1. Review & Recommendations
Mecklenburg Electric Cooperative
Finance Committee
2012 Healthcare Benefits
Review & Recommendations

2. 2012 Healthcare Analysis Received Competitive Offer from Anthem
MEC partnered with Dominion Benefits consultant
effective September 1, 2011
Received 2012 Renewal from NRECA
Continued to negotiate with NRECA & utilized online modeling tool to analyze plans for competitive costs
After a review and RFP of recommended benefit consultants, Mecklenburg Electric partnered with Dominion Benefits out of Richmond, effective September 1st. We feel that Dominion has a solid background with value driven focus on evaluation, implementation and administration of employer benefit goals as well as ongoing strategic support and advanced analytics needed to continue our plans utilization throughout the year.
We received renewal rates from NRECA and felt they were not acceptable based on our claims utilization and our plan design.
Their renewal calculation does not refect savings for a consumer-driven healthcare strategy considering our decreased-level of claims and our implementation of a high deductible health plan. We continued to negotiate our numbers w/ NRECA to no avail, as well as utilized their online tool to model, analyze and tweek similar plans with little to no impact on premium increase.
We worked with Dominion and sent out an request for proposal to several companies (included Optima, Southern Health, Anthem, & United Healthcare). We received an attractive offer of rates from Anthem, as well as a variety of plan options to choose. With Anthem’s nationwide networks and partnerships with providers, our employees will reap a larger provider discount than what they have seen in the past. They raise the perimeters when it comes to providers, so that our employees and families will have access to specialists for their needed care within a reasonable distance.
RFP Sent Out
Received Competitive Offer from Anthem

3. Healthcare Plan Recommendations
Maintain a High Deductible Health Plan with Anthem Continue paying 100% Single Premium
Continue offering health savings account (HSA)
Pay 75% of Family Premium to maintain consistency
Maintain a PPO Plan with Anthem
Continue paying 95% Single Premium
Continue offering flexible spending account (FSA) Continue paying 62% Family Premium
Our recommendation is to maintain a HDHP w/ Anthem;
continue paying 100% of the single premium
we continue to offer the healthcare savings account to help offset the employees’ out-of-pocket expenses
we pay 75% of the family premium to maintain the consistency of employees’ current premium
we maintain a PPO plan w/ Anthem
continue paying 95% of the single premium
we continue to offer the Fleible Spending Accounts
and continue paying 62% of the family premium
READ THIS WHILE SWITCHING TO NEXT SLIDE….Glen takes from here.
In summary, employees will realize about a 1.25% increase in their monthly premium -

4. 2012 HDHP Premiums
SINGLE PLAN
FAMILY PLAN
Total
Employee
MEC
2011 HDHP
Premium
Share
100%
419.94
0.00
72%
886.26
131.41
754.85
2012 HDHP
387.10
75%
921.30
133.02
788.28
Difference
-32.84
35.04
1.61
33.43
The family plan employee share premium increase is about $1.61 per month or a 1.23% increase.
A 75% MEC contribution toward the family HDHP Plan provides premium increase consistency between the PPO and HDHP Plans and further promotes the use of the HDHP Plan.

5. 2012 PPO Premiums SINGLE PLAN FAMILY PLAN Total Employee MEC 2011 PPO
Share
95%
519.14
25.96
493.18
62%
1,235.10
273.35
961.75
2012
525.24
26.26
498.98
1,250.07
276.74
973.33
Difference
6.10
.30
5.80
14.97
3.39
11.92
The single plan employee premium increases .30 cents per month or a 1.16% increase
The family plan employee premium increases $3.39 or a 1.24% increase

6. HDHP Carrier Difference
2012 Anthem
High Deductible Health Plan
Single
$3,000 Deductible
100% Coverage In-Network
70% Coverage Out-of-Network
$1,000 Annual Out-of-Pocket (RX Only)
Family
$6,000 Deductible
$2,000 Annual Out-of-Pocket (RX Only)
2011 NRECA
High Deductible Health Plan
Single
$2,000 Deductible
$2,000 Annual Out-of-Pocket
80% Coverage In-Network
60% Coverage Out-Network
Family
$4,000 Deductible
$4,000 Annual Out-of-Pocket
A look at the HDHP Plans:
Single: the maximum OOP decreases from $4k to $3k unless prescription is included. Then participant must reach the maximum OOP of $4K
Family: the max OOP decreases from $8K to $6K unless prescription is included. Then participant must reach the maximum OOP of $8K
Coverage is paid at 100% in network; 70% out of network – with Anthem’s strong area networks that serve all of our service areas, and deep provider discounts, side-by-side, the participant has more purchasing power for each dollar contributed with Anthem vs. NRECA These strong area networks will give little reason for participants to go out-of-network.
Our discounts w/ NRECA averaged about 21%....we anticipate about 30% average with Anthem.

