New Jersey State Health Benefits Program. Plan Year 2015 Rate Renewal Recommendation Report. Local Government Employer Group

Transcription

1 New Jersey State Health Benefits Program Plan Year 2015 Rate Renewal Recommendation Report Local Government Employer Group January 1, 2015 December 31, 2015 Prepared by Aon Hewitt

2 TABLE OF CONTENTS Subject Page Executive Summary 1 Historical Overview 11 Trend Analysis 18 Financial Projections 20 Minimum Value 22 Renewal Rate Development 23 Exhibits 28 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 State Health Benefits Program Local Government Employer Group Rate Renewal Recommendation Report For Plan Year 2015 Executive Summary The purpose of this report is to recommend premium levels for the Local Government Employer Group of the State Health Benefits Program (SHBP) for January 1, 2015 through December 31, Benefit Plans Maintained by the SHBP The State of New Jersey operates the SHBP as a multiple-option program for participating Local Government Employer 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 either high deductible option. Early Retirees are only offered the $4,000 high deductible option and neither option is available to Medicare-eligible retirees. Active Employees may also be enrolled in a Prescription Drug Card Plan available under the SHBP, which is administered by Express Scripts. Local Government 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 SHBP 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. SHBP 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 8.1% for Active Employees, 5.5% for Early Retirees, and 6.1% for Medicare Retirees. For all groups combined, the recommended increase is 7.4%. Note that the Active increase reflects the impact of a 5.7% increase in Single and Employee+Spouse rates, a 9.7% increase in the Family rates, and a 12.3% 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 8.9% 6.3% 6.3% 10.4% 13.0% HMO Medical 4.4% 3.0% 3.0% 7.0% 9.5% PPO Rx 7.5% 5.0% 5.0% 9.1% 11.6% HMO Rx 7.5% 5.0% 5.0% 9.1% 11.6% Total 8.1% 5.7% 5.7% 9.7% 12.3% Early Retirees PPO Medical 5.0% 5.0% 5.0% 5.0% 5.0% HMO Medical 5.0% 5.0% 5.0% 5.0% 5.0% 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 5.5% 5.5% 5.5% 5.5% 5.5% Medicare Retirees PPO Medical 1.9% 1.9% 1.9% 1.9% 1.9% HMO Medical 3.0% 3.0% 3.0% 3.0% 3.0% PPO Rx 10.0% 10.0% 10.0% 10.0% 10.0% HMO Rx 10.0% 10.0% 10.0% 10.0% 10.0% Total 6.1% 6.1% 6.1% 6.1% 6.1% Grand Total 7.4% 5.7% 5.7% 8.6% 10.5% Note that if the Legacy Plans and the New Plans were rated on their own experience, the renewal increase would be 7.8% for Legacy Plans and an 11% decrease for New Plans. These premium increases for Plan Year 2015 are projected to produce no gain or loss for the Local Government Group. The table below shows the projected 3

6 Claim Stabilization Reserves at the end of Plan Years The target Claim Stabilization Reserve is equivalent to 2.0 months of plan costs. The Plan Year 2015 renewal premium increases include no margin because the projected reserve is expected to be at the recommended level of 2.0 months of plan costs as of 12/31/2015. SHBP Projected Claim Stabilization Reserve (in $millions) Total 12/31/2013 $240 12/31/2014 $238 12/31/2015 $238 Months of Plan Costs at 12/31/ Employee+Child(ren) Premium Increases SHBP 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 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

7 The Plan Year 2014 premiums rated Child(ren) coverage at 59% of employee costs. The Plan Year 2015 premiums increase the cost of Child(ren) coverage to 69% 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 SHBP 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), Employee+Spouse/Partner, or Family). The new contribution table is being phased in over 4 years. Local Governmental 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. 5

8 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 the 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 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 6

