2015-16 HEALTH PLAN RECOMMENDATIONS & RETIREMENT … · Medicare Advantage Cigna-HealthSpring Medicare Advantage Why these plans • Offers the same coverage as Original Medicare

2015-16 HEALTH PLAN RECOMMENDATIONS & RETIREMENT

BENEFITS

1

SCS Board Work Session

May 19, 2015

Dorsey E. Hopson II, Esq.

Trinette Small, Chief of Human Resources Loretta Poindexter, Benefits Manager

2

Retiree Demographics

17 77

517

1,675

2,451

1,912

1,377

1,079

704

Number of Retirees by Age Band

<50

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

8,415

622

144 112

86 430

Number of Retirees by State

Tennessee

Mississippi

Arkansas

Florida

Texas

All Other

5,490

509 491

392

301

182

173

92 85 86

2,008

Number of Retirees by City Memphis TN

Cordova TN

Germantown TN

Collierville TN

Millington TN

Arlington TN

Olive Branch MS

Southaven MS

Lakeland TN

Eads TN

Other

Retiree Enrollment

PRE-65 POST-65 TOTAL RETIREES 2,286 7,523 9,809

SPOUSE 810 1,050 1,860

TOTAL 3,096 8,573 11,669

3

2015 – 2016 Medical Insurance Recommendations (Active/Pre-65 Plan & Post-65 Plan)

Financial Implications

Tobacco surcharge • Require a $50 per month surcharge if an employee/retiree has used tobacco six

months prior to open enrollment • Offer a smoking cessation program through Cigna

$1.0M Savings (District Savings vs. Status Quo -12

months)

OAPIN plan changes • Implement a $150 (employee only) / $300 (employee + 1) / $450 (family) deductible

to the OAP In-Network Plus plan*

$0.8M Savings (District Savings vs. Status Quo- 12

months)

PHS+ Program • Implement Cigna’s PHS+ program and include the savings associated with this plan

to further reduce costs

$290,000 Savings (District Savings vs. Status Quo -12

months)

Spouse-Out • Eliminate retiree spouse coverage Jan 2016 (since coverage is available through public and

private exchanges regardless of individual health situation)

• $2.7M (Pre-65) Savings • $3.0M (Post- 65) Savings

(District Savings vs. Status Quo -12 months)

50% Pre-65 Contribution change $3.3M Savings (District Savings vs. Status Quo -12

months)

Offer Cigna’s High Option Medicare Advantage (HMO-like) plan to Post-65 retirees • Assuming 10% of population enrolls under the current 70% District subsidy – Savings

estimated at $400,000

$400,000 Savings (District Savings vs. Status Quo -12

months)

2015-16 Medical Plan Recommendations

4

BUILDING SOLUTIONS TOGETHER FOR POST-65 RETIREES Medicare Advantage HMO plans with Part D prescription drug coverage.

Medicare Advantage

Cigna-HealthSpring

Medicare Advantage

Why these plans

• Offers the same coverage as Original Medicare (Part A and Part B) and provides additional coverage, in one simple plan

• Medicare Advantage HMO plans maximize savings through networks of health care professionals

• Medicare Advantage HMO-POS plans add the flexibility to access out-of-network care

• Integrated Part D prescription drug coverage is also available

• Fully insured plan limits your risk

• Premium is reduced by government contribution

Why Cigna-HealthSpring

• Extensive network of high performance health care

professionals and pharmacies

• Programs designed to reward doctors for quality rather than

volume, by focusing on quality preventive care and

improved clinical outcomes

• Access to LivingWell centers featuring multidisciplinary care

teams – including doctors, nurses, case managers and

pharmacists – who work together to deliver coordinated care

for patients

• Promotes healthy living through a variety of health

and wellness programs

• Competitive pricing controls costs for you

• Predictable costs for your retirees

5

OPTION OPEB REDUCTION AMOUNT

IMPACT

Life Insurance- No longer offer to Employees who retire after July 1, 2015

$42M Future Retirees



Medical Insurance/Dependent coverage- No longer offer retiree dependent coverage as of January 1, 2016

