 & 10/90 EPO: 10/90 & 20/80

10 Health Plan Administration FY16 Plan Design Recommendations HDHP Plan: remove Urgent Care & Emergency Room copayments EPO Plan: add Primary Care & Specialist copayments ($25/$40) Both Plans: Changes to Zero Copay Drug List NO CHANGES to Deductible, Coinsurance or Out of Pocket Maximum Amounts 10

11 Health Plan Administration Scenario 1 No changes to benefits or contribution percentages 6.5% increase to active employees Average 30% increase to retirees Increase City budget by $1,406,934 Increase Employee/Retiree contributions by $363,911 11

12 Health Plan Administration Scenario 2 Change contribution percentages only 6.5% increase Average 30% increase to retirees Increase City budget by $416,287 Increase Employee/Retiree contributions by $1,354,677 12

13 Health Plan Administration Scenario 2a Change contribution percentages only for dependent coverage levels 6.5% increase Average 30% increase to retirees Increase City budget by $1,222,909 Increase Employee/Retiree contributions by $548, employees (40%) elect employee only coverage 13

14 Health Plan Administration Scenario 3 Change contribution percentages AND add Primary Care and Specialty Care copays to EPO, remove UC/ER copays from HDHP 7.3% increase to employees Average 34% increase to retirees Increase City budget by $595,620 Increase Employee/Retiree contributions by $1,411,380 Employees in EPO benefit from lower out of pocket costs to see primary care and specialist providers 14

15 Health Plan Administration Scenario 3a Change contribution percentages only for dependent levels of coverage AND add Primary Care and Specialty Care copays to EPO, remove UC/ER copays from HDHP 7.3% increase to employees Average 34% increase to retirees Increase City budget by $1,408,818 Increase Employee/Retiree contributions by $598,182 Employees in EPO benefit from lower out of pocket costs to see primary care and specialist providers 15

16 Health Plan Administration Scenario 4 Use current contribution percentages AND add Primary Care and Specialty Care copays to EPO, remove UC/ER copays from HDHP 7.3% increase to employees Average 34% increase to retirees Increase City budget by $1,594,655 Increase Employee contributions by $412,345 Employees in EPO benefit from lower out of pocket costs to see primary care and specialist providers 16

17 Health Plan Administration Scenario 5 Change contribution level on active dependent coverage levels and bifurcate active/employee rates -2.3% decrease to employees 74% increase to retirees Decreases City budget by $666,747 Increase Employee/Retiree contributions by $2,446,033 Removes implicit subsidy entirely (50% anticipated OPEB decrease) 17

18 Retiree Health Insurance FY16 18

19 UNDER AGE 65 RETIREE MEDICAL Current Fixed Monthly Subsidy RETIRED BEFORE 01/01/2008 RETIRED AFTER 01/01/2008 YOS MAX MONTHLY CITY CONTRIBUTION Retiree Dependent MAX MONTHLY CITY CONTRIBUTION Retiree No Dep. Contribution 30+ $600 $300 $600 $ $550 $275 $550 $ $500 $250 $500 $ $450 $225 $450 $ $400 $200 $400 $ $0 $0 $0 $0 19 *Hired January 1, 2006 or later No City Subsidy

20 Under Age 65 Retiree Health Plan Enrollment as of January 2015 Total Retirees (under age 65) on medical plan 407 Annual City Contribution (Subsidy) $2,563,718. Annual Retiree Contribution $872,843. EPO PLAN PRE 2008 POST 2008 TOTAL RET ONLY RET + CHILD RET + FAM RET + SP SPOUSE ONLY EPO TOTAL HDHP PRE POST TOTAL RET ONLY RET + CHILD RET + FAM RET + SP SPOUSE ONLY HDHP TOTAL

21 2015 Employees Eligible to Retire % 4% 308 Employees Eligible for Medical Plan & Subsidy 29% 58% 153 Employees Eligible for Medical / Not eligible for subsidy until age Employees Hired after 2006 / No Subsidy (38 < 65) (10 > 65) 20 Employees Age 65+ / Eligible for Medicare Plan & Subsidy 21