9 in the table below. These changes are estimated to reduce projected Plan Year 2015 prescription drug costs by approximately 2.0% for the SHBP: SHBP Retirees PPO HMO Retail Generic Copay $12 $14 $7 $7 $7 $8 $3 $3 Retail Preferred Brand Copay $25 $27 $14 $15 $17 $19 $19 $21 Retail Non-Preferred Brand Copay $50 $54 $27 $30 $37 $41 $49 $53 Mail Generic Copay $12 $14 $7 $7 $5 $6 $5 $6 Mail Preferred Brand Copay $37 $41 $21 $22 $43 $46 $38 $42 Mail Non-Preferred Brand Copay $62 $68 $34 $37 $94 $102 $98 $107 Out-of-Pocket Maximum $1,446 $1,572 $1,446 $1,572 none none none none 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. 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). 7

10 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 increases 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 SHBP due to the SHBP 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 the 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 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 SHBP plan options were tested and have a minimum value in excess of 60% (more details are included in the Minimum Value section of this report). 8

11 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 State Health Benefits Plan Design Committee which has the responsibility to modify and create plans from which eligible public 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. These proposed benefit design changes would reduce projected costs for Plan Year 2015 and would also decrease future trends. 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 9

12 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 loss ratio decreased 1.3% since the Plan Year 2014 renewal analysis. This increased the Plan Year 2013 projected gain from $50 million to $65 million. The Plan Year 2014 projected loss ratio increased 0.8% from last year s renewal analysis, resulting in a current projection of a $2 million loss. The increase in cost is largely due to increases in prescription drug claim experience and trend assumptions. Plan Year 2015 results are projected to produce no gain or loss. The Plan Year 2015 projected costs are $1,466 million: $984 million for Actives and $482 million for Retirees. 10

13 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: 11

14 For Active Employees, Local Government employers can select the SHBP 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 prescription drug 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 and 2014, the Retiree prescription drug card copays and out-of-pocket maximum limits increased based on an indexing formula (Exhibit 7 details the plan costsharing 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. 12

15 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 Government Retiree Premiums were reduced $16 million in Plan Year 2012 and $5 million in Plan Year 2013, with the remainder of the ERRP funds applied to State and Local Education Early 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 13

16 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, increased to $2.00 per member per year in 2013, projected $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 $0.4 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 $6.8 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 SHBP plans with 14

17 the exception of NJ DIRECT10 and the High Deductible 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 SHBP plan options except the High Deductible plans. This change will be implemented for all Retirees and for Actives whose employer selected prescription drug coverage with the SHBP. For Local Actives with prescription drug coverage outside of the SHBP, the Medical in-network out-of-pocket maximum will be set at $5,300/$10,600 and Local Government 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 $5 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, 15

18 Employee+Child(ren), Employee+Spouse/Partner, or Family). The percentages increase each year and will reach the full mandated level on 7/1/2014. 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 are governed by the terms applicable prior to the effective date of Chapter 78. 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 70% of the Single employee rate. Federal Healthcare Reform increased the maximum SHBP age for dependent children from 23 to 26 and as a result Local Government enrollment for this coverage dropped from 655 in December 2010 to 210 in December 2011, and has increased since then to 272 as of May 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 Government Actives will 16

19 increase 1% in Plan Years 2014 and 2015 and 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 the enrollment in the NJ DIRECT15 will change to the lower-cost 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 was stable in Plan Years 2013 and The average HMO employee age is approximately the same as the average PPO employee age. The average age of employees enrolling in the new benefit options is approximately two years younger than the employees in the Legacy Plans. Average Employee Age 4/1/2013 4/1/2014 Change Legacy PPO Legacy HMO Legacy Total New Plans (0.9) Total

20 Trend Analysis The claim trends 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% 11.5% PPO Medicare Retiree 4.5% 11.5% HMO Actives 7.0% 9.0% HMO Retirees 7.0% 11.5% 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 SHBP 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 SHBP experience adjusted for expected future changes and vendor recommended trends. The two-year average experience trends for Horizon Actives are 8.5%. Trends for Horizon Early Retirees have been lower than those for Actives in recent years, but have usually been higher. The Aon Hewitt recommended trend combines 18

