School District of St.
Croix Central
Benefit Plan Recommendations
October 2011
Current Profile
Medical highlights
High medical loss ratio
2008: 76%
2009: 100.7%
2010: 102.2%
2011 YTD: 91.8%
Medical costs decreased in 2011
Younger than average population
Members are engaged in generic utilization and care
management programs
Medical Plan
Difficulty obtaining competitive quotes
High medical loss ratio
Large ongoing claims
Census discrepancies
Cash in lieu of medical is affecting enrollment – losing
good risk. Carriers would be more comfortable with
$200/month or less
109 on the plan (per the census)
76 waivers
Medical Plan - Challenges
Comparable vs. identical benefits
Waiver of Premium (3 on WOP)
Inconsistent plan years
Renewal July 1 – benefit change effective date was 9/1
Deductible runs Calendar Year
Flex Plan runs Calendar Year
Medical Plan – Challenges - Retirees
Retirees eligible for school district contribution stay on
group health plan.
Once eligible for Medicare, they convert to a Medicare
Supplement, unless they are 65 and still eligible to take
COBRA in conjunction with their retiree benefit
When on Medicare, WEAIT does not provide coverage
for prescription drugs. Participants must obtain
Medicare Part D coverage elsewhere if they want
coverage for RX.
Medical Plan – Challenges - Retirees
If they decline to participate in Medicare Part D, they are
penalized for participating at a later date
Once school district contribution ends, retirees are able
to stay on group health plan at their own cost (regardless
of age). Claims incurred are credited to the active
group’s claims experience. (16 direct bills)
District group health plan becomes less attractive to
other vendors. Especially as retiree population
increases.
Medical Plan - Opportunities
Quote from Medica with “comparable” benefits
but not identical. Some plan differences include:
No waiver of premium
Assumption that Retirees that are Medicare eligible are
enrolled in a group Medicare Supplement or enrolled
elsewhere
Copays are subject to the out-of-pocket (better)
Ancillary Plan Opportunities
Carriers with products specifically designed to
mirror WEAIT
Expand ability to offer additional products for
those who would like to participate
CONSUMER DRIVEN
HEALTH PLANS
Health Reimbursement Accounts
Health Savings Accounts
Understanding the “lingo”
Health Reimbursement Account (HRA)- ER funded
Vested
Unvested
Health Savings Account (HSA) – ER/EE funded
Flexible Spending Account (FSA) – typically EE funded
Pre-tax premium
Pre-tax dependent care
Pre-tax uninsured medical expenses
HSA limits the uninsured medical account to dental and
vision expenses only
Non-Vested HRA Overview
Usually works in conjunction with a high deductible
Take a portion of the premiums savings to help
employees pay out of pocket expenses
Separate HRA amount recorded for each plan participant
available only to reimburse actual expenses
Funds can be used tax free for medical expenses deemed
eligible by the plan document
Funds may or may not be rolled over into next plan year
EMPLOYER
CONTRIBUTIONS
Employer sets aside
money to help
employees with out of
pocket expenses
HEALTH REIMBURSEMENT ACCOUNT
Employee takes money out to help them
with claims subject to the deductible
Vested HRA Overview
Employer makes deposits on behalf of the employee to
be used tax-free for eligible medical expenses and
premiums.
Can be individual interest bearing accounts for
participants.
The HRA, when vested, follows the participant and is
“portable” (i.e., leave employment, retire)
HSA Overview
High deductible
health insurance
policy that covers
large medical or
hospital claims
Investment or
savings account
from which you can
withdrawal money
tax-free for
qualified medical
expenses
What is the HDHP?
Health insurance plan with a minimum deductible of:
$1,200 (single)
$2,400 (family)
These amounts are indexed for inflation
Annual out-of-pocket (including deductibles and
coinsurance) cannot exceed:
$6,050 (single)
$12,100 (family)
These amounts are indexed for inflation
What is the HSA?
Similar to an IRA
Triple Tax Advantaged!
Contributions can be made with pre-tax or after-tax dollars
Interest earnings tax-deferred
Withdrawals for qualified medical expenses are tax-free
Account is owned by employee
Contributions are 100% vested
HSA Eligibility Requirements
Covered by a high deductible health
plan (HDHP)
No other health plan (including regular
flexible spending accounts and some
HRAs)
Not enrolled in Medicare
May not be claimed as a dependent on
someone else’s tax return
How Does HSA & FLEX Work Together
FLEX PLAN ACCOUNT
1.
2.
3.
Premium Account
•
Medical Premiums
•
Dental Premiums
•
HSA Contributions
Dependent Day Care Account
Flexible Spending Account
•
Limited to dental and vision
expenses only
•
Immediate availability on
annualized dollar amount
•
USE IT OR LOSE IT
Withdrawals can be
made for any section
213(d) qualified
expense. Including:
• Expenses subject
to your deductible
• Over the counter
medicines
• Dental expenses
• Vision expenses
HEALTH SAVINGS ACCOUNT
1. 2012 Contribution Limit
• $3100 single
• $6250 family
2. Can only withdraw up to balance
that is already in the account
3. USE IT OR KEEP IT
Go To
Comparison
Worksheet
Medical Plan - Recommendations
For Active Employees
Consider moving to Medica - comparable plans
Total annualized rate savings: $123,767
Savings quoted include support staff
Waiver of Premium is not available through Medica.
This would need to be self-funded and administered by
the district
Medical Plan - Recommendations
For Retirees
Limit eligibility for the district health plan to employees and early
retirees eligible for district contributions to health plan
Medicare supplement eligible employees would be able to move to
Medica group Medicare supplement or individual Medicare supplement
through WEA Trust or another vendor
Medicare retirees claims experience no longer impact the district’s
claims experience.
