Campus Forum November 15, 2016 Agenda Introductions MTIA Dedicated Team Current Plan Design Benchmarking Data Challenges and Considerations Specific Concerns Questions 2
M&T Insurance Agency, Inc. Dedicated Service Team 3
College Goals Considerations for future benefit decisions Maintain Exceptional Benefits Budgetary Constraints of 3-4% Manage ER and EE Cost Share Maintain acceptable level of risk for funding method Recruiting & Retention Maintain control of health plan costs & data Compliance Other 4
Health Insurance 101 Components Health Insurance Premiums Administration Claims Cost of running the plan Government taxes and fees Dollars reimbursed to physicians, labs, pharmacy's and hospitals for services How can the cost of these components be controlled Competition Renegotiate the components of Cost Administration Claims 5
Definitions High Deductible Health Plan (HDHP): A type of health insurance plan that, compared to traditional health insurance plans, requires greater out-of-pocket spending with lower monthly premiums. An HSA-qualifying HDHP must have a deductible of at least $1,250 for single coverage and $2,500 for family coverage. The plan must also limit the total amount of out-of-pocket max cost-sharing for covered benefits each year to $6,250 for single coverage and $12,500 for families. Deductible: A specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Out-of-Pocket Maximum Co-payment: A specific charge that your health insurance plan may require that you pay for a specific medical service or supply, also referred to as a "co-pay. Coinsurance: The amount that you are obliged to pay for covered medical services after you've satisfied any co-payment or deductible required by your health insurance plan. Coinsurance is typically expressed as a percentage of the charge or allowable charge for a service rendered by a healthcare provider. 6
Definitions cont d In-Network: allowed amount for covered health care services to providers who contract with your health insurance or plan. In-network services usually costs you less than out-of-network co-insurance. Out-of-Network: allowed amount for covered health care services to providers who do not contract with your health insurance or plan. Out-of-network services usually costs you more than in-network co-insurance. Out-Of-Pocket Maximum: An annual limitation on all cost-sharing for which patients are responsible under a health insurance plan. This limit does not apply to premiums, balance-billed charges from out of network health care providers or services that are not covered by the plan. 7
Definitions cont d HSA (Health Savings Account): A tax advantaged savings account to be used in conjunction with certain high-deductible (low premium) health insurance plans to pay for qualifying medical expenses. Tax-free contributions may be made by employee and/or employer. Funds remain in the account from year to year and may be invested. Partially Self-Funded- The term used to describe a group healthcare option midway between traditional group insurance and self-funding your organization s health insurance. Partial self-insuring or partial self-funding is an option and strategy designed to realize the greatest savings on health insurance while keeping the organization, and its staff, as safe from risk as possible. 8
Affordable Care Act (ACA) Requirements All medical plans must include the following services that are not subject to the deductible Preventive Services- All medical plans must include the following services that are not subject to the deductible s Annual Physical s Well Child Visit s Immunizations s Prostate Test s Contraceptives s Colonoscopy s Prenatal & Post-partum Visits s Mammogram s Pap Smear s Cholesterol Test Additional Requirements s s s Bone Mineral Density Test Dependents to age 26 regardless of student status No Annual Limits 9