21 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 the 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 partially 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 the 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 we are recommending for the Plan Year 2015 renewal are listed in the table on page 18. 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 drug costs will be trended using the values in the table on page 18 and then reduced 2% for the assumed ESI contract extension. 19

22 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 no gain or loss for Employees and Retirees since the Claim Stabilization Reserve is projected to be at the target level of 2.0 months as of 12/31/2015. Projected Financial Results (in $ millions) PPO10 PPO15 HMOs New Plans Total Plan Year 2013 Premium Rates x Enrollment $792.5 $211.9 $182.4 $23.6 $1,210.4 Incurred Claims $744.7 $187.9 $165.6 $17.9 $1,116.1 Administrative Charges $18.1 $5.0 $5.3 $0.6 $29.0 Net Gain (Loss) $29.7 $19.0 $11.5 $5.1 $65.3 Plan Year 2014 Premium Rates x Enrollment $884.3 $221.3 $182.5 $36.4 $1,324.5 Incurred Claims $867.9 $206.0 $172.8 $36.3 $1,283.0 Administrative Charges $27.9 $7.4 $6.7 $1.4 $43.4 Net Gain (Loss) ($11.5) $7.9 $3.0 ($1.3) ($1.9) Plan Year 2015 Premium Rates x Enrollment $981.2 $243.1 $196.7 $45.5 $1,466.5 Incurred Claims $968.9 $228.9 $184.6 $44.2 $1,426.6 Administrative Charges $25.7 $6.6 $6.2 $1.4 $39.9 Net Gain (Loss) ($13.4) $7.6 $5.9 ($0.1) $0.0 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. 20

23 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 $ % 21

24 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 SHBP plans were tested using the Minimum Value calculator provided by Health and Human Services (HHS) and the Internal Revenue Service (IRS). All the SHBP 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 93% for the Active NJ DIRECT10 plan. 22

25 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 each benefit plan 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. Premium increases were set to achieve no loss or gain for the Local Government group. Medical and Prescription Drug Claim Projections 1. Using claim data and claim triangles supplied by Horizon, Aetna, and Express Scripts, 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. 2. Capitation and other similar fixed claim charges were added to the incurred claims to arrive at projected incurred claims. 23

26 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 are based on historical billing enrollment data by coverage tier and 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 2% in Plan Years 2014 and 2015 to reflect the impact of the prescription drug copay and out-ofpocket 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 $5 million in Plan Year 2013 due to Early Retiree Reinsurance Program payments received by the plan. 8. Aggregate claims for Plan Year 2015 are the product of projected enrollment and the projected claims per member. 24

27 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 $39 million for Plan Year 2013, $37 million for Plan Year 2014 and $41 million for Plan Year Total SHBP 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, and prescription drug rebates. 25

28 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 State of New Jersey administrative costs charged against the plans, projected at $2.4 million for Plan Year $2 per member per year for the Comparative Effectiveness Fee for Plan Year 2013, estimated $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 $0.4 million was used to reduce projected administrative costs for Plan Year NJWELL expenses (net of projected savings), projected to be $97 per employee for Plan Year 2014 and $63 per employee for Plan Year

29 Margin 1. Active and Retiree premiums include no margin, since the Claim Stabilization Reserve is projected to be at or above the target reserve of 2.0 months of Plan costs as of 12/31/2015. Projected Premiums 1. Plan Year 2015 premiums were developed by applying the projected 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 projected Plan Year 2015 premium rates. 27

30 SHBP Plan Year 2015 Renewal Recommendation Exhibit 1A Enrollment Projections Local Government Enrollment Actives Early Retirees Medicare Retirees 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Actives Assumes enrollment will increase by 1% in Plan Year 2014 and Plan Year Retirees Assumes an increase of 6% in Plan Year 2014 and Plan Year

