PREPARING FOR BARGAINING MEDICAL INSURANCE September 2014

Least Restrictive Most Restrictive Traditional PPO POS HMO HMO - Health Maintenance Organization POS – Point Of Service PPO – Preferred Provider Organization Different Health Insurance Plans 2

 Traditional plan has three parts:  Hospital benefit at 100%  Medical-surgical benefit – 100% up to $ limit  Major medical benefits  Deductible: $100  Coinsurance: 20% up to $400  100% coverage after deductible and coinsurance  Balance bills possible Traditional Indemnity Plan 3

Least Restrictive Most Restrictive Traditional PPO POS HMO HMO - Health Maintenance Organization POS – Point Of Service PPO – Preferred Provider Organization Different Health Insurance Plans 4

 Primary care physician required  100% coverage after co-payment  No deductibles or claim forms  Out-of-network expenses not covered, except in some emergencies  Choice depends on residency Health Maintenance Organization (HMO) 5

Least Restrictive Most Restrictive Traditional PPO POS HMO HMO - Health Maintenance Organization POS – Point Of Service PPO – Preferred Provider Organization Different Health Insurance Plans 6

 In-network  Primary care physician required in-network  100% coverage after co-payment  Out-of-network  Deductible: $100  Coinsurance: 40% up to $2000  100% coverage after deductible and coinsurance  Balance bills possible Point Of Service (POS) 7

Least Restrictive Most Restrictive Traditional PPO POS HMO HMO - Health Maintenance Organization POS – Point Of Service PPO – Preferred Provider Organization Different Health Insurance Plans 8

 In-network  No primary care physician required in-network  100% coverage after $10 copayment  Out-of-network  Deductible: $100  Coinsurance: 20% up to $2,000  100% coverage after deductible and coinsurance  Balance bills possible Preferred Provider Organization (PPO) 9

All health plans can be turned into a HDHP  Deductible  Minimum single - $1,250  Minimum family - $2,500  Out-of-Pocket  Maximum single - $6,350  Maximum family - $12,700  Health Savings Account (HSA) or Health Reimbursement Account (HRA)  Preventive care is usually covered at 100% High Deductible Health Plans 10

Prior to P.L Chapter 2, the administration of the plan was not a major priority. It is now more important than ever to understand the funding of your program. Administration Of Your Plan 11

Fully Inured Retrospective Minimum Premium Self Insured Risk Spectrum 12

 Fully insured plan is the most common type of plan used by employers outside the SHBP/SEHBP.  The employer pays a premium to the insurance carrier. The carrier assumes all claims liability under the plan.  The premium rates are fixed for a year. The employer is charged on a monthly basis.  The monthly premium only changes if the number of enrolled employees or employee status changes. Fully Insured 13

 A self-insured group health plan is one in which the employer assumes the financial risk for providing health care benefits to its employees. The employer pays for claim as they are incurred.  Self-insured employers can either administer the claims or subcontract this service to a third party administrator (TPA).  To protect against catastrophic claims, employers purchase what is known as stop-loss insurance to reimburse them for claims above a specified dollar amount. Self Insured 14

 The employer is not subject to state health insurance mandates. These health plans are regulated under federal law (ERISA).  The “bell curve of claims” is an important factor in an employer being self insured, and reserves need to be set aside for the incurred but not reported claims (IBNR). Self Insured 15

 Closer to a fully insured plan.  Premiums are usually higher than a traditional fully insured plan.  Insurance company pays claims  Financial accounting is performed 3 to 5 months after close of plan year.  Rate Stabilization Fund (RSF) is set up to hold any reserve or deficit.  Insurance company holds IBNR fund Retrospective Premium 16

 Closer to a self insured plan  Employer pays administrative costs but pays claims as they are incurred on a monthly basis.  Rate Stabilization Fund (RSF) is set up to pay monthly claims.  Financial accounting is performed 3 to 5 months after close of plan year.  Employer or insurance company holds IBNR fund. Minimum Premium 17

 Employers are “pooled” together with a fully insured administration pattern.  Premiums are set on a yearly basis with approximately 6 months lead time to allow employers flexibility.  Employers can come and go as they wish.  Rates are the same for all employers no matter what the usage is.  Benefits are set by SEHBP/SHBP Design Committee Health Insurance Funds (SEHBP/SHBP) 18

 Employers are “pooled” together for purchasing power  While a standard benefit package is available, employers can change benefit package to suit their CBA.  Employers are assessed a base premium, each employer has charges based on benefit level and usage.  Premiums are set on a yearly basis, but contract has exiting costs.  Possibility of “rebates” to employer. Health Insurance Funds (Non-SEHBP/SHBP) 19

Information Needed When Negotiating Comprehensive Health Benefits

 Health Insurance Scattergram  Number of employees in each available plan for last few years  Number of members in each level of coverage (S, PC, HW, F) for the past few years  Monthly/yearly cost of each available plan for last few years  Number of members waiving benefits  Number of members not eligible for benefits Item 1 21

 Chapter 78 Scattergram  Members name  Member’s salary  Member’s level of health, prescription, dental, and optical  Amount employer is charging each employee for benefits  1.5% of salary amount  Remember to include members that waive insurance Item 2 22

Health insurance benefit book (maybe even a master contract) for each plan offered to employees Item 3 23

A five year budget history of health benefit costs Item 4 24

Changes in levels of benefit in the collective bargaining agreement over the last 5 contracts Item 5 25

Detailed list of cost savings (or increase) for each Board of Education proposal Item 6 26

Disruption report when switching networks  Broker  Strennus Item 7 27

Is The Change Worth It To Your Members?

Medical - Horizon Direct 10  In-network  No primary care physician required in-network  100% coverage after $10 co-payment  Out-of-network  Deductible: $100 / $250  Co-insurance: 20% up to $2,000/$5,000  100% coverage after deductible and coinsurance  Emergency room - $25 Hospital stay - $0/day 29

Prescription - Horizon Direct 10  Retail Prescription – $3 generic/$10 brand  Mail Prescription – $5 generic/$15 brand 30

2015 Horizon Direct 10 CoverageYearly Premium $30,000$60,000$90,000 Single$10,828$1,082.80$2,923.56$3, Parent/Child$18,949$1,136.94$3,979.29$5, Husband/Wife$21,656$1,299.36$4,547.76$6, Family$29,777$1,488.85$5,062.09$8,

Medical - Horizon Direct 20/30  In-network  NO Primary care physician required in-network  100% coverage after $20 co-payment primary  100% coverage after $20-child/$30-adult co-payment specialist  Out-of-network  Deductible: $200 / $500  Co-insurance: 30% up to $5,000/$12,500  100% coverage after deductible and coinsurance  Emergency room - $125 Hospital stay - $500/stay 32

Prescription -Horizon Direct 20/30  Retail Prescription – $3 generic/$18 preferred/ $46 non-preferred  Mail Prescription - $5 generic/$36 preferred/ $92 non-preferred 33

Change to Horizon Direct 20/30 CoverageYearly Premium $30,000$60,000$90,000 Single Savings over Direct 10 $9,525 $ $ $2, $ $3, $ Parent/Child Savings over Direct 10 $16,669 $1, $ $3, $ $5, $ Husband/Wife Savings over Direct 10 $19,049 $1, $ $4, $ $5, $ Family Savings over Direct 10 $26,193 $1, $ $4, $ $7, $1,