$166M Current & Future Retirees

Medical Insurance/Dependent coverage- No longer offer to Employees who retire after July 1, 2015


Medical Insurance/Dependent Coverage- No longer offer to Employees who retire after July 1, 2020


Medical Insurance- No longer offer to Employees who retire after July 1, 2015




Medical Insurance Premium- Change District contribution for pre-65 medical premium to 50%


Medical Insurance Premium- Change District contribution for retiree medical premiums; provide $10 per month per year of service


Options to reduce SCS OPEB Liability

6

DISTRICT RECOMMENDATIONS OPEB REDUCTION AMOUNT

IMPACT

No longer offer retiree medical or life insurance to Employees hired after July 1, 2015

$0 Future Retirees



Medical Insurance/Dependent coverage- No longer offer retiree dependent coverage as of January 1, 2016




Medical Insurance Premium- Change District contribution for retiree medical premium; provide $10 per month per year of service


Total OPEB Reduction $871M

OPEB Liability Reduction Recommendations

7

State of TN Retiree Benefits

State Requirements: • The majority of employees must agree (vote) to the health plan and a letter

from the Superintendent stating the majority agrees must be submitted (Signed Memorandum of Understanding)

• A 60-day notice is required • The Local Education agency agrees to a two-year participation commitment • State retirement benefits are only available to employees who previously

covered under the State health insurance plan • SCS retirees are eligible for the State Medicare Supplement Plan • SCS could chose to contribute to the premiums or the retiree could pay the full

cost • OPEB would be based on District’s contribution to the State retiree health

premium

8

State of TN Retiree Benefits

Pre-65 (monthly total

premium)

STATE OF TN BCBST (WEST)

STATE OF TN CIGNA OAP

(WEST)

SCS (2015-16)

Partnership PPO OAP-IN

Retiree Only $279.39 $317.39 $593.91 ($207.87)

Retiree + Spouse (1) $579.92 $619.92 $1,187.80 ($463.24)

Family $773.22 $813.22 $1,656.98 ($646.22)

Standard PPO BASIC

Retiree Only $322.39 $342.39 $555.49 ($149.98)

Retiree + Spouse (1) $629.92 $669.92 $1,110.97 ($366.62)

Family $823.22 $863.22 $1,549.81 ($511.44)

Medicare Supplement-Post 65 Example monthly premium for retiree with 30 years of service:

• State of TN: $86.68 (Does not include Rx coverage) • SCS: $52.60 (Total cost is $344.26 & includes Rx coverage)

Notes:

9

Affordable Care Act (ACA)

Example of Health Plan coverage available under ACA: Coverage for a 60 year old, with an annual income of $40,000

Cost: • 3 plans less than $200/month • 11 plans less than $300/month • 30+ plans less than $400/month

Plan Types • 16 Bronze Plans • 31 Silver Plans (Comparable to SCS Choice Fund HRA Plan) • 10 Gold Plans (Comparable to SCS Basic Plan) • 8 Platinum Plans (Comparable to SCS OAP-IN Plan)

Enrollment • 2015 Open Enrollment Dates: October 1, 2015 – December 12, 2015 • Effective Date: January 1, 2016

10

Active Employee Benefits

11

2014-15 Plan Year Highlights & Future Goals

Plan Highlights • Plan spend in the current period was $325 PMPM for Active Employees, 21% lower than the norm • Plan spend in the current period was $513 PMPM for Retirees under 65, 24% greater than the norm • Network penetration and discounts are above the norm at 96.1% and 61.9% vs. 93.1% and 56.0% respectively • Average member age is 44.2 years, 22.5% higher than the norm of 36.1 years • The majority of population is female (63.3%) compared to the norm (59.4%)

Utilization & Rx Highlights • ER utilization was 11% greater than the norm; steerable visits were 21% above norm • Rx drug cost was $127 PMPM, 27% higher than norm of $100