31 SHBP Plan Year 2015 Renewal Recommendation Exhibit 1B Actives Plan Year 2015 Plan Distribution Plan Year 2015 Local Government Employees PPO 10 PPO 15 PPO 1525 PPO 2030 PPO 2035 HD4000 HD1500 HMO 10 HMO 1525 HMO 2030 HMO 2035 Assumes that 79% of employees will remain in $10 copay plans. Assumes 86% of employees will enroll in the PPO plans, 14% in the HMO plans and less than 1% in the HDHP plans. Assumes 97% of employees will remain in legacy plans with only 3% in the new benefit options. Assumes enrollment will be split 82% to Horizon and 18% to Aetna. Actives Horizon Aetna Total PPO % 3.3% 66.2% PPO % 0.5% 17.7% PPO % 0.3% 0.8% PPO % 0.2% 1.2% PPO % 0.0% 0.1% HD % 0.0% 0.0% HD % 0.3% 0.3% HMO % 12.8% 13.1% HMO % 0.3% 0.3% HMO % 0.2% 0.3% HMO % 0.0% 0.0% Total 82.1% 17.9% 100.0% 29

32 SHBP Plan Year 2015 Renewal Recommendation Exhibit 1B Retirees Plan Year 2015 Plan Distribution Plan Year 2015 Local Government Retirees PPO 10 PPO 15 PPO 1525 PPO 2030 HD4000 HMO 10 HMO 1525 HMO 2030 Assumes that 81% of retirees will remain in $10 copay plans. Assumes 85% of retirees will enroll in the PPO plans, 15% in the HMO plans and less than 1% in the HDHP plan. Assumes 96% of retirees will remain in legacy plans with only 4% in the new benefit options. Assumes enrollment will be split 82% to Horizon and 18% to Aetna. Retirees Horizon Aetna Total PPO % 3.0% 67.0% PPO % 0.5% 15.9% PPO % 0.2% 1.0% PPO % 0.2% 0.9% HD % 0.0% 0.1% HMO % 13.3% 13.5% HMO % 0.4% 0.5% HMO % 0.8% 1.1% Total 81.6% 18.4% 100.0% 30

33 SHBP Plan Year 2015 Renewal Recommendation Exhibit 1C Actives May 2014 Enrollment Member + Spouse Parent + Single /Partner Family Child(ren) Total GOVERNMENT ACTIVES Medical Plans Horizon 10 PPO 9,041 5,044 12,197 3,802 30,084 Horizon 15 PPO 2,822 1,420 3,108 1,114 8,464 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 12,121 6,549 15,703 5,009 39,382 Aetna 10 PPO ,610 Aetna 15 PPO Aetna 1525 PPO Aetna 2030 PPO Aetna 2035 PPO Aetna HD Aetna HD Aetna Legacy HMO 1, ,523 1,103 6,087 Aetna 1525 HMO Aetna 2030 HMO Aetna 2035 HMO Aetna Total 2,249 1,200 3,469 1,457 8,375 Total 14,370 7,749 19,172 6,466 47,757 31

34 SHBP 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 GOVERNMENT RETIREES Medical Plans Horizon 10 PPO 8,027 6,738 2, ,669 Horizon 15 PPO 1,937 1, ,369 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 10,088 8,573 3, ,552 Aetna 10 PPO Aetna 15 PPO Aetna 1525 PPO Aetna 2030 PPO Aetna 2035 PPO Aetna HD Aetna HD Aetna Legacy HMO 1,507 1, ,664 Aetna 1525 HMO Aetna 2030 HMO Aetna 2035 HMO Aetna Total 1,881 1,807 1, ,038 Total 11,969 10,380 4,054 1,187 27,590 32

35 SHBP 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/ % 1.3% 5.8% 4/1/2013-3/31/ % 0.7% 11.2% Average 8.5% Aon Hewitt Trend Assumption 8.3% Horizon Early Retiree 4/1/2012-3/31/ % 1.7% 3.3% 4/1/2013-3/31/ % 0.7% 5.1% Average 4.2% Aon Hewitt Trend Assumption 8.3% Horizon Medicare Retiree 4/1/2012-3/31/ % 0.9% 1.1% 4/1/2013-3/31/ % 0.6% 1.0% Average 1.1% Aon Hewitt Trend Assumption 4.5% Aetna 4/1/2012-3/31/ % 1.4% 12.2% 4/1/2013-3/31/ % 0.6% 2.5% Average 7.3% Aon Hewitt Trend Assumption 7.0% Normalizing Adjustments Increase in number of covered children per employee. Change in U&C guidelines 1/1/2013. All claims normalized to NJ DIRECT10 plan design. 33

