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Anchorage Education Association Plan Design Selection Fall 2013.

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Presentation on theme: "Anchorage Education Association Plan Design Selection Fall 2013."— Presentation transcript:

1 Anchorage Education Association Plan Design Selection Fall 2013

2 NEA-Alaska Health Plan, Chief Financial Officer

3 Reasons to consider alternative medical/dental plan designs Premium Growth Cadillac Tax Increase Dental, could add Ortho Waiver Contribution ends in July 2015 Difference between A/A and C/A, C/B Lower overall costs

4 Premium Growth NEA-Alaska Health Plan average increase in premiums has been less than 10% annual since 1997 Substantially lower than Statewide increases Other groups/employers have increased deductibles and OOPs over the years yet continue to have double digit increases 1996/1997, $100 deductible premium was $435 monthly 2013/2014 premium is $1797 monthly

5 Cadillac Tax The Affordable Care Act contains a provision that will tax entities that provide a health care benefit that is considered a Cadillac plan. Cadillac status is determined by the amount of annual premium paid Assessed tax rate is 40% of amount beyond threshold Threshold for the tax is annual premium greater than $27,500 Conservative premium increases will price current plan design at annual cost of $31, by 2018 Generating probable penalty $1, per individual

6 Increase Dental Coverage Add Orthodontia Currently selected Plan offers only $2,000 in annual dental coverage There is no orthodontia coverage available For a decrease in premiums dental coverage of $3,000 is available For a small increase in premium orthodontia coverage for all family members ($2,000) is available

7 Year 1 (July 2013 – June 2014) Plan Year 1Annual Premium Employer Contribution Waiver Contribution Employee Contribution A/A no ortho$21,564$17,580$2,324$1,660 C/A No Ortho$18,300$17,580$720$0 C/B No Ortho$18,168$17,580$588$0 C/B w Ortho$18,384$17,580$804$0 PremiumEmployerEmployee Waiver Balance 6/13 $7,488,415 ASD CY waiver Contrib. Balance Available Plan A/A$1,797$1,465$332($7,118,412)$7,981,320$8,351,323 Plan A/A 6 mo Plan C/B 6 mo $1,797 $1,514 $1,465 $ 332 $ 49 ($6,101,496) ($ 900,522)$7,981,320$8,467,717

8 Year 2 (July 2014-June 2015) PremiumEmployerEmployeeWaiver ASD Waiver Contrib Balance Available Plan A/A$1,977$1,540$437($8,031,186)$8,389,920$8,710,057 Plan C/B$1,665$1,540$125($4,594,500)$8,389,920$12,263,137 Plan Year 2* Assume 10% Annual Premium Employer Contribution Waiver Contribution Employee Contribution A/A no ortho$23,720$18,480$2,622$2,618 C/A No Ortho$20,130$18,480$1,650$0 C/B No Ortho$19,985$18,480$1,505$0 C/B w Ortho$20,222$18,480$1,742$0

9 Year 3 (July 2015 – June 2016) Plan Year 3* Assume 10% Annual Premium Employer Contribution Waiver Contribution Employee Contribution A/A no ortho$26,092$18,480$2,540$5,072 C/A No Ortho$22,143$18,480$3,663$0 C/B No Ortho$21,984$18,480$3,504$0 C/B w Ortho$22,244$18,480$3,764$0 PremiumEmployerEmployeeWaiver ASD Waiver Contrib Balance Available Plan A/A$2,175$1,540$635($7,780,020)$0$930,037 Plan C/B$1,832$1,540$292($10,732,752)$0$1,530,385

10 Terms Deductible – Monies paid for expenses before co-insurance kicks in Out Of Pocket – (OOP) After deductible, cost sharing begins. Trust pays 80%, member pays 20%. Member share is capped. Once Cap is met, Trust pays 100%. Premium – Cost of Health Insurance Policy Paycheck Deduction – Amount due from employee/member for insurance coverage