If selected, there would be no employer contribution required to
maintain this group option for employees
JA Counter staff would be available to help council affected retirees
Retiree – Plan options compared
Carrier
WEA Trust MedPlus
Medica Group Prime Solution
Medica Individual Prime Solution
$143.52
$170
$122
Medical Deductible
$100
$500
$0
Preventative Health
100%
100%
100%
Doctor Visits
100% after deductible
$20 Copay
$0 Copay
Emergency Care
100% after deductible
$75 Copay (waived if admit in 24h)
$0 Copay
Ambulance Services
100% after deductible
$75 Copay
$0 Copay
Inpatient Hospital Care
100% after deductible
$200 Copay
$0 Copay
Eyewear
No Coverage
$250 every 2 years
$125 every 2 years
Hearing Aids
No Coverage
$900 every 2 years
$450 every year
Fitness Program
No Coverage
Free membership - network
Free membership - network
Part D
No Coverage
Yes - $10 G, $34 PB, $74 NPB (no Donut Hole)
No Coverage
Unlimited
Unlimited
Unlimited
Yes
Yes
Yes
Monthly Premium
Lifetime Maximum
Network
Medical Plan - Recommendations
Option 1:
Comparable plan designs for year one. This would give the district
time to educate employees on alternate plan designs and
employees time to get used to a new provider.
Estimated annualized savings
District: $115,234 (including support staff)
Employees: Single: $37 / Family: $84
Pros
Limited change in plan design
Financial incentives for wellness built in to the product ($135/adult=$27,945)
Lower net out of pocket to employee
Built in telephonic Employee Assistance Program (EAP) with onsite education
Cons
Difference in drug formulary (not bad just different)
Medical Plan - Recommendations
Option 2:
Consider moving to a $2000/$4000 -100% plan with
same RX copay but no other copays until deductible is
met. Net deductible of $250 for single and $500 for
family. Fund with a non-vested HRA.
Estimated annualized savings assuming 50% HRA utilization
District: $228,075 (including support staff)
Employees: Single: $130 / Family: $296
Pros
Significant premium Savings to district and employees
Net deductible the same
Copay obligation on OV, ER and UR go away
Cons
To the district, the HRA risk is difficult to determine
Requires employee involvement in claims reimbursement
Medical Plan - Recommendations
Option 3:
$1500/$3000 – 100% HSA plan design with $1250/$2500 district
contribution
Ability to offer dual choice between $250 traditional and HSA with HSA
as “base plan”
Cost savings district: $153,444 (including support staff)
Cost savings employees: Single: $128 / Family: $291 + HSA dollars
Pros
Increased deductible allows fixed premium cost to go down
Keeps employees better than “whole”
Offer flexibility for employees to choose which plan works best for them and their individual
situations
Employees keep what they don’t use
Cons
Eligibility rules must be met to receive contribution
Coordination with flex and some HRAs
Base Plan and Buy-up
HDHP with HSA (Base)
Traditional (Buy-Up)
Deductible
$1500/$3000
$250/$500
HSA Contribution
$1250/$2500
$0
Preventive Care
100% No Deductible
100% No Deductible
Office Visits
Deductible then 100%
$10 then 100%
RX
Deductible then 100%
$5/$20/$40
In/Out Patient
Deductible then 100%
Deductible then 100%
Single
$464.75
$556.04 (diff: $91.29)
Family
$1,053.76
$1,260.71 (diff: $206.95)
EE Annualized Premium
Medical Plan - Recommendations
Future Consideration:
Move to MyPlan by Medica
Allows School District to move to a defined contribution approach
Pros
District determines flat contribution to health benefit – easier to budget from
year to year
Offers flexibility for employees to choose which plan works best for them and
their individual situations (up to 20 options)
Employees keep the savings if they choose a plan where premiums are
lower than the allotted amount.
Cons
Potential increased deductible and out-of-pocket exposure for employees
Enrollment in this plan could be considered “complicated” by employees (too
many options)
Insurance cost is slightly higher due to increased administration
Flex Plan - Recommendations
Modify flex plan to allow availability of a limited flex plan
for those that may be eligible to participate in an HSA
health plan elsewhere
Dental Insurance - Recommendations
Delta Dental is offering a comparable plan design with
approx. $1100 in savings to the district. Recommend
staying with WEAIT.
Vision Insurance - Recommendations
Avesis is offering a comparable plan design with approx.
$6,279 in savings to the district (28% lower than current)
Pros
Annual maximum would start over 1/1/12
Lower rates
Cons
Current carrier has a 4 year rate guarantee – Avesis is 2 years
Long-Term Disability - Recommendations
EPIC is offering a comparable plan design with approx.
$4,191 in savings to the district (34% lower than current)
Pros
Like plan design
Ability to offer voluntary short-term disability
Cons
?
Life Insurance - Recommendations
Unless you want to give up the paid up benefit for
retirees, we have no viable options for you (40 – 50%
savings without this benefit). Recommendation to stay
with WEAIT.
Consider offering employees the ability to purchase
expanded optional life coverage through payroll
deduction (Unum has exceptional worksite product
availability including accident and cancer/critical illness
policies)
Other Recommendations
Consider working with a wellness vendor or Medica’s
wellness team to implement a formal wellness program
customized to meet the needs of the district
Conduct ongoing education for employees with tips on
saving money, utilizing plan benefits, helping them
understand they are a partner in the long-term effort to
control premium costs
Questions
Thank you for taking the time to
learn about alternative options.