36 SHBP 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% 5.6% 4/1/2013-3/31/ % 0.0% 11.3% Average 8.5% Aon Hewitt Trend Assumption 9.0% Retiree Rx 4/1/2012-3/31/ % -3.3% 7.4% 4/1/2013-3/31/ % -2.3% 14.2% Average 10.8% Aon Hewitt Trend Assumption 11.5% Normalizing Adjustments: Retiree Rx Copays and OOP maximum increased on 1/1/2013 and 1/1/2014. Increase in number of covered children per employee. Larger than usual move to generic drugs in Increase in price discount 1/1/

37 SHBP Plan Year 2015 Renewal Recommendation Exhibit 3 Medical Large 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: Legacy HMOs have the highest percentage of shock claim costs at 23%. 20% 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,

38 SHBP Plan Year 2015 Renewal Recommendation Exhibit 4A Plan Year 2013 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 74,057 2, ,376 13,275 10, Incurred Medical claims $890,537,000 $29,835,000 $2,731,000 $575,789,000 $147,467,000 $119,131,000 $1,540,000 $926,000 $2,778,000 $2,391,000 $295,000 Capitation $14,756,000 $0 $0 $3,674,000 $1,081,000 $9,449,000 $32,000 $0 $18,000 $209,000 $6,000 Incurred Prescription Drug Claims $297,080,000 $8,747,000 $1,097,000 $184,715,000 $50,307,000 $46,850,000 $671,000 $230,000 $843,000 $1,013,000 $144,000 Prescription Drug Rebates ($42,209,000) ($1,236,000) ($153,000) ($26,319,000) ($7,160,000) ($6,595,000) ($94,000) ($31,000) ($119,000) ($143,000) ($20,000) EGWP Credits ($38,961,000) ($1,045,000) ($140,000) ($26,422,000) ($6,501,000) ($4,428,000) ($69,000) $0 ($135,000) ($107,000) ($7,000) ERRP Credits ($5,061,000) ($153,000) ($26,000) ($2,864,000) ($778,000) ($899,000) ($18,000) ($8,000) ($41,000) ($41,000) ($8,000) Administrative Fees $29,012,000 $741,000 $102,000 $17,320,000 $4,936,000 $5,181,000 $90,000 $42,000 $94,000 $131,000 $19,000 Total Cost $1,145,154,000 $36,889,000 $3,611,000 $725,893,000 $189,352,000 $168,689,000 $2,152,000 $1,159,000 $3,438,000 $3,453,000 $429,000 Total Premium $1,210,435,000 $35,843,000 $4,721,000 $756,621,000 $207,173,000 $179,207,000 $3,166,000 $1,488,000 $4,028,000 $4,292,000 $649,000 Gain (Loss) $65,281,000 ($1,046,000) $1,110,000 $30,728,000 $17,821,000 $10,518,000 $1,014,000 $329,000 $590,000 $839,000 $220,000 Employees Average Medical Subscribers 47,439 1, ,401 8,931 6, Incurred Medical claims $663,638,000 $23,782,000 $1,536,000 $438,318,000 $111,393,000 $82,087,000 $911,000 $674,000 $1,202,000 $1,485,000 $107,000 Capitation $11,038,000 $0 $0 $2,834,000 $854,000 $7,043,000 $22,000 $0 $9,000 $147,000 $2,000 Incurred Prescription Drug Claims $133,586,000 $3,858,000 $530,000 $82,316,000 $22,851,000 $22,232,000 $362,000 $163,000 $213,000 $401,000 $53,000 Prescription Drug Rebates ($17,754,000) ($513,000) ($70,000) ($10,940,000) ($3,037,000) ($2,955,000) ($48,000) ($22,000) ($28,000) ($53,000) ($7,000) 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 Administrative Fees $18,257,000 $597,000 $78,000 $10,084,000 $3,096,000 $4,056,000 $54,000 $33,000 $40,000 $88,000 $9,000 Total Cost $808,765,000 $27,724,000 $2,074,000 $522,612,000 $135,157,000 $112,463,000 $1,301,000 $848,000 $1,436,000 $2,068,000 $164,000 Total Premium $823,707,000 $24,485,000 $2,956,000 $516,530,000 $147,662,000 $121,045,000 $2,062,000 $1,103,000 $1,714,000 $2,214,000 $269,000 Gain (Loss) $14,942,000 ($3,239,000) $882,000 ($6,082,000) $12,505,000 $8,582,000 $761,000 $255,000 $278,000 $146,000 $105,000 Retirees Average Medical Subscribers 26, ,975 4,344 3, Incurred Medical claims $226,899,000 $6,053,000 $1,195,000 $137,471,000 $36,074,000 $37,044,000 $629,000 $252,000 $1,576,000 $906,000 $188,000 Capitation $3,718,000 $0 $0 $840,000 $227,000 $2,406,000 $10,000 $0 $9,000 $62,000 $4,000 Incurred Prescription Drug Claims $163,494,000 $4,889,000 $567,000 $102,399,000 $27,456,000 $24,618,000 $309,000 $67,000 $630,000 $612,000 $91,000 Prescription Drug Rebates ($24,455,000) ($723,000) ($83,000) ($15,379,000) ($4,123,000) ($3,640,000) ($46,000) ($9,000) ($91,000) ($90,000) ($13,000) EGWP Credits ($38,961,000) ($1,045,000) ($140,000) ($26,422,000) ($6,501,000) ($4,428,000) ($69,000) $0 ($135,000) ($107,000) ($7,000) ERRP Credits ($5,061,000) ($153,000) ($26,000) ($2,864,000) ($778,000) ($899,000) ($18,000) ($8,000) ($41,000) ($41,000) ($8,000) Administrative Fees $10,755,000 $144,000 $24,000 $7,236,000 $1,840,000 $1,125,000 $36,000 $9,000 $54,000 $43,000 $10,000 Total Cost $336,389,000 $9,165,000 $1,537,000 $203,281,000 $54,195,000 $56,226,000 $851,000 $311,000 $2,002,000 $1,385,000 $265,000 Total Premium $386,728,000 $11,358,000 $1,765,000 $240,091,000 $59,511,000 $58,162,000 $1,104,000 $385,000 $2,314,000 $2,078,000 $380,000 Gain (Loss) $50,339,000 $2,193,000 $228,000 $36,810,000 $5,316,000 $1,936,000 $253,000 $74,000 $312,000 $693,000 $115,000 36