11 Plan Differences BenefitsPlan A/APlan C/A No Ortho Plan C/B No ortho Plan C/B With Ortho Deductible$100/$300$500/$1,500 Out Of Pocket (OOP) $1,000/$3,000$2,000/$6,000 RX$10/$20/$30$15/$25/$40 RX Mail Order$20/$40/$60$30/$50/$80 Dental$2,000 $3,000 Dental Ded$50/$150 $75/$225 OrthoNo Yes Annual Premium$21,564$18,300$18,168$18,384 Cadillac Tax in 2018 YesNo All other benefits remain consistent throughout plan designs

12 Effects of Plan C/B on Single Total Costs reflect High Usage of Health System Year 1Plan A/APlan C/B Paycheck Premium Deduction $1,660$0 Deductible$100*$500* Out of Pocket$1,000*$2,000* Total Costs$2,760$2,500 A single individual with no health concerns/low utilization can save on premium. Even years of high utilization, the savings from no premium go towards deductible/OOP if they have care needs beyond preventative. Year 2Plan A/APlan C/B Paycheck Premium Deduction $2,618$0 Deductible$100*$500* Out of Pocket$1,000*$2,000* Total Costs$3,718$2,500 Year 3Plan A/APlan C/B Paycheck Premium Deduction $5,072$0 Deductible$100*$500* Out of Pocket$1,000*$2,000* Total Costs$6,172$2,500

13 Effects of Plan C/B on Family of 2 Total Costs reflect High Usage of Health System Year 1Plan A/APlan C/B Paycheck Premium Deduction $1,660$0 Deductible$200*$1,000* Out of Pocket$2,000*$4,000* Total Costs$3,860$5,000 Year 2Plan A/APlan C/B Paycheck Premium Deduction $2,618$0 Deductible$200*$1,000* Out of Pocket$2,000*$4,000* Total Costs$4,818$5,000 Year 3Plan A/APlan C/B Paycheck Premium Deduction $5,072$0 Deductible$200*$1,000* Out of Pocket$2,000*$4,000* Total Costs$7,272$5,000 A 2 person family with no health concerns/low utilization Year 1 : Saves $1,660 Year 2: Saves $2,618 Year 3: Saves $5,072 Year 2 and 3 demonstrate clear advantage even in years of higher than average utilization.

14 Effects of Plan C/B on Family of 3 or more Total Costs reflect High Usage of Health System Year 1Plan A/APlan C/B Paycheck Premium Deduction $1,660$0 Deductible$300*$1,500* Out of Pocket$3,000*$6,000* Total Costs$4,960$7,500 Year 2Plan A/APlan C/B Paycheck Premium Deduction $2,618$0 Deductible$300*$1,500* Out of Pocket$3,000*$6,000* Total Costs$5,918$7,500 Year 3Plan A/APlan C/B Paycheck Premium Deduction $5,072$0 Deductible$300*$1,500* Out of Pocket$3,000*$6,000* Total Costs$8,372$7,500 How often do 3 or more family members need extensive medical care in a given calendar year? In this Plan very few. The premium savings are substantial and even by year 3, plan C is more attractive.

15 Guaranteed Expenses (Payroll deductions) vs. Usage Costs Paycheck Premium Deductions are Fixed Costs. Regardless of use of insurance, payroll deductions will occur Deductible and Out Of Pocket are variable costs. Only incurred when service beyond preventative are needed Assumes there are medical expenses beyond Preventative (100% coverage) Plan C/B adds $1,000 of Dental annually 60% of adults over age 45 max their current dental

16 Migration to coverage from waiver For the purposes of these illustrations several assumptions were made Overall member/employee counts were held constant Enrolled count of approximately 3,063 and waiver counts of 454 were kept constant Migration could occur from the waiver to covered count (reducing available waiver monies) as the payroll deduction for coverage drops to zero through June 2016 Which may reduce the amount of waiver monies available for Year 3 All information is based upon estimates of employees/covered lives and premium increases. All of which is subject to change and may impact estimate of zero year payroll deductions


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