Town of Arlington Public
Employees
2011 Health Insurance
Options
October and November
Meetings 2010
Version 4.0
10.19.10
The Problem - Healthcare Costs are Increasing
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Leaner budgets are squeezing everyone
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Reduced local aid
Lower revenues with bad economy
No real cost-reduction strategies
National Healthcare Reform
Healthcare Discussion - Background Information
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Ongoing discussions date back several years
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Group Insurance Commission
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Town proposed to join GIC in 2009, Unions rejected
proposal
Municipal and State financial issues affect us
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Rising healthcare costs impacting Town budget
Affects employees, retirees and the Town
Joint labor-management committee completed extensive
review of health plan
$4.5 million Town deficit and growing
FY12 looks worse both for Commonwealth and local towns
Budget woes impact our livelihood
Retiree coverage is vulnerable to changes
Healthcare Discussion - Why Consider a Change Now?
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Estimated FY12 deficit is $6.3 million
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Status quo approach
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State contemplating changes
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Means Town spends $1.4 million MORE on health insurance than
currently
Need to find cost savings elsewhere
Legislative proposals that may not be in our favor
Legislature likely to take action in coming months
On the political agenda for governor’s race
Overview - Three Choices to Consider
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Option 1 – Do nothing, keep current plans and
contribution splits
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Option 2 – Total replacement with new HPHC plans
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$1.5 million in Town savings; NO wage increases
guaranteed; contract negotiations continue
Option 3 – Go to GIC
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Town absorbs $1.4 million increase
$3.2 million in Town savings
 $1.8 million net savings for Town AFTER guaranteed
wage increases and Medicare Part B
 $1.4 million to Employees/Retirees (Salary increases of
$1,100,683 and Medicare Part B reimbursements of
$332,160)
Option 1 - No Changes
Town Absorbs $1.4 million Additional Costs
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All plans will remain the same
No protection for retirees
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Premiums will increase
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Town can increase cost sharing for retirees
HMO Blue
 Rates will increase 11.6% Individual and10.8% Family
Blue Care Elect
 Rates will increase 19.3% Individual and 20.5% Family
Blue Choice
 Rates will increase 20.5% for both Individual and Family
HPHC HMO
 Rates will not increase
Option 2 – Total Replacement with HPHC
Town Saves $1.5 million
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Replace all BCBS plans with HPHC (HMO, PPO, POS)
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New Retiree Plans
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Higher copays
HPHC “High” and “Low” options, national network
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Effective January 1, 2011 or when practical
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No retiree contribution changes for one year
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Town to pay $40 per month for Medicare Part B
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Each union must ratify, 1 year agreement
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Each union continues contract negotiations; no guaranteed
wage increases
Option 2 – HPHC Total Replacement Plan Design Changes
Plan Feature
Network Blue HMO
(current)
Harvard Pilgrim HMO
(proposed)
PCP, OB, GYN, MH, PT,
Chiro
$10 copay
$20 copay*
Specialist, O/P
Specialty Care
$10 copay
$40 copay*
Emergency Room
$50 copay
$75 copay
Inpatient Hospital Care
No copay
$250 copay
Day Surgery
No copay
$100 copay
$10/$20/$35
$10/$20/$35
$10/$20/$35
$20/$40/$105
Prescription Drugs
Retail
Mail Order (90
day)
•See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays.
•Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization and
outpatient surgical services.
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Option 2 – HPHC Total Replacement Cost for Members
Plan
HPHC
Monthly
Consolidated Estimated
Jan. 1, 2011
(Savings) or
Cost
Renewal
HMO Blue
HPHC (new)
Annual
Estimated
(Savings) or
Cost
Single
15%
$116.07
$98.88
($17.19)
($206.28)
Family
15%
$307.16
$261.35
($45.81)
($549.72)
HPHC HMO
HPHC (new)
Plan
Single
15%
$94.17
$98.88
$4.71
$56.52
Family
15%
$242.01
$261.35
$19.34
$232.08
Medex III
HPHC (new)
$107.36
$98.88
($8.48)
($101.76)
Plan
Single
Retiree
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Current
Plans
Jan. 1, 2011
25%
Option 2: HPHC Total Replacement Plan Design Changes
Continued
Plan Feature
Harvard Pilgrim HMO
(current)
Harvard Pilgrim HMO
(proposed)
PCP, OB, GYN, MH, PT,
Chiro
$10 copay
$20 copay
Specialist and O/P
Specialty
$10 copay
$40 copay*
Emergency Room
$50 copay
$75 copay
Inpatient Hospital Care
No copay
$250 copay
Day Surgery
No copay
$100 copay
$10/$20/$35
$20/$40/$105
$10/$20/$35
$20/$40/$105
Prescription Drugs
Retail
Mail Order (90
day)
•See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays.
•Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization and
outpatient surgical services.
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Option 3 – Group Insurance Commission (GIC)
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Effective July 1, 2011
Three year agreement
Formal Section 19, Coalition Bargaining agreement
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Improved contribution splits
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HMOs @ 85/15 for all employees/retirees
PPOs @ 85/15 for all employees/retirees
Indemnity Plans @ 75/25 for all employees/retirees
Town will protect members against future GIC increases
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Protects retirees, who gain bargaining rights
Town to pay a higher contribution split if GIC rates increase more
than 12%
Town will pay a higher contribution split if GIC deductibles
increase more than $100
Option 3 – GIC Continued
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Health Reimburse Accounts (HRA)
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Town to pay $40 per month for Medicare Part B
Town committing contract raises
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Town to reimburse employees up to $500 for hospitalization and
$150 for day surgery
If HRA is not authorized by GIC, Town will improve the premium
split from 85/15 to 86/14 for HMO and PPO plans
½% for 7/1/10
1% for 7/1/11
1% for 7/1/12
Raises are contingent on contract settlements
Option 3 – GIC Continued
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Town savings projected to be $1.8 million
AFTER money paid out for town-committed wage
increases
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Town providing $1,000,683 in wage increases and
$332,160 in Medicare Part B reimbursements,
which is projected to be $1.4 million in total
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Most members will experience lower premiums
Option 3 - GIC Health Insurance Plans
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GIC offers multiple plan options for active,
retired Medicare and non-Medicare participants
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Non-Medicare plans include “tiered” copays for
doctors and hospitals
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PPO, HMO, Indemnity, Medicare Supplement Plans
Tier levels are based on cost and quality data
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Your out-of-pocket costs will depend on the
doctors and hospitals you select
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Non-Medicare plans include up-front calendar
year deductibles
Option 3 – GIC Cost for Members
Current
Plans
Jan. 1,
2011
GIC
%
July 1, 2011
Split Estimated
Monthly
Estimated
%
(Savings)
Split or Cost
Annual
Estimated
(Savings)
or Cost
Plan
Renewal
HMO Blue
Single
$116.07
15%
$94.86
14%
($21.21)
($254.52)
Family
$307.16
15%
$231.71
14%
($75.45)
($905.40)
Plan
Renewal
HPHC HMO
Single
$94.17
15%
$94.86
14%
$0.69
$8.28
Family
$242.01
15%
$231.71
14%
($10.30)
($123.60)
Plan
Medex III
25%
($5.65)
($67.80)
Single $107.36
Retiree
HPHC
Independence PPO
HPHC
Independence PPO
UniCare w/ CIC
25%
$101.71
Note: July 1, 2011 GIC rates estimated at 12% above 2010 rates. PPO splits will be 15% if GIC allows HRAs.
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Option 3 - GIC Health Insurance Plans Continued
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Active Employees & Non-Medicare Eligible
Retirees
 Four
PPO Plans
– Tufts, HPHC, UniCare (2)
 Two Limited Network HMO Plans (new in 2010)
– HPHC Primary Choice
– Tufts Health Plan
 Four Regional HMO Plans
– Fallon Direct, Fallon Select, NHP, HNE
 One Indemnity Plan
– UniCare Indemnity with CIC
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Option 3 - GIC Health Insurance Plans Continued
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Medicare Eligible Retirees
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Retirees must enroll in Medicare if age 65 and
eligible for Medicare (Self or Spouse)
Six Medicare Supplement Plans
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HPHC, Tufts, Fallon, HNE
Option 2 – GIC Health Insurance Plans 2009 Enrollment
To date, 80% of municipal members have enrolled in a GIC
PPO option
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Option 3 – GIC Sample Plan Design
Plan Feature
HPHC Independence PPO
In-Network
Out-of-Network
PCP Office Visit
$20 copay
20% after deductible
Specialist Office Visit
$25 Tier 1
$35 Tier 2
$45 Tier 3
20% after deductible
Calendar Year Deductible
$250/$750
$400/$800
$100
$100
Tier 1 $250 per admission
Tier 2 $500 per admission
Tier 3 $750 per admission
20% after deductible
Emergency Room
Inpatient Hospital Care
Maximum of 4 per calendar year
Outpatient Surgery
$150 per occurrence
20% after deductible
Maximum of 4 per calendar year
Prescription Drugs
Retail
Mail Order (90 day)
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$10/$25/$50
$20/$50/$110
GIC – Sample HPHC Independence Hospital Tiers
Sample of Network
Tier 1 $250 4/yr
Tier 2 $500 4/yr
Winchester
X
Newton Wellesley
X
Children’s
X
Dana Faber
X
Beth Israel
X
Mount Auburn
X
Emerson
X
Tier 3 $750 4/yr
Lahey Clinic
X
Mass General
X
Brigham & Women’s
X
Note: The Town is offering an HRA reimbursement of $500/hospital admission if allowed by the GIC,
or a reduction in the employee split from 15% to 14% for HMO and PPO plans.
