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Benefits Administration Update Presentation for 2013 Board of Education Spring Fiscal Workshop.

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Presentation on theme: "Benefits Administration Update Presentation for 2013 Board of Education Spring Fiscal Workshop."— Presentation transcript:

1 Benefits Administration Update Presentation for 2013 Board of Education Spring Fiscal Workshop

2 Agenda Plan Funding Process 2014 Health Benefits Estimated premium increase Base premium/surcharges Benefit changes Partnership Promise Health Reform – Accountable Care Act 2

3 Funding Levels and Benefit Design Overview of Process Goal: Ensure fiscal integrity of the plans Largest, primary portion of funding is premium comprised of employer, employee and retiree contributions Premiums cover: Claims Reserves for claims incurred but not yet reported (IBNR) Reserve for unanticipated fluctuations and catastrophic claims Administrative fees to claims and program administrators Clinic operation for State Insurance Plan Benefits Administration overhead 3

4 Funding Levels and Benefit Design Overview of Process 4 Factors considered in setting premiums Prior years’ performance Projected medical trend (cost and utilization) Program goals (e.g., incentives, value-based benefit design, wellness) Available state funding Plan reserves and IBNR Process Evaluate detailed month-to-month revenue and expense information Project current and future years’ expenses using historical information, market trend data and future regulatory requirements Evaluate benefit design against market benchmarks and program goals Project cost of proposed benefit design with changes (if any) Balance benefit design changes with existing fund balances, available funding, funding required to support benefit, and target ending reserve levels

5 2.1% Average Per Annum Increase – 0% 2010 – 4% 2011 – (2.9)% 2012 – 0% 2013 – 9.2% 5 Kept cost increases below trend Use of reserve Re-procurement Benefit redesign

6 Estimated 2014 Premium Increase FY 2014 BEP funding increase budgeted at 8.8% Premium increase expected to be less than 8.8% 2012 actual experience better than earlier forecast Funding based on aggregate average of base premium Base premium is based on lowest cost plan and lowest cost network (premium before network surcharge and Standard Plan surcharge) East and Middle TN base premium = BCBST Partnership PPO West TN base premium = Cigna Partnership PPO Final premium increase will be approved by Local Education Committee in June 6

7 2014 Benefit Proposed benefit changes not finalized Evaluating if there is a need for other benefit adjustments – only minor changes expected Out of pocket max added to drug coverage By 2015 health reform requires all combined out of pocket payments not to exceed certain $ threshold Will phase in partially for 2014 Specialty drug coverage – requirement that members who need a specialty drug for human growth hormone first try a preferred drug 7

8 8 Partnership Promise Everyone must take action in 2013 Builds on previous years’ requirements Goal: to help healthy members stay healthy and to slow or stop the progression of disease among those with chronic illnesses New Wellness Partner - Healthways now manages the Partnership Promise

9 9 Partnership Promise 2014 Promise will continue to build on previous requirements *  Complete the Well-Being Assessment by March 15  Keep contact information up to date  Everyone will complete a biometric screening through health screening event or personal physician visit  More choices for wellness activity (choose one)  At-risk members participate in health coaching/case management  Tobacco users must participate in a tobacco cessation program  New employees must complete Well-being Assessment (WBA) and biometric screening within 120 days of insurance coverage effective date * Pending approval from the Insurance Committees

10 10 Working for a Healthier Tennessee Companion to the Governor’s wellness initiative, Healthier Tennessee Focuses on improving health of our plan members Three key areas: Physical activity Healthy eating Tobacco cessation Asking each school district to choose a Site Champion

11 Your Site Champion will:  Commit to one year of service, with an average monthly time commitment of three to five hours  Participate in monthly Site Champion conference calls  Promote wellness activities in your organization  Organize at least two healthy events for your worksite  Serve as screening site coordinator (if applicable) for the Partnership Promise  Regional kickoff meetings starting in mid-June 11 Working for a Healthier Tennessee

