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Options for July 1, 2015 Implementation.  Covers 36,261 individuals: 17,031 employees + 19,230 spouses and dependents Enrollees primarily reside in Arkansas,

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Presentation on theme: "Options for July 1, 2015 Implementation.  Covers 36,261 individuals: 17,031 employees + 19,230 spouses and dependents Enrollees primarily reside in Arkansas,"— Presentation transcript:

1 Options for July 1, 2015 Implementation

2  Covers 36,261 individuals: 17,031 employees + 19,230 spouses and dependents Enrollees primarily reside in Arkansas, clustered in two markets: Central Arkansas, NWA Self insured, non-ERISA health plan University bears the risk of the insured pool; stop loss coverage for claims > $1 million Stop-loss coverage renews annually with individual catastrophic claims figured into renewal proposals University of Arkansas System Health Plan

3   July 2010: No increase Employee Only; 5% increase in family rate  July 2011: No increase  July 2012: No increase UAF and UAMS; 10% increase all other campuses  July 2013: No increase  July 2014: No increase  January, 2015: 3% Rate Increase UAF & UAMS Last 5 Years: History of Premium Increases

4   Loss of approximately $1.7 million  In May, loss of $1.2 million  In June, loss of $2.7 million  From July 2014 through December, 2014  Lost an additional $9.4 million Total Loss for Calendar 2014: $14,769,019 What Happened in April of 2014?

5   “Loss rate accelerated and continues to increase…”  “unprecedented large claims intensity on a significantly higher number of large claim events”  Rate increase of 24% based on assumption plan continues to experience high cost claims at current level Aon Hewitt Actuarial Analysis December 2014

6   Combine a rate increase with plan design changes and other initiatives to mitigate 24% rate increase to 19%  Plan Design Changes effective July 1, 2015:  Increase office visit co-pays by  $10 for primary care  $5 for specialists  Increase Rx co-pays for Tier 2 Drugs by $10  Reduce Co-insurance from 80% to 70%  January 1, 2016: Increase Deductible from $750 to $1250  Address the current ratio of Employer and Employee Contribution percentages Recommendations:

7   Access Pharmacy Discounts under 340b program where eligible  Dependent Eligibility Audit  Require positive documentation from each employee (tax returns/birth certificates/marriage licenses)  Estimates of 1% to 2% savings from removing ineligible enrollees Other Initiatives

8   Wellness Participation Requirements built into Plan Design  Health Rates with EE/ER % by Salary Bands  Spousal Surcharge/Working Spousal Exclusion  Tobacco Surcharge  New Plan Language with Care Management Requirements (currently voluntary) Additional Initiatives under Evaluation

9  Financial Impact

10   Best way to address impact on all employees  19% Increase in employee portion to health insurance  Address current ratio of employee/employer contributions  Across the board increase vs possible 2-tier or 6-tier salary band solution  Impact of increase on possible cost of living adjustment Issues for Discussion

11   Currently the employee/employer ratio for the total insurance premium is split with approximately 81% being paid by the university and approximately 19% paid by the employee.  The system offices recommended an employee contribution change of 2%. This would change the employee/employer ratio to 79% and 21% respectively.  By making this small change in the ratio split it would raise the employee premium by 31% instead of the 19% increase in the current model. System Solution Proposal #1

12  19% Increase Proposal #2 CurrentlyProposal #1 Differences (Proposal - Current) TypeCoverage Head Count Employee 'Monthly' Employer 'Monthly' Employee 'Yearly' Total Employer 'Yearly' TotalEmployee %Employer % Employee 'Monthly' Employer 'Monthly' Employee 'Yearly' Total Employer 'Yearly' Total Employee 'Monthly' Employer 'Monthly' FAY - CLC Individual ,913 3,970, %80.627% ,135,156 4,724, Employee + Spouse ,914 4,111, %80.816% ,161,338 4,892, Employee + Children ,296 1,570, %81.720% ,042 1,868, Family ,844,980 8,153, %81.548% , ,195,527 9,703, FAY - POS Individual , , %72.741% , , Employee + Spouse , , %73.011% ,117 1,063, Employee + Children , , %74.284% , , Family ,292 1,232, %74.039% , ,427 1,467, ,274 5,223,278 20,845,426 6,215,700 24,806,057

13  2-Tier Solution Proposal #3

14  2-Tier with cola impact

15

16  6-Tier Solution Proposal #4

17  6-Tier with cola impact

18

19  Summary

20  Peer Data For reference: UA employee only currently is $65 and family is $198

21  Peer Data For reference: UA employee only currently is $65 and family is $198

22  Peer Data For reference: UA employee only currently is $65 and family is $198

23  Peer Data

24   Feedback from Faculty and Staff Senates to Administration April 20th  Final premium allocation to System Office May 1 st  Plan design changes effective July 1 st  Premium changes effective on July 31 st payroll  Additional changes to deductible January 1, 2016 Next Steps


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