39 SHBP Plan Year 2015 Renewal Recommendation Exhibit 4A Plan Year 2013 Aggregate Costs (2 of 2) 2030 HD 4000 HD 1500 Aetna PPO NJ DIRECT Aetna HMO Horizon HMO Aetna PPO Horizon PPO Aetna PPO Horizon PPO Employees and Retirees Average Medical Subscribers Incurred Medical claims $536,000 $2,362,000 $3,948,000 $579,000 $1,000 $132,000 $31,000 $65,000 Capitation $0 $16,000 $257,000 $13,000 $0 $1,000 $0 $0 Incurred Prescription Drug Claims $127,000 $675,000 $1,426,000 $232,000 $2,000 $0 $0 $1,000 Prescription Drug Rebates ($17,000) ($95,000) ($194,000) ($33,000) $0 $0 $0 $0 EGWP Credits $0 ($86,000) $0 ($21,000) $0 $0 $0 $0 ERRP Credits ($10,000) ($51,000) ($128,000) ($29,000) ($3,000) ($4,000) $0 $0 Administrative Fees $26,000 $76,000 $202,000 $39,000 $4,000 $6,000 $1,000 $2,000 Total Cost $662,000 $2,897,000 $5,511,000 $780,000 $4,000 $135,000 $32,000 $68,000 Total Premium $1,081,000 $3,637,000 $6,866,000 $1,397,000 $77,000 $154,000 $8,000 $27,000 Gain (Loss) $419,000 $740,000 $1,355,000 $617,000 $73,000 $19,000 ($24,000) ($41,000) Employees Average Medical Subscribers Incurred Medical claims $290,000 $720,000 $935,000 $72,000 $0 $30,000 $31,000 $65,000 Capitation $0 $6,000 $120,000 $1,000 $0 $0 $0 $0 Incurred Prescription Drug Claims $84,000 $88,000 $418,000 $16,000 $0 $0 $0 $1,000 Prescription Drug Rebates ($11,000) ($12,000) ($56,000) ($2,000) $0 $0 $0 $0 EGWP Credits NA NA NA NA NA NA NA NA ERRP Credits NA NA NA NA NA NA NA NA Administrative Fees $17,000 $27,000 $65,000 $8,000 $0 $2,000 $1,000 $2,000 Total Cost $380,000 $829,000 $1,482,000 $95,000 $0 $32,000 $32,000 $68,000 Total Premium $584,000 $1,093,000 $1,734,000 $186,000 $3,000 $32,000 $8,000 $27,000 Gain (Loss) $204,000 $264,000 $252,000 $91,000 $3,000 $0 ($24,000) ($41,000) Retirees Average Medical Subscribers NA NA Incurred Medical claims $246,000 $1,642,000 $3,013,000 $507,000 $1,000 $102,000 NA NA Capitation $0 $10,000 $137,000 $12,000 $0 $1,000 NA NA Incurred Prescription Drug Claims $43,000 $587,000 $1,008,000 $216,000 $2,000 $0 NA NA Prescription Drug Rebates ($6,000) ($83,000) ($138,000) ($31,000) $0 $0 NA NA EGWP Credits $0 ($86,000) $0 ($21,000) $0 $0 NA NA ERRP Credits ($10,000) ($51,000) ($128,000) ($29,000) ($3,000) ($4,000) NA NA Administrative Fees $9,000 $49,000 $137,000 $31,000 $4,000 $4,000 NA NA Total Cost $282,000 $2,068,000 $4,029,000 $685,000 $4,000 $103,000 NA NA Total Premium $497,000 $2,544,000 $5,132,000 $1,211,000 $74,000 $122,000 $0 $0 Gain (Loss) $215,000 $476,000 $1,103,000 $526,000 $70,000 $19,000 NA NA 37

