1. Page 1 Overview of Self-Funded Health Plans a step ahead McNeary, Inc.

2.  No premium taxes on the medical premiums  Lower administrative expenses  Greater flexibility in benefit design  Employers retain any savings that occur when actual claims are lower than those projected (fully-insured plans, the insurer retains those savings) What are the advantages to a Self-funded plan? Page 2 McNeary, Inc.

3.  Enrollment refers to the number of Employees who are enrolled in the health plan  Covered Lives or Covered Members refers to the employees + dependents who are enrolled in the health plan  Stop Loss coverage insurance purchased to cover large unexpected single claims that cost more than a specified amount ($175,000 Schools/$200,000 City) on an individual/member.  Utilization rates the amount of medical services used by employees in a specific period Vocabulary Terms: Page 3 McNeary, Inc.

4.  Third Party Administrator (TPA) is a company that receives medical invoices, reviews them and pays them on behalf of a company  Third Party Administrator with Carrier is a Health Insurance Network company that provides TPA services for a fee  Administrative fees are the per employee/per month fees charged by the TPA  Self Funded means that SPS/City pays for the actual cost of medical claims and any associated administrative fees. Vocabulary Terms: Page 4 McNeary, Inc.

5. Components of Self-Funding Page 5 McNeary, Inc. Medical Claims Hospital Specialists Doctor Visits Out-patient Urgent Care/Emergency Care Physical Therapy Imaging Pharmacy Laboratory Surgery $14,507,621 Stop Loