Office of Group Benefits Tommy D. Teague Chief Executive Officer TODAY’S SMART CHOICES... TOMORROW’S HEALTHY SAVINGS Office of Group Benefits Tommy D. Teague Chief Executive Officer

Eligibility Full-time employees and retirees of… state agencies state colleges and universities participating school boards …and legal dependents: Legal spouse Never-married child from birth to age 21 Never-married child age 21-24 (if full time student) Effective date of coverage is first day of month after enrollment plus 30 days

OGB Plan Member Premiums Plan member pays 25% of premium for self Plan member pays 50% of premium for any dependents Aggregate contribution level is 29% by plan member

Retiree Health Coverage

OGB Health Plans 4 plans -- for all plan members PPO (self-insured & administered by OGB) HMO (self-insured; administered by Humana) EPO (self-insured; administered by UnitedHealthcare) Medical Home HMO (fully-insured & administered by Vantage)

OGB Medicare Advantage Health Plans 5 plans – only for retired plan members with Medicare Part A & Part B 3 Medicare Advantage HMO plans Humana HMO (only in certain areas of LA) Peoples Health (only in certain areas of LA) Vantage/POS Option (statewide) 2 Private Fee-for-Service (PFFS) plans Humana PFFS (nationwide) SecureHorizons Medicare Direct (nationwide)

OGB Health Plan Enrollment Total Enrollment 132,305*** Active employees 86,253 65% Retired employees 46,052 35% *** figures don’t include LSU plans

OGB Budget FY 2010 $1.264 billion

Fund Balance as of August 14, 2009 Fiscal Year 2009-10 Fund Balance as of August 14, 2009 $484,176,551

OGB Administrative Costs MEDICAL BENEFITS MEDICAL BENEFITS DRUGS ADMINISTRATIVE MENTAL HEALTH Administrative costs are 3% of total costs

OGB Organization 332 employees 5 divisions Benefit Services Customer Services Information Services Quality Assurance & Administration Legal & HIPAA

OGB Organization

OGB Organization

Enrollment Retired Employees 46,573 With Medicare 27,854 (Medicare is primary) 59% Without Medicare 18,719 (OGB is primary) 41%

Life Insurance Group term life plan Prudential State pays 50% of premium for employees and retirees Employee pays premium for dependent life Reduced coverage and premiums, on July 1 after reaching age 65 and age 70

Life Insurance Basic Plan Option I Option II Employee $5,000 Spouse $1,000 $2,000 Each Child $ 500

Basic Plus Supplemental Plan Life Insurance Basic Plus Supplemental Plan Option I Option II Employee: Based on schedule to maximum of $50,000 Based on employee’s annual salary Spouse $2,000 $4,000 Each child $1,000

GASB 45 / OPEB Liability Historically, governments accounted for retiree health care benefits on pay-as-you-go (PAYGO) basis. Cost of covering active employees was only a function of current year costs Did not reflect total cost of employee health coverage …only included current year Without projected future costs, governmental entities’ financial statements did not fully disclose all costs GASB requires disclosure of future costs associated with current services Those future costs are classified as OPEB

GASB 45 / OPEB Liability OPEB (other post-employment benefits) – a compilation of all non-pension benefits an employee receives after retirement Examples include: Health benefits Dental, vision and hearing coverage Prescription drug coverage Life insurance Long-term care commitments Long-term disability

GASB 45 / OPEB Liability Liability calculation assumptions: Benefit composition Medical inflation Turnover rate Mortality assumption Will employee live to reach retirement? How long will retiree live in retirement? Discount rate Other factors that affect number of dependents

GASB 45 / OPEB Liability GASB 45 does not require funding of the calculated liability Decision to fund or not is significant: Funded plans have lower liabilities Unfunded plans have larger liabilities Rating agencies may consider funding Funding requirements are strict; funds must be held in irrevocable trust Depending on funding or not: State’s liability now stands at $13.7 billion over 30 years….and growing