22 City Obligations

23 Retiree Health Plan Considerations Current OPEB accrued liability: $103 million 50% of liability is implicit subsidy 546 employees eligible to retire in eligible for City subsidy 1282 employees hired after Jan 2006 not eligible for explicit subsidy, only implicit subsidy if rates blended 86 retirees on <65 health plan will turn 65 in

24 Retiree Health Plan Considerations OPTIONS FY16 Increase Premiums to Retirees in accordance with existing subsidy structure with blended premiums. Implement same plan changes for retirees as actives (Scenario 3a) OR Increase Premiums for Retirees by separating their rate from active employee rate (Scenario 5) OPTIONS FY17 Lower the current City subsidy amounts OR Provide an option for pre-65 retiree coverage through an independent or federal exchange instead of the group health plan Establish separate HRA with higher City subsidy for those who elect an exchange plan 24

25 Retiree Health Plan Recommendation for FY16 PROS: + Maintains consistency with message in 2013 & 2014 regarding rate increases + Less of a premium increase than splitting rates from actives + Opportunity for education of retirees on 2017 options and looking to the future at the exchanges with a higher subsidy + Implicit & explicit subsidy will continue to decrease as retirees age to 65 CONS: - City remains responsible for retiree claims and future liabilities - Does not greatly affect the current accrued OPEB liability 25

26 Retiree Health Plan PROS/CONS of Separating the Retiree Rates from Actives* + OPEB reduction by 50% due to removal of implicit subsidy - 70% rate increase to current retirees - Current retirees didn t plan for this type of increase (implied contract argument) - Active employees see little change to current health plan rates in return for much higher rates at time of retirement - Inhibits current employees from retiring due to cost of insurance 26 *This option is not recommended by Human Resources

27 Retiree Health Plan Recommendation for FY17 Continue blended rate with actives Offer the OPTION of electing individual coverage through the marketplace with a higher City subsidy (to be determined) City has time to establish Health Reimbursement Account for retirees Retirees will have ample time to research the benefits of marketplace plans City claim liabilities end for retirees that elect exchange option trade off is increasing the subsidy amount Retirees will continue to have a choice Future retirees will better understand the financial costs surrounding retiree health insurance 27

28 Federal Marketplace vs. Private Exchange Federal Marketplace (Healthcare.gov) Pros Large choice of carriers and plans No administrative fees No RFP required Cons No employer control over plan choices Hard to obtain individual enrollment assistance for retirees Narrow provider networks Private Exchange (recommended) Pros Large choice of carriers and plans Employer has flexibility in selecting participating providers and plans Individual enrollment assistance for retirees Educational and administrative support Assistance with determining Federal subsidy eligibility for retirees Cons Administrative fees RFP process required for selecting a vendor

29 Advantage for Retirees Why choose a Retiree HRA?

30 Questions About Federal Marketplace Healthcare.gov

31 FY16 Human Resources Recommendations July 1, 2015: Implement $200 Prior Authorization on Compound medications (cost and safety issue) 2016 Plan Design Rx: Specialty Drug Program, Limit $0 copay medications to specific disease states (heart disease (BP/cholesterol), diabetes, asthma) Eliminate Urgent Care & ER Copays from HDHP Add Primary Care & Specialist Copays to EPO 2016 Premiums Change % City Contribution for dependent level coverage only Continue blending active/retiree rates 31

32 FY16 Human Resources Recommendations Estimated Budgetary Impact Based on McGriff s Report Increase current PEPM budget figure from $7,680 to $8,240* $1,408,818 City Contribution Increase* Savings related to Rx program changes ($200,000 for Specialty Rx) Employee Impact Employee with HDHP EE coverage moves from $11.43 to $12.27 per paycheck ($21.84 annually) Employee with EPO EE coverage moves from $25.43 to per paycheck ($46.62 annually) Retiree Impact Retiree only monthly HDHP premium moves from $ to $ ($ annually) Retiree only monthly EPO premium moves from $ to $ ($ annually) $600 RR Only Subsidy still covers both premiums *subject to change, based on claims experience beyond April & other costs 32 (admin fees, Rx savings, etc) not yet accounted for

33 33 Questions/Discussion