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Option 3 – GIC Sample Plan Design Continued
Plan Feature
Tufts Health Plan Spirit
Limited Provider Network, No PCP Referrals
PCP Office Visit
$20 copay
Specialist Office Visit
$25 Tier 1
$35 Tier 2
$45 Tier 3
Calendar Year Deductible
$250/$750
Emergency Room
Inpatient Hospital Care
$100
Tier 1 $300 per admission
Tier 2 $700 per admission
Maximum of 4 copays per calendar year
Outpatient Hospital Care
$150 per occurrence
Maximum of 4 copays per calendar year
Prescription Drugs
Retail
Mail Order (90 day)
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$10/$25/$50
$20/$50/$110
Option 3 – GIC Continued Explanation of ‘up-front’
deductibles
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“Up-front deductibles” require the member to pay a stated
amount up-front, before certain health insurance benefits
are paid by the insurance carrier
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GIC deductibles are typically $250 per Individual and $750
per family per calendar year
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Care that is subject to a deductible: ER visits, inpatient hospitalization,
surgery, lab and blood tests, bone density screenings, x-rays and high
tech imaging, durable medical equipment
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Care that is exempt from a deductible: prescriptions, office visits,
necessary immunizations, medically necessary wigs, hearing aids,
mammograms, pap smears, EKGs, colonoscopies
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Some of these services will be covered without a required co-pay under National Healthcare
Reform
Option 3 - GIC Continued Eligibility Rules
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Municipal employees are not eligible for the GIC
dental, vision, life or disability programs
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Each plan participant must provide birth and
marriage certificates to be covered
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New hires are eligible the first of the month after 60
days of employment
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Retirees over age 65 on Medicare with younger
dependents have special enrollment rules
Option 3 – GIC Resources
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Access carrier web sites and/or carrier (800) numbers
– Review physicians
– Review hospitals
– Review drug formularies by plan
Group Insurance Commission: www.mass.gov/gic
Harvard-Pilgrim HC: www.harvardpilgrim.org/gic
Tufts Health Plan: www.tuftshealthplan.com/gic
Fallon Community HP: www.fchp.org
UniCare: www.unicarestateplan.com and www.caremark.com/gic
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Summary – Health Plan Options
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Option 1 – No change in plans
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Option 2 – HPHC total replacement
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Current contribution splits
No Medicare Part B reimbursement
Effective January 1, 2011, or as soon as practical
$40 Medicare Part B reimbursement for retirees
Current contribution splits stay in place
Retirees and survivor plans remain in place
Summary – Health Plan Options Continued
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Option 3 – GIC
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Effective July 1, 2011
HMO/PPO contribution split @ 85/15%
Indemnity contribution split @ 75/25%
Town to protect members if GIC increases
exceed 12% per plan year
Town to protect members if GIC deductible
amounts increase more than $100 per plan year
HRA
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Up to $500/hospital admission and $150/day surgery
Agreement includes wage increases
Health Plan Options – Index of Materials
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1.
Town Fiscal Projections
2.
Letter from Town Manager
3.
Memorandum regarding Harvard Pilgrim Consolidation w/plan changes
4.
Memorandum regarding GIC
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Comparison of various plans
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Q & A about deductibles
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No Change in Current Plans spreadsheet
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Current Plans vs. HPHC Consolidation comparison spreadsheet
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Current Plans vs. GIC Plans comparison spreadsheet
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Proposed GIC plans showing costs/savings with possible wage increases
Town of Arlington Health Insurance Options
QUESTIONS & ANSWERS
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