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 Individual1214 65.48 272.52 953,913 3,970,07119.373%80.627% 77.92 324.30 1,135,156 4,724,385 12.44 51.78 Employee + Spouse552 147.33 620.67 975,914 4,111,31819.184%80.816% 175.32 738.60 1,161,338 4,892,469 27.99 117.93 Employee + Children253 115.71 517.29 351,296 1,570,49218.280%81.720% 137.69 615.58 418,042 1,868,886 21.98 98.29 Family778 197.62 873.38 1,844,980 8,153,87618.452%81.548% 235.17 1,039.32 2,195,527 9,703,112 37.55 165.94 FAY - POS Individual197 102.22 272.78 241,648 644,85227.259%72.741% 121.64 324.61 287,561 767,374 19.42 51.83 Employee + Spouse120 229.41 620.59 330,350 893,65026.989%73.011% 273.00 738.50 393,117 1,063,443 43.59 117.91 Employee + Children43 180.01 519.99 92,885 268,31525.716%74.284% 214.21 618.79 110,533 319,295 34.20 98.80 Family117 307.90 878.10 432,292 1,232,85225.961%74.039% 366.40 1,044.94 514,427 1,467,094 58.50 166.84 3,274 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