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Page 1
Overview of Self-Funded Health Plans
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McNeary, Inc.
No premium taxes on the medical premiums
Lower administrative expenses
Greater flexibility in benefit design
Employers retain any savings that occur when
actual claims are lower than those projected
(fully-insured plans, the insurer retains those
savings)
What are the advantages to a Self-funded plan?
Page 2McNeary, Inc.
Enrollment refers to the number of Employees who are
enrolled in the health plan
Covered Lives or Covered Members refers to the
employees + dependents who are enrolled in the health
plan
Stop Loss coverage insurance purchased to cover large
unexpected single claims that cost more than a specified
amount ($175,000 Schools/$200,000 City) on an
individual/member.
Utilization rates the amount of medical services used by
employees in a specific period
Vocabulary Terms:
Page 3McNeary, Inc.
Third Party Administrator (TPA) is a company that
receives medical invoices, reviews them and pays them on
behalf of a company
Third Party Administrator with Carrier is a Health
Insurance Network company that provides TPA services
for a fee
Administrative fees are the per employee/per month fees
charged by the TPA
Self Funded means that SPS/City pays for the actual cost
of medical claims and any associated administrative fees.
Vocabulary Terms:
Page 4McNeary, Inc.
Components of Self-Funding
Page 5McNeary, Inc.
Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging Pharmacy Laboratory Surgery $14,507,621
Stop Loss Coverage ($175,000) $ 813,056
Administrative Fees $ 376,131
Prescription Drug Credit $ (199,924)
State Tax $ 18,294
Total Cost $15,515,178
Employee Usage drives cost of claims
Risk of unexpected cost minimized$21.41 PE/PM
$(11.38) PE/PM
2.25% Stop Loss
Ways to contain costs…..
Page 6McNeary, Inc.
Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging Pharmacy Laboratory Surgery
$14,507,621
Stop Loss Coverage ($175,000) $ 813,056
Administrative Fees $ 376,131
Total Cost Estimate $15,515,178
Involve Employeesin their health care (Wellness)
Increase Risk
Negotiate with vendor
Change Plans design, shift costs, and manage disease costs
Page 7
SPS Demographics and Trends
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McNeary, Inc.
Page 8McNeary, Inc.
8 Year History of Health Benefit Costs
*Affordable health care began 2012-2013 plan year*Changes to benefits made (shift in costs) 2013-2014 plan year*Enrollment change of 68 employees contributed to lower increases
6% 14%
61% Increase
SPS Enrollment Trends
Page 9McNeary, Inc.
Average Employees 1566 1488
Expense per Employee $8,946 $8,605
Average Members 2719 2651 -2.5%
Expense per Member $5,152 $4,830 -6.3%
Average # Employees 1,566 1,488 -5.0%
Average # Members 2,719 2,651 -2.5%
Average # Members/policy 1.74 1.78 2.6%
Average Age Employees 46.93 47.58 1.4%
Average Age Members 37.54 37.92 1.0%
Table 1
Table 2
Table 3
Note: Expense per employees/members only includes cost of claims not total costs
2013-2014 2014-2015
2013-2014 2014-2015
2013-2014 2014-2015
SPS Trends
Page 10McNeary, Inc.
Site of Care 2013-2014 % of Total 2014-2015 % of Total % Change
In-patient Facility $2,377,862 17.0% $2,482,970 19.4% 4.4%
Out-patient Facility $4,130,727 29.5% $3,254,611 25.4% -21.2%
Inpatient Professional $ 421,387 3.0% $ 446,283 3.5% 5.9%
Outpatient Professional $4,129,105 29.5% $3,301,546 25.8% -20.0%
Pharmacy $2,892,812 20.6% $3,262,328 25.5% 12.8%
Total $14,008,781 100.0% $12,803,642 100.0% - 8.6%
Note: enrollment numbers dropped 68 employees during this time period
SPS top most Manageable Medical Conditions
Page 11McNeary, Inc.
Medical Condition
Asthma
Cerebrovascular disease
Chronic Respiratory disease
Coronary Artery disease
Depression
Diabetes
High Cholesterol
Hypertension (High Blood Pressure)
Rheumatoid Arthritis
Page 12McNeary, Inc.
Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging Pharmacy Laboratory Surgery $14,507,621
Contain Medical claims by:
Wellness Program •Employees become involved in improving health•Employee Group becomes healthier•Manage/eliminate risk of disease
Explore Pharmacy to provide medicine at/near cost to employees 2013-2014 Plan year spent $3.2m
Explore Wellness Clinics to reduce cost of Doctor, Urgent Care, and Emergency care visits, provide disease management
Page 13McNeary, Inc.
Estimated Cadillac Tax impact Year 2015 2016 2017 2018 2019 2020 2021 2022
HMOSingle 6,622 7,086 7,582 8,113 8,681 9,288 9,938 10,634Single (FSA) 7,974 8,438 8,934 9,465 10,033 10,640 11,290 11,986Family 18,761 20,075 21,480 22,983 24,592 26,314 28,156 30,127Family (FSA) 20,113 21,427 22,832 24,335 25,944 27,666 29,508 31,479
2015 2016 2017 2018 2019 2020 2021 2022
PPOSingle 7,651 8,187 8,760 9,373 10,029 10,732 11,483 12,287Single (FSA) 9,003 9,539 10,112 10,725 11,381 12,084 12,835 13,639Family 21,260 22,748 24,340 26,044 27,867 29,818 31,905 34,139Family (FSA) 22,612 24,100 25,692 27,396 29,219 31,170 33,257 35,491
Estimated Excise Tax Impact 2018 2019 2020 2021 2022TOTAL $8,190 $20,385 $55,427 $155,312 $322,935
Annual Plan Cost Limits ($)Single 10,200 10,404 10,612 10,824 11,041
Family 27,500 28,050 28,611 29,183 29,767
Health Care clinics run by school division at cost
Pharmacy for employees with health care clinic
Wellness programs that pay employees to maintain
healthy life style choices
Page 14McNeary, Inc.
What are other school districts doing?
Wellness Program launch (Fall 2015)
Exploring joint Pharmacy/Health Clinics for
employees as a joint project with the city
Page 15McNeary, Inc.
What is Suffolk Public Schools planning?
Creation of committee to explore offering
several health care plans to include: High deductible, low monthly cost plan (Account based HP)
Changes to PPO plan to eliminate “Cadillac Tax” expense (2018)
Changes to HMO plan to eliminate “Cadillac Tax” expense (2020)
Permission to explore joint Pharmacy/Wellness
clinics for SPS/City employees
Page 16McNeary, Inc.
Next Steps…
Questions?
Page 17McNeary, Inc.