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
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
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?
“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
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:
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
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
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
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
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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