2014 Benefit Changes
in response to the ACA
HR Pros - April, 2013
Office of Human Resources
The “Affordable Care Act”
…by any other name…
• ACA
• Patient Protection and Affordable
Care Act (PPACA)
• Health Care Reform
• Obamacare
…may, or may not, be a rose
Is the ACA a good thing?
• Many more Americans will have coverage
– but not everyone
• Many with poor coverage have better coverage
– but many won’t have quite as good coverage as now
• This will come at a cost
– More out-of-pocket costs in our plan. More taxes going to the Feds.
– It may take longer to get an appointment with a provider.
• Health care delivery in America does need reforming!
– Costs more and produces worse outcomes.
– Why? Providers get paid for the wrong thing: Services
instead of Results.
• In the end, you will have to decide whether it’s a good thing.
Will it effect the UPlan?
HCR has already affected the UPlan…
…but not as much as many other employer plans!
2011:
• Adult child coverage to age 26
– That’s currently costing roughly $2M a year
2013:
• Health Care Exchanges begin Enrollment
– Challenge for us to help employees understand what’s happening
•
•
•
•
Healthcare Flexible Spending Account limited to $2,500
Some minor changes in benefits
Changes in the way that appeals are handled
Value of your 2012 tax-exempt medical insurance shows on W-2
Effects on UPlan
2014:
• January 1: Exchanges deliver coverage
– Like most large employers, we will “play” (pay or play)
– Benefits remain a key component of our employee value proposition
• Requires a complicated way of determining Full Time eligibility
2015 (2016?):
• Auto-enrollment required
• New employees will automatically be enrolled for employee-only coverage.
They will have to enroll their dependents to get coverage, and can opt out if
desired.
• Overrules MN State Law
2018: (here’s the “biggie”)
• An Excise (“Cadillac”) Tax will be imposed on “high value” plans
UPlan is a “High Value” plan
“Plan Value” is defined by the ACA as the sum of:
Employer contribution to premium
+ Employee contribution to premium
+ any Health Flexible Spending Account amounts
Out-Of-Pocket costs are not included!
A “High Value” plan is any plan that exceeds these
annual amounts in 2018:
– $10,200 for individual; $27,500 for family
– UPlan has options at $8,000 individual; $21,000 family now!
When the “Cadillac Tax” hits…
• A tax rate of 40% of the Plan Value in excess of the
maximum allowed will be imposed.
• Five year (2018-2022) estimate of UPlan exposure:
$48,000,000
– Assumes we do nothing
• The University must not pay this tax!
– For financial reasons
– For political (public relations) reasons
Our Goals…
Maintain quality, affordability,
and choice in the UPlan
Avoid the Excise Tax
Continue to manage healthcare trend
Changes begin in 2014
Why this early?
• Must have plan value calibrated before 2016 to
ensure safe harbor
• Need a minimum 18 months of experience to
measure impact of changes, plus time to make
adjustments prior to 2016
• Also, high risk of making changes for 2015 because
of overlap with ESUP
• Pushes us to January 1, 2014
We must reduce Plan Value
• Three strategies
– Ongoing cost-effective care initiatives
– Adjusting the benefit design
– Miscellaneous other changes
2014 medical changes
Increase Out-Of-Pocket costs.
• In ‘traditional’ plans:
– Introduce deductibles on all non-copay items
• $100/$200 on Medica Elect Essential
• $200/$400 on Medica Insights and Choice
– Increase primary care and related copays by $10
• Primary, internal medicine, OB/GYN, pediatrics
• Also chiropractic, acupuncture, physical, occupational &
speech therapy, MH/SA
– Introduce higher copays for specialty care
• $15 higher than primary care ($10 higher in ACO plan)
2014 medical changes
• In Health Savings Account Plan
– $250 / $500 reduction in HSA account
– $500 / $1,000 increase in out-of-pocket
maximum
2014 medical changes
• Introduce a new, ACO (Affordable Care
Organization) Plan in our choices
–
–
–
–
High-quality, cost effective, but restrictive
Benefits slightly higher than Base Plan
Costs slightly lower – a “buy down” plan
Four Twin Cities ACOs within this plan
• Fairview, HealthEast, Park Nicollet, Ridgeview
– Fairview currently includes UMP specialists, but not
UMP primary care
– Park Nicollet does not include HP primary or specialty
• Some potential to include Duluth care system
2014 medical changes
• ACO Plan continued
– Annual Elections - Employee & all family
members must be in same ACO for the full year
– No referrals needed within ACO network.