7. HDHP RX Difference 2012 Anthem HDHP RX Plan 2011 NRECA HDHP RX Plan
Pay full price less discount of drugs up to deductible
Generics - $10
Preferred Brand Drugs
$30 – 30 days
$60 – 90 days
Non-Preferred Brand Drugs
$50 or 20% - 30 days ($200 max)
$150 or 20% - 90 days ($400 max)
Pay RX Copay up to $1,000 (Single)
Pay RX Copay up to $2,000 (Family)
2011 NRECA
HDHP RX Plan
Pay full price less discount of drugs up to deductible
Generics - $ day
$ days
Preferred Brand Drugs
Greater of $30/25% - 30 days
Greater of $65/25% - 90 days
Non-Preferred Brand Drugs
Greater of $50/40% - 30 days
Greater of $130/40% - 90 days
RX Copay up to $2,000 (Single)
RX Copay up to $5,000 (Family)
Maintenance RX applied to annual-of-pocket only; these drugs do not have to meet deductible
A Look at the RX Plans with the HDHP side by side…..almost identical RX plans.
With Anthem’s $10 generic, there is encouragement to utilize the discounted plans such as the $4 plans and $5 retail plans…..(CVS, Walmart, Walgreens).

8. Traditional PPO Carrier Difference
2012 PPO Anthem Plan
Single
$25 Copays, unlimited
$2,500 Deductible/Coinsurance
80% Coverage In-Network
60% Coverage Out-of-Network
RX Copays up to $3,500 Maximum
Family
$5,000 Deductible/Coinsurance
RX Copays up to $3,500 Max. per person
2011 PPO NRECA Plan
Single
$20 Copays, unlimited
$3,000 Deductible/Coinsurance
80% Coverage In-Network
60% Coverage Out-of-Network
RX Copays up to $2,000 Maximum
Family
$6,000 Deductible/Coinsurance
RX Copays up to $5,000 Maximum
A look at the PPO Plans:
Copays increase $5 – these copays do not go towards the out-of-pocket amounts
Deductibles/Annual Coinsurance decrease
Coverage in/out of networks remain the same
The RX bucket increases to $3,500 per person (single & family plans)

9. Traditional PPO RX Difference
2012 Anthem
PPO RX Plan
Generics - $10
Preferred Brand Drugs
$30 – 30 days
$60 – 90 days
Non-Preferred Brand Drugs
$50 or 20% - 30 days ($200 max)
$150 or 20% - 90 days ($400 max)
RX Copay up to $3,500 per person
2011 NRECA
PPO RX Plan
Generics - $ day
$ days
Preferred Brand Drugs
Greater of $30/25% - 30 days
Greater of $65/25% - 90 days
Non-Preferred Brand Drugs
Greater of $50/40% - 30 days
Greater of $130/40% - 90 days
RX Copay up to $2,000 (Single)
RX Copay up to $5,000 (Family)
A look at the RX plans with the PPO side by side….they are almost identical plans
Again….with this $10 generic price, participants still can shop those $4 & $5 plans to compare for a cheaper price.

10. HSA Contribution Support
Family
HDHP
Plan
Amount
Emp / Family
Total
Premium %
Maximum
Difference
MEC
Wellness
Savings
Annual
Funded
Out-of
Funds
Participation
HSA
Contribution
H S A
of Max
Pocket (OOP)
Pocket
Annually
Bonus
Funding
Monthly
OOP
Employee
3,000.00
500.00
600.00
400.00
1,000.00
26.26
315.12
1,315.12
43.84%
263.02%
Employee+Family
6,000.00
1,200.00
800.00
2,000.00
143.72
1,724.69
3,724.69
62.08%
372.47%
Based on current HDHP participation and HSA full funding, MEC will continue to save $122,087 in 2012.
Traditional
HDHP
PPO
Monthly
Annual
MEC COST
Rate
Difference
100%
387.10
95%
498.98
111.88
1,342.54
Breakeven
Dependent Coverage 75% / 62%
788.28
973.33
185.05
2,220.55

11. Healthcare Plan Comparison Single Scenario
High Deductible Plan
MEC HSA funds $ 600
Wellness bonus $ 400
Self HSA funds $
Total HSA $1,000
Premium $
2 Office $ $ 160
(Non-Preventative)
Surgeon Fee $1,500
Anesthesia ($1,200) $1,200
Generic Antibiotic ($36) $
Surgery ($9,700) $
($104 meets $3K Deductible – remaining 100%)
Total Medical Costs $3,000
Minus HSA Reimbursed (MEC FUNDS)
Total Out-of-Pocket Costs $2,000
PPO Plan
MEC FSA Funds N/A
Wellness bonus N/A
Self FSA Funds $
Total FSA $
Premium $
2 Office $ $
(Non-Preventative)
Surgeon Fee ($1,500) $
($500 ded. +20% of remaining total)
Anesthesia ($1,200) (20%) $
Generic Antibiotic $ (Walmart)
(RX applies toward RX bucket)
Surgery ($9,700) (20%) $1,940
Total Medical Costs $2,935
Total Out-of-Pocket Costs $3,250.12
Let’s take a look at a scenario on each of the plans side-by-side……
Employees have the option to contribute pre-tax dollars into their tax advantage accounts, in this scenario, the employee chose not to contribute.
Participant saves $1, on HDHP