40 SHBP 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 76,234 2, ,288 12,987 9, Incurred Medical claims $996,669,000 $37,200,000 $4,911,000 $649,973,000 $154,093,000 $119,661,000 $2,581,000 $1,580,000 $4,486,000 $3,237,000 $492,000 Capitation $15,739,000 $0 $0 $4,542,000 $1,103,000 $9,291,000 $35,000 $0 $27,000 $266,000 $6,000 Incurred Prescription Drug Claims $339,987,000 $11,423,000 $1,916,000 $212,198,000 $55,704,000 $49,257,000 $887,000 $444,000 $1,850,000 $1,414,000 $176,000 Prescription Drug Rebates ($32,057,000) ($1,077,000) ($180,000) ($20,021,000) ($5,255,000) ($4,635,000) ($83,000) ($41,000) ($175,000) ($133,000) ($16,000) EGWP Credits ($37,316,000) ($1,103,000) ($166,000) ($25,264,000) ($6,104,000) ($4,157,000) ($70,000) $0 ($190,000) ($116,000) ($11,000) ERRP Credits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Administrative Fees $43,368,000 $1,374,000 $209,000 $26,569,000 $7,178,000 $6,607,000 $140,000 $85,000 $190,000 $183,000 $26,000 Total Cost $1,326,390,000 $47,817,000 $6,690,000 $847,997,000 $206,719,000 $176,024,000 $3,490,000 $2,068,000 $6,188,000 $4,851,000 $673,000 Total Premium $1,324,534,000 $45,678,000 $6,736,000 $838,654,000 $214,604,000 $178,811,000 $3,662,000 $2,139,000 $6,114,000 $4,733,000 $685,000 Gain (Loss) ($1,856,000) ($2,139,000) $46,000 ($9,343,000) $7,885,000 $2,787,000 $172,000 $71,000 ($74,000) ($118,000) $12,000 Employees Average Medical Subscribers 47,991 1, ,210 8,513 6, Incurred Medical claims $728,280,000 $27,578,000 $3,360,000 $489,249,000 $113,754,000 $78,409,000 $1,735,000 $1,199,000 $1,963,000 $1,540,000 $208,000 Capitation $12,338,000 $0 $0 $3,776,000 $925,000 $7,269,000 $27,000 $0 $15,000 $164,000 $3,000 Incurred Prescription Drug Claims $147,060,000 $4,715,000 $872,000 $92,455,000 $24,544,000 $21,702,000 $402,000 $316,000 $478,000 $490,000 $56,000 Prescription Drug Rebates ($13,516,000) ($433,000) ($80,000) ($8,498,000) ($2,256,000) ($1,995,000) ($37,000) ($29,000) ($44,000) ($45,000) ($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 Administrative Fees $30,376,000 $1,132,000 $171,000 $17,946,000 $5,042,000 $5,224,000 $95,000 $71,000 $96,000 $128,000 $14,000 Total Cost $904,538,000 $32,992,000 $4,323,000 $594,928,000 $142,009,000 $110,609,000 $2,222,000 $1,557,000 $2,508,000 $2,277,000 $276,000 Total Premium $896,633,000 $31,073,000 $4,492,000 $572,279,000 $151,312,000 $116,946,000 $2,449,000 $1,657,000 $2,697,000 $2,417,000 $302,000 Gain (Loss) ($7,905,000) ($1,919,000) $169,000 ($22,649,000) $9,303,000 $6,337,000 $227,000 $100,000 $189,000 $140,000 $26,000 Retirees Average Medical Subscribers 28, ,078 4,474 3, Incurred Medical claims $268,389,000 $9,622,000 $1,551,000 $160,724,000 $40,339,000 $41,252,000 $846,000 $381,000 $2,523,000 $1,697,000 $284,000 Capitation $3,401,000 $0 $0 $766,000 $178,000 $2,022,000 $8,000 $0 $12,000 $102,000 $3,000 Incurred Prescription Drug Claims $192,927,000 $6,708,000 $1,044,000 $119,743,000 $31,160,000 $27,555,000 $485,000 $128,000 $1,372,000 $924,000 $120,000 Prescription Drug Rebates ($18,541,000) ($644,000) ($100,000) ($11,523,000) ($2,999,000) ($2,640,000) ($46,000) ($12,000) ($131,000) ($88,000) ($11,000) EGWP Credits ($37,316,000) ($1,103,000) ($166,000) ($25,264,000) ($6,104,000) ($4,157,000) ($70,000) $0 ($190,000) ($116,000) ($11,000) ERRP Credits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Administrative Fees $12,992,000 $242,000 $38,000 $8,623,000 $2,136,000 $1,383,000 $45,000 $14,000 $94,000 $55,000 $12,000 Total Cost $421,852,000 $14,825,000 $2,367,000 $253,069,000 $64,710,000 $65,415,000 $1,268,000 $511,000 $3,680,000 $2,574,000 $397,000 Total Premium $427,901,000 $14,605,000 $2,244,000 $266,375,000 $63,292,000 $61,865,000 $1,213,000 $482,000 $3,417,000 $2,316,000 $383,000 Gain (Loss) $6,049,000 ($220,000) ($123,000) $13,306,000 ($1,418,000) ($3,550,000) ($55,000) ($29,000) ($263,000) ($258,000) ($14,000) 38