– BUT referrals outside the ACO highly unlikely!
– Travel benefit covers care outside service area
• Emergency, urgent & non-emergency care
– Care within service area, but outside of ACO, is
out of network
– Expect providers to reach out to new members
2014 pharmacy changes
• Increase Tier 3 – Non-formulary brand
copay to $75
– Encourages use of Tier 1 and Tier 2
clinically appropriate, cost effective
medications
– Current appeals & Prior Authorization
provisions remain in effect
Plan comparison –
Elect / Essential & ACO
Medica Elect/
Essential & New
Medica ACO Plan
Category
Deductible
Elect/Essential
Current Design
Elect/Essential
New Deductible & Co-pay Design
ACO Plan
New Deductible & Co-pay Design
(Lower Premium than Elect/Essential)
In Network
Out of Network
In Network
Out of Network
In Network
(specific ACO)
Out of Network
None
$600/$1200
$100/200 or
$200/400
$600/$1200
$100/200 or
$200/400
$600/$1200
Preventive care
100%
100%
Physician care
$15 copay
Deductible/70%
Convenience care
$10 copay
Urgent Care
Emergency room
100%
Deductible/70%
$20 PCP/$30 SPC
Deductible/70%
Deductible/70%
$25 PCP/$40
SPC
$15 copay
Deductible/70%
$15 copay
Deductible/70%
$15 copay
$15 copay
$25 copay
$40 copay
$20 copay
$20 copay
$90 copay
$90 copay
$100 copay
$100 copay
$100 copay
$100 copay
Lab
100%
Deductible/70%
Deductible/100%
Deductible/70%
Deductible/100%
Deductible/70%
MRI
$30 copay
Deductible/70%
Deductible/100%
Deductible/70%
Deductible/ 100%
Deductible/70%
100%
Deductible/70%
Deductible/100%
Deductible/70%
Deductible/100%
Deductible/70%
Other copays:
chiro, MH, etc.
$15
Deductible/70%
$25 PCP/$40
SPC
Deductible/70%
$20 PCP/$30 SPC
Deductible/70%
Rx benefits
$10/30/60 copay with
$750/$1,500 OOP max.
$75 copay for Tier 3 medications
$75 copay for Tier 3 medications
$2,500/$4,000
$2,500/$4,000
$2,500/$4,000
Hospital
Annual OOP limits
Plan comparison - Insights
Medica Insights
Insights - Current Design
Category
Deductible
Preventive care
Physician care
(Tiers 1/2/3)
In Network
Out of Network
In Network
Out of Network
None
100%
$600/$1200
100%
$200/400
100%
$600/$1200
$15/$30/$50
Deductible/70%
$25/$40/$65
Deductible/70%
$10 copay
$15/30/50
$90 copay
100%
$30 copay
Deductible/70%
$15/30/50
$90 copay
Deductible/70%
Deductible/70%
$25 copay
$40 copay
$100 copay
Deductible/100%
Deductible/ 100%
Deductible/70%
100%/$200 copay
/$200copay
Deductible/70%
Deductible/100%
Deductible/70%
$15 copay
Deductible/70%
$25 PCP/$40 SPC
Deductible/70%
Convenience care
Urgent Care
Emergency room
Lab
MRI
Hospital
Other copays:
chiro, MH, etc.