12. Healthcare Plan Comparison Family Scenario
High Deductible Plan
MEC HSA funds $1,200
Wellness bonus $
Self HSA funds $
Total HSA $2,000
Premium $1,596.24
2 Office $80 $
(Non- Preventative)
X-ray & Reading ($500) $
Brand x4 $
Surgery ($9,700) $4,844.36
($6,000 Deductible is met)
Anesthesia ($1200) $
Total Medical Costs $6,000
Minus HSA Reimbursed (MEC FUNDS)
Total Out-of-Pocket Costs $5,596.24
PPO Plan
MEC FSA Funds N/A
Wellness bonus N/A
Self FSA Funds $ 0
Total FSA $ 0
Premium $3,320.88
2 Office $25 $
(Non-Preventative)
X-ray & Reading ($500) $
Brand $60 x4 $
(RX applies toward RX bucket)
Surgery ($9,700) (20%) $1,940
Anesthesia ($1,200) (20%) $
Total Medical Costs $2,970
Total Out-of-Pocket Costs $6,290.88
Employees have the option to contribute pre-tax dollars into their tax advantage accounts, in this scenario, the employee chose not to contribute.
Participant Saves $694.64
Copyright 2010

13. Healthcare Long-Term Strategy
Mitigates rising healthcare plan costs by promoting consumer driven health plans
Increases wellness awareness and promote participation
Continues commitment on benefit education and resources
Provides quality healthcare benefits to keep employees healthy & productive
Assists in retaining high quality workforce
Our promotion of the HDHP mitigates the rising healthcare costs by involving the participants in their personal healthcare decisions and creating a consumer driven plan.
This will take several years to develop such a culture, but we can do this by increasing our wellness awareness through continual education classes and promoting wellness resources to our employees and their families.
We’ve seen a tremendous commitment by our employees already with over 50% moving to the HDHP this year and increased involvement in wellness activities, and we have no doubt our employees support this culture.
With these efforts, our goal is to provide quality healthcare benefits to keep our employees healthy & productive and retain a high quality workforce.

14. Other Employee Benefits
Short Term Disability – No Increase
Business Travel Accident – No Increase
Basic Life & AD&D – 3.1% Increase
Long Term Disability – 3.8% Increase
Director AD&D – 10% Decrease
Net Annual Change = $5,236
Taking a look at other employee benefit adjustments for next year….Basic Life & AD&D will increase 3.1% & LTD will increase 3.8%...
This gives us a net annual change of $5,236.

15. Financial Impact of Recommendation
Year End
2012
Benefit Changes
Budget
Estimate
Staff
2006
2007
2008
2009
2010
2011
Proposal
Medical
883,398
957,566
908,204
931,332
1,029,095
1,249,992
1,170,391
1,194,176
Life, Disability, Accident
134,296
146,907
148,124
145,013
138,860
144,243
136,149
143,738
HSA/FSA
2,500
4,000
2,604
TOTAL
1,017,694
1,104,472
1,056,328
1,076,345
1,170,455
1,398,235
1,309,144
1,340,517
Annual Difference
86,779
(48,144)
20,017
94,110
227,780
(89,091)
(57,718)
Annual Percentage Increase
8.53%
-4.36%
1.89%
8.74%
19.46%
-4.13%
Budget to Budget
Notes if brought to the table:
HDHP employee enrollment was better than anticipated plus changes within the plan.
Losses and gains due to employees leaving and one new hire $10,300
Not all of the employee HDHP wellness incentives have been earned. $5,500

16. Expense Impact of Recommendations
Benefit Changes
Income Statement Effects
Year End
2012
Budget
Estimate
Staff
2011
Proposal
Capitalization ratio
32.50%
31.00%
Medical
1,249,992
1,170,391
1,194,176
843,745
807,570
823,981
Life, Disability, Accident
144,243
136,149
143,738
97,364
93,943
99,179
HSA/FSA
4,000
2,604
2,700
1,797
TOTAL
1,398,235
1,309,144
1,340,517
943,809
904,116
924,957
Annual Difference
-89,091
-57,718
-39,692
-18,852
Annual Percentage Increase
-4.13%
-2.00%
Budget to Budget

17. Questions? Leilani Todd, VP Human Resources (434) 372-6191
Kristine Martin, Benefits Administrator
(434)

18. Follow-up Employee Benefit Meetings Enrollments due to Anthem
Timeline of Events 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 31
Employee/Spouse
Benefit Meetings
Follow-up Employee Benefit Meetings
Enrollment
Deadline
Enrollments due to Anthem