• Large diabetic population (insulin spend is 168% above the norm; oral diabetic Rx spend is 135% above norm)

• Large portion of population with Hypertension (blood pressure Rx spend is 78% above norm)

Health, Wellness, & Engagement Highlights • Only 206 members completed a Health Assessment in the current period, 8.7% with biometrics • 21.9% of the population was identified with a chronic condition; 7.5% are engaged in an ongoing way

Goals & Strategy (1-3 Year Plan) • More intense management of chronic conditions (25% reduction in percentage of claims/plan spend) • 15 % engagement for population that require outreach (through incentives)-currently 7.2% • 80% HRA participation (through incentives) • Address low ER copay (utilization is 11% higher than norm)

12

Medical Plan Cost Breakdown

2014-2015 Total Plan Cost: $148M 2015-2016 Total Plan Cost: $159M

2015-16 Projected Increase = 7%

13

2015 – 2016 Medical Insurance Recommendations (Active Employee Plans)


Tobacco surcharge • Require a $25 per pay surcharge if an employee has used tobacco six

months prior to open enrollment • Offer a smoking cessation program through Cigna using annual

Wellness Funds offered in their new contract

$1.0M Savings (District Savings vs.

Status Quo -12 months)

OAPIN plan changes • Implement a $150 (employee only) / $300 (employee + 1) / $450 (family)

deductible to the OAP In-Network Plus plan*


Status Quo- 12 months)

PHS+ Program • Implement Cigna’s PHS+ program and include the savings associated with

this plan to further reduce costs

$290,000 Savings (District Savings vs.


Health Risk Assessment (HRA) • Provide incentives for Employees to complete Health Risk Assessment &

age-appropriate biometric screenings prior to open enrollment using Cigna annual Wellness Funds offered in their new contract

$125,000 Cigna provided Wellness Fund

Telehealth • Offer Telehealth services to Employees offered as part of new Cigna

contract

$72,000 Cigna provided service

2015-16 Medical Plan Recommendations

14

2015 – 2016 Medical Insurance Considerations (Active Employee Plans)


RFP-Related Plan Changes • Lower CIGNA Administrative Services Only (ASO) fee as a

result of RFP



SCS Health Clinics • Include $250,000 credit toward SCS’ onsite clinics to

reduce expense to health plan (Annual cost for SCS onsite clinic = $1.3M)

$250,000 Cigna provided Fund

Affordable Care Act (ACA) • Budget approximately $650,000 for costs associated with

the ACA (30-hour tracking, PCORI, and Transitional Reinsurance fees)

$650,000 Cost

2015-16 Medical Plan Considerations

15

Proposed Changes -Plan Designs Effective 9/1/2015

Medical Plan Designs

Plan OAP In-

Network Plus OAP Basic Option Choice Fund HRA Option Fund (excludes deductible)

Employee N/A N/A $500

Employee + 1 N/A N/A $750

Family N/A N/A $1,000

Network Network Out-of-Network Network Out-of-Network

Annual Deductible

Employee $150 $500 $1,000 $1,500 $3,000

Employee + 1 $300 $750 $1,500 $2,250 $4,500

Family $450 $1,000 $2,000 $3,000 $6,000

Coinsurance 100% 80% 50% 80% 50%

Out of Pocket Maximum (includes deductible)

Employee $2,500 $4,000 $12,000 $4,500 $13,500

Employee + 1 $5,000 $8,000 $24,000 $9,000 $27,000

Family $7,500 $12,000 $36,000 $12,700 $38,100

Lifetime Plan Maximum Unlimited Unlimited Unlimited

Hospital

Inpatient $500 copay* 80%* 50%* 80%* 50%*

Outpatient $250 copay* 80%* 50%* 80%* 50%*

Emergency Room $150 copay* $150 copay $150 copay 80%* 80%*

Physician Office Visits

PCP $20 copay* $25 copay 50%* 80%* 50%*

Specialist $35 copay* $35 copay 50%* 80%* 50%*

Lab and X-Ray 100%* 80%* 50%* 80%* 50%*

Preventive Benefits 100% 100% Not covered 100% Not covered

Behavioral Health & Substance Abuse

Inpatient $500 copay* 80%* 50%* 80%* 50%*

Outpatient $35 copay* $35 copay 50%* 80%* 50%*

Prescription Drugs

Deductible None None $100 per person None $100 per person

Retail (30 days)