Rx benefits
Annual OOP limits
Insights - New Deductible & Co-pay
Design
100%
$40 copay
$100 copay
Deductible/70%
Deductible/70%
$10/30/60 copay with
$750/$1,500 OOP max.
$75 copay for Tier 3 medications
$2,500/$4,000
$2,500/$4,000
Plan comparison – Choice Nat’l
Medica Choice
National
Medica Choice National - Current Design
Category
In Network
Deductible
Out of Network
None
$600/$1200
Preventive care
Medica Choice National –
New Deductible & Co-pay Design
In Network
Out of Network
$100/200 or $200/400
$600/$1200
100%
100%
Physician care
$30 copay
Deductible/70%
$40 PCP/$55 SPC
Deductible/70%
Convenience care
$10 copay
Deductible/70%
$20 copay
Deductible/70%
Urgent Care
$30 copay
$30 copay
$55 copay
$55 copay
Emergency room
$90 copay
$90 copay
$100 copay
$100 copay
Lab
100%
Deductible/70%
Deductible/100%
Deductible/70%
MRI
$30 copay
Deductible/70%
Deductible/ 100%
Deductible/70%
$200 copay then 100%
Deductible/70%
Deductible/100%
Deductible/70%
$30 copay
Deductible/70%
$40 PCP/$55 SPC
Deductible/70%
Hospital
Other copays:
chiro, MH, etc.
Rx benefits
Annual OOP limits
$10/30/60 copay with $750/$1,500 OOP max.
$75 copay for Tier 3 medications
$2,500/$4,000
$2,500/$4,000
Plan comparison - HSA
Shift some costs out of the rates
• Move costs for internal administrative
costs, and Wellness Incentives, out of
the premiums
– Costs charged to fringe pool, but not to
UPlan Medical program
– Reduces cost of all plan options
Multiple base plans cause tax exposure
Base Plans
Employee Only 2013
Rates
Total Cost
Employee Cost
Wellness / Standard
Rates
Twin Cities – Medica
Elect / Essential
$276.35
$24.39 / $35.93
Duluth – Medica Elect
/ Essential
$327.64
$24.39 / $35.93
Greater Minnesota –
Medica Choice
Regional
$377.70
$24.39 / $35.93
Combining base plans helps
• Combining the Twin Cities, Duluth, and
Greater-MN base plans into one
reduces the excise tax exposure.
– Same benefits, total cost, and employee
cost for new single base plan
– Networks will differ
– Non-metro costs will come down; very
slight increase for Twin Cities costs
Family tier cost causes exposure
Medica Choice 2013
Rates
Total Cost
Employee Cost
Wellness / Standard
Employee
$306.20
$54.24 / $65.78
Employee &
Child/Children
$530.32
$133.29 / $144.83
Employee & Spouse
/ SSDP
$655.87
$163.84 / $179.22
Employee & Family
$878.54
$224.72 / $240.10
Combining tiers helps
2013 Coverage Tiers
2014 Coverage Tiers
Employee only
Employee only
Employee + Child/Children
Employee + Child/Children
Employee + Spouse/SSDP
Employee + Family
Employee + Family
• Spouse/SSDP and Family tiers are combined.
• This reduces exposure to the Excise Tax by pulling
down the cost of the Family tier.
• However, this significantly increases cost for
employees currently in the Spouse/SSDP tier.