Current Plan Design Blue Cross Blue Shield of WNY Point Of Service (POS) 206 Deductible Coinsurance In Network $0 Out of Network $1,000/$2,000 In Network 0% Out of Network 25% Embedded Out of Pocket Max In Network $6,350/$12,700 Out of Network $5,000/$10,000 Primary and Specialist $25 Preventive Services $0 Inpatient Service $500 Outpatient Service $75 Emergency Room/Ambulance $50 Urgent Care $35 Durable Medical 50% Prosthetic & Orthotics 20% Wellness Rider $250 Prescription $10/$50/$100 10
Copay Trend Leveraging Medical Sample medical service cost $75 with $25 copay $120 $100 $80 $60 $40 $20 12% Employer Cost Trend 8% Total Cost Trend 0% Member Copay Trend Employer Cost Copay Employer Trend Total Cost Trend Copay Trend $- Year 1 Year 2 Year 3 Year 4 Year 5 Daemen s trend rate is greater than overall healthcare cost trends due to static copay levels. 11
Current Employee / Employer Contributions Annual Premiums: Single $6,402 and Family $16,668 Salary Tier Annual Employee Single Contribution Annual Employer Single Contribution Annual Employee Family Contribution Annual Employer Family Contribution Under $25k $262.32 (5%) $6,139.68 (95%) $419.76 (2%) $16,248.24 (98%) $25k - $40k $865.68 (14%) $5,536.32 (86%) $1,521.60 (9%) $15,146.40 (91%) $40k - $60k $1,442.88 (23%) $4,959.12 (77%) $2,623.20 (16%) $14,044.80 (84%) $60k - $80k $1,626.48 (25%) $4,775.52 (75%) $2,885.52 (17%) $13,782.48 (83%) Over $80k $1,731.36 (27%) $4,670.64 (73%) $3,279.12 (20%) $13,388.88 (80%) 12
Benchmarking Analysis Contribution Strategy Total Annual Employer Contribution $16,000.00 $14,000.00 $12,000.00 $10,000.00 $8,000.00 $6,000.00 $4,000.00 Daemen College WNY Colleges National Benchmark $2,000.00 $- Single Family Daemen College s employer contributions are comparable to the national POS/PPO benchmark for single plans and slightly higher than the benchmark for family plans. Based on Kaiser Family Foundation and Health Research & Educational Trust 2015 Employer Health Benefits Survey; WNY Colleges is based on data obtained by M&T Insurance Agency, Inc. and averaged to de-identify 13
Benchmarking Analysis Contribution Strategy Total Annual Employee Contribution $5,000.00 $4,500.00 $4,000.00 $3,500.00 $3,000.00 $2,500.00 $2,000.00 $1,500.00 $1,000.00 Daemen College WNY Colleges National Benchmark $500.00 $- Single Family Daemen College s employee contributions are comparable to the national POS/PPO benchmark for single plans but significantly lower than the benchmark for family plans. Based on Kaiser Family Foundation and Health Research & Educational Trust 2015 Employer Health Benefits Survey; WNY Colleges is based on data obtained by M&T Insurance Agency, Inc. and averaged to de-identify 14
Benchmarking Analysis Plan Design Plan Deductibles $3,500.00 $3,000.00 $2,867 $2,500.00 $2,000.00 $1,500.00 $1,433 $1,604 Daemen College WNY Colleges $1,000.00 $500.00 $729 $0 $0 National Benchmark $- Single Comparison based on majority of membership in Daemen College s POS 206 Plan 1. The Daemen College POS 206 Plan 1 option does not include a deductible. Family Based on Kaiser Family Foundation and Health Research & Educational Trust 2015 Employer Health Benefits Survey; WNY Colleges is based on data obtained by M&T Insurance Agency, Inc. and averaged to de-identify, not all members are in deductibles but all offer at least one plan with deductible 15
Benchmarking Analysis Plan Expenses Total Annual Premium $20,000.00 $18,000.00 $16,000.00 $14,000.00 $12,000.00 $10,000.00 $8,000.00 $6,000.00 Daemen College WNY Colleges National Benchmark $4,000.00 $2,000.00 $- Single Family Daemen College s total annual premium for POS 206 is comparable to the national benchmark for single and slightly lower for family plans. Based on Kaiser Family Foundation and Health Research & Educational Trust 2015 Employer Health Benefits Survey; WNY Colleges is based on data obtained by M&T Insurance Agency, Inc. and averaged to de-identify 16
Current Healthcare Cost Trends Nationwide Actual and Projected Trends based on national benchmark from 2017 Segal Trend Survey Comparison of Selected Cost Trend Rates (2014-2015 Actual and 2016 Projected) for Actives and Retirees Under Age 65 12.00% 10.00% 10.7% 11.1% 11.3% Pharmacy 8.00% 6.00% 6.5% 6.8% 7.8% Medical 4.00% 2.00% 3.5% 3.5% 3.5% Increase in Tuition (Daemen College actual increase is slightly higher than national) 0.00% 2014 2015 2016 17
Healthcare Cost Drivers What causes healthcare costs to increase at such high rates? 1. Specialty Drugs 2. Inflation on Cost of Services 3. Disease Prevalence a) Example: Higher prevalence of Cancer and Multiple Sclerosis in WNY 4. Utilization Patterns a) Emergency Room vs. Urgent Care vs. Primary Care Physician 5. Demand for Services a) Example: Television commercials 6. Demographics Age & Gender 7. New Technology & Services 8. Inefficiencies in Healthcare System a) Example: Repeated or Unnecessary Testing 9. Regulation & Litigation 18
Daemen College Demographics Age Breakdown % of Employees (Not Including Retirees Over Age 65) Enrolled in Health Plan by Age Band 19
Current Healthcare Cost Trends Actual and Projected National Trends based on 2017 Segal Trend Survey Medical and Pharmacy Cost Trends 12.00% 10.7% 11.1% 11.3% 11.6% 10.00% 8.00% 7.6% 6.9% 8.0% 7.5% Medical (POS) 6.00% RX 4.00% 2.00% 0.00% 2014 2015 2016 Projected 2017 Projected 20
Daemen College Budget Projection Based on Current Trends Expected claims forecasted out to 6 years based on 3 years of data provided. Premium increase is projected at 12.64% per year. $5,500,000 Claims Expense Premiums Self Funded Costs $5,298,248 $5,000,000 $4,769,479 $4,500,000 $4,238,599 $4,000,000 $3,500,000 $3,125,806 $3,000,000 $2,953,727 $2,500,000 $2,454,627 Actual Estimated $2,000,000 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 Period *Self Funded Costs represent partial self funding with stop loss insurance coverage. 21
Healthcare Cost Management What can we do to control rising healthcare costs for Daemen College? Disease Management Risk Tolerance Wellness Programs Retiree Benefits Plan Design Funding Method Telemedicine Employee Education EE Contributions Network Consumerism Communication Tier Structure Carrier/TPA Lifestyle Changes Value Based Networks M&T Support 22
Plan Design Examples For Illustration Only Sample Plan Design Option A Deductible: $500 single; $1,000 family Coinsurance: 80% paid by plan; 20% paid by member Out-of-Pocket Maximum: $2,000 single; $4,000 family Copays: $25 Primary Care Physician visit (after deductible) $30 Specialist visit (after deductible) $7 / $50 / $100 Prescription Drugs Annual savings on claims portion of plan premium = 4% Approximate annual dollar savings of $205 for Single and $533 for Family 23
Plan Design Examples For Illustration Only Sample Plan Design Option B Deductible: $1,500 single; $3,000 family Coinsurance: 80% paid by plan; 20% paid by member Out-of-Pocket Maximum: $3,500 single; $7,000 family Copays: $10 / $50 / $100 Prescription Drugs (after deductible) Annual savings on claims portion of plan premium = 14% Approximate annual dollar savings of $717 for Single and $1,867 for Family 24
Funding Arrangement Understanding the Risk vs. Reward Relationship Financial Spectrum Fully Insured Contingent Premium Minimum Premium Self-Funded with Stop Loss 25
Timeline 26
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Thank you. Kevin B. Gannon M&T Insurance Agency, Inc. Vice President Group Benefits 285 Delaware Ave. Suite 4000 Buffalo, NY 14202 716 651 4258 (c) 716 870 4260 (F) 716 651 4778 kgannon@mtb.com mtb.com