12 Plan Year Lifetime dollar limits on Essential Health Benefits (EHB) prohibited* Preexisting Condition Exclusions Prohibited for Children under 19* Overly restrictive annual dollar limits on EHB prohibited* Extension of Adult Child Coverage to Age 26* Prohibition on Rescissions* Certain In-Network Preventive Health Care Provided with No Cost Sharing** Internal Claims and Appeals Changes and External Review** Consumer/patient protections** Nondiscrimination requirements on fully insured plans** (DELAYED) Certain Retiree Medical Claims Reimbursable (ERRP) Retiree Drug Plan FAS Liability Recognition Over-the-Counter Medicines Not Reimbursable Under Health FSA, HRAs, or from HSAs Without a Prescription, Except Insulin HSA Excise Tax Increase Public Long-Term Care Option (CLASS Act) –No Longer Supported by HHS Medicare Part D Discounts for Certain Drugs in “Donut Hole” In-network Women’s Preventive Health Care Provided at No Cost Sharing (effective for PY beginning on or after Aug. 1, 2012) ** Employer Distribution of Summary of Benefits and Coverage to Participants* Comparative Effectiveness Fee Based on Avg. Covered Lives in 2012 (paid in 2013) Employer Quality of Care Report** (DELAYED) Medical Loss Ratio rebates (insured plans only)* Employer Reporting of Health Coverage on Form W-2 (due January 31, 2013) Notice to Inform Employees of Coverage Options in Exchange Limit Health FSA salary- reduction contributions to $2,500 (Indexed) Elimination of Deduction for Expenses Allocable to Retiree Drug Subsidy (RDS) Additional Medicare Tax on High Income Earners Individual Mandate to Purchase Insurance or Pay Penalty State Insurance Exchanges Employer Responsibility to Provide Affordable Minimum Essential Health Coverage*** Preexisting Conditions Exclusions Prohibited* Annual Dollar Limits on EHB Prohibited* Automatic Enrollment Limit of 90-Day Waiting Period for Coverage* Employer Reporting of Health Insurance Information to Government and Participants Increased Cap on Rewards for Participation in Health- Contingent Wellness Program* Annual OOP Limit for HDHPs apply to other group health plans** Transitional reinsurance contributions for plans providing major medical Coverage for individuals participating in Approved Clinical Trials** 2018 Coverage provider subject to 40% Excise Tax on Excess Benefit of High-Cost Coverage Affordable Care Act Implementation *Denotes group/insurance market reforms applicable to all group health plans. **Denotes group/insurance market reforms not applicable to grandfathered health plans. *** This requirement applies to full time employees (e.g., working on avg. 30 hours per week) and will require coverage that is affordable and satisfies a certain actuarial value to avoid the penalty. Guidance forthcoming.

13 Concerns and Issues Affordability Full-time status Equal or superior requirement 13

14 Federal Health Reform Beginning in 2014, employers with over 50 employees will be subject to a penalty unless Offer minimum essential coverage Offer at least 1 plan with minimum 60% actuarial value Offer affordable coverage If any of its full-time employees seeks and receives a premium credit toward purchase of an Exchange plan, “free-rider” penalty is applied to employer Penalty starts at $3K annual for each FT employee receiving a tax credit up to maximum of $2K times total number of employees minus 30 14

15 Affordability Test FTE contribution for EE Only lowest cost cannot exceed 9.5% of Applicable Taxpayer’s household income Determined based on self-coverage (EE Only), regardless of actual coverage election IRS guidance for calculation on FTE’s W-2 wages expected Penalty of $3,000/PY per FTE (30HRS) who enrolls in exchange and is eligible for premium tax credit or cost-sharing reduction At least 30 hours a week and whose deduction for the lowest cost plan available is more than 9.5% of family income (measured on EE Only Coverage) 15

16 Roles and Responsibilities under PPACA State of Tennessee Local Education Plan Production and distribution of the Summary of Benefits Coverage (SBC) Payment of Comparative Effectiveness Research fee Payment of Transitional Reinsurance Fee Employers Notification about availability of the Health Care Exchange (HHS has not yet released guidelines) Auto-enrolling new employees (Dept of Labor has not yet released guidelines) Must offer health plan that meets essential benefits, actuarial value threshold and affordability State plan exceeds minimum actuarial value for offering essential benefits Affordability test is a combination of premium payment by employee and wages 16

17 PPACA Training 17 State-sponsored PPACA webinars Two sessions for Fiscal Directors One session for agency benefit coordinators and others Dates in May - TBD


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