Generic $10 copay $10 copay 50%* $10 copay 50%*

Brand (Formulary) 20% ($20,$50) 20% ($20,$50) 50%* 20% ($20,$50) 50%*

Brand (Non-Formulary) 30% ($45,$75) 30% ($45,$75) 50%* 30% ($45,$75) 50%*

Mail Order (90 days) 3 x Retail 3 x Retail Not covered 3 x Retail Not covered

Notes: • (*) denotes after

deductible

• All cost sharing (copay and coinsurance) is subject to the out of pocket maximum as required by ACA

• Changes from Status Quo are highlighted.

16

Projected Enrollment

2014-15 20-Pay Period Rates



Projected Enrollment

Total Rate

Employee

Cost

District Cost

Projected Enrollmen

t

Total Rate

Employee Cost

District Cost

Total Rate

Employee Cost

District Cost

OAP-IN

EE only 3,298 $336.87 $114.73 $222.14 3,405 $354.19 $123.97 $230.22 $296.95

$103.94 $193.01

EE +1 1,133 $673.73 $262.29 $411.44 1,054 $708.37 $276.26 $432.11 $593.90

$231.62 $362.28

Family 1203 $939.86 $365.89 $573.97 1,220 $988.18 $385.39 $602.79 $828.49

$323.11 $505.38

OAP -BASIC

EE only 2587 $308.87 $86.74 $222.14 1,768 $331.28 $89.45 $241.83 $277.75

$74.99 $202.76

EE +1 650 $617.75 $206.31 $411.44 480 $662.55 $218.64 $443.91 $555.49

$183.31 $372.18

Family 610 $861.76 $287.79 $573.97 565 $924.77 $305.01 $619.26 $774.91

$255.72 $519.19

CHOICE HRA

EE only 513 $276.14 $54.00 $222.14 664 $300.98 $55.20 $245.78 $252.35

$46.00 $206.35

EE +1 151 $552.28 $140.83 $411.44 161 $601.96 $150.49 $451.47 $504.69

$126.17 $378.52

Family 215 $770.42 $196.46 $573.97 235 $839.74 $209.93 $629.81 $704.04

$176.01 $528.03

2015-16 Medical Plan Costs

17

State of TN Benefits

STATE OF TN BCBST (WEST)

STATE OF TN CIGNA OAP (WEST)

SCS

Partnership PPO OAP-IN

EE Only $560.71 $540.71 $593.91

EE + Children $932.18 $892.18 N/A

EE + Spouse $1,094.39 $1,054.39 $1,187.80

Family $1445.85 $1,405.85 $1656.98

Standard PPO BASIC

EE Only $585.71 $565.71 $555.49

EE + Children $957.18 $917.18 N/A

EE + Spouse $1,144.39 $1,104.39 $1,110.97

Family $1,495.85 $1,455.88 $1,549.81

State Requirements: • The majority of employees must agree (vote) to the health plan and a letter from the

Superintendent stating the majority agrees must be submitted (Signed Memorandum of Understanding)

• A 60-day notice is required • The Local Education agency agrees to a two-year participation commitment

18

Other Active Employee Benefits

• Dental Benefits- no plan design changes; finalized rates will be available June 2014 (expected increase 2%-5%)

• Vision Benefits – no plan design changes or rate increases

• Life Insurance – under a 3-year rate guarantee with MetLife until 8/31/2016

Documents

2015-16 HEALTH PLAN RECOMMENDATIONS & RETIREMENT … · Medicare Advantage Cigna-HealthSpring Medicare Advantage Why these plans • Offers the same coverage as Original Medicare