2014 Premium Changes
Premiums
(Standard)
EE Only
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
$
$
$
$
$
36.56
35.30
58.58
65.58
36.85
EE & Sp/SSDP **
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
$
$
$
$
$
EE & Child(ren)
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
Family
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
Premiums
(Wellness)
$ Change % Change
$ 0.63
$ (0.63)
$ 1.30
$ (0.20)
$ 0.47
1.8%
-1.8%
2.3%
-0.3%
1.3%
$
$
$
$
$
25.02
23.76
47.04
54.04
25.31
142.86
137.70
197.92
215.02
144.13
$
$
$
$
$
23.7%
19.3%
25.1%
20.0%
24.0%
$
$
$
$
$
$
$
$
$
$
95.06
91.60
130.94
144.39
95.98
$ 1.68
$ (1.78)
$ 2.96
$ (0.44)
$ 1.20
1.8%
-1.9%
2.3%
-0.3%
1.3%
$
$
$
$
$
142.86
137.70
197.92
215.02
144.13
$ (11.79)
$ (16.95)
$ (14.02)
$ (25.08)
$ (11.46)
-7.6%
-11.0%
-6.6%
-10.4%
-7.4%
* Trend is measured against base plan
** Trend is measured against family coverage
27.40
22.24
39.72
35.80
27.86
$ Change % Change
$ 0.63
$ (0.63)
$ 1.30
$ (0.20)
$ 0.47
2.6%
-2.6%
2.8%
-0.4%
1.9%
127.47
122.32
182.53
199.63
128.74
$
$
$
$
$
27.4%
22.2%
27.8%
21.8%
27.6%
$
$
$
$
$
83.52
80.06
119.40
132.85
84.44
$ 1.68
$ (1.78)
$ 2.96
$ (0.44)
$ 1.20
2.1%
-2.2%
2.5%
-0.3%
1.4%
$
$
$
$
$
127.47
122.32
182.53
199.63
128.74
$ (11.80)
$ (16.95)
$ (14.03)
$ (25.09)
$ (11.47)
-8.5%
-12.2%
-7.1%
-11.2%
-8.2%
27.39
22.24
39.71
35.79
27.85
2014 Premium Changes
Premiums
(Standard)
EE Only
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
$
$
$
$
$
36.56
35.30
58.58
65.58
36.85
EE & Sp/SSDP **
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
$
$
$
$
$
EE & Child(ren)
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
Family
E/E & Choice Reg.
ACO *
Insights
Choice National
HSA
$ Change % Change
Premiums
(Wellness)
$ 0.63
$ (0.63)
$ 1.30
$ (0.20)
$ 0.47
1.8%
-1.8%
2.3%
-0.3%
1.3%
$
$
$
$
$
25.02
23.76
47.04
54.04
25.31
142.86
137.70
197.92
215.02
144.13
$
$
$
$
$
23.7%
19.3%
25.1%
20.0%
24.0%
$
$
$
$
$
$
$
$
$
$
95.06
91.60
130.94
144.39
95.98
$ 1.68
$ (1.78)
$ 2.96
$ (0.44)
$ 1.20
1.8%
-1.9%
2.3%
-0.3%
1.3%
$
$
$
$
$
142.86
137.70
197.92
215.02
144.13
$ (11.79)
$ (16.95)
$ (14.02)
$ (25.08)
$ (11.46)
-7.6%
-11.0%
-6.6%
-10.4%
-7.4%
* Trend is measured against base plan
** Trend is measured against family coverage
27.40
22.24
39.72
35.80
27.86
$ Change
% Change
$ 0.63
$ (0.63)
$ 1.30
$ (0.20)
$ 0.47
2.6%
-2.6%
2.8%
-0.4%
1.9%
127.47
122.32
182.53
199.63
128.74
$
$
$
$
$
27.4%
22.2%
27.8%
21.8%
27.6%
$
$
$
$
$
83.52
80.06
119.40
132.85
84.44
$ 1.68
$ (1.78)
$ 2.96
$ (0.44)
$ 1.20
2.1%
-2.2%
2.5%
-0.3%
1.4%
$
$
$
$
$
127.47
122.32
182.53
199.63
128.74
$ (11.80)
$ (16.95)
$ (14.03)
$ (25.09)
$ (11.47)
-8.5%
-12.2%
-7.1%
-11.2%
-8.2%
27.39
22.24
39.71
35.79
27.85
Concluding notes
• We are consulting with BAC now
• Negotiating with Labor Represented groups
• Planning massive communication campaign,
including:
– Facts of ACA
• Clear message that Obamacare is the driver
– Impact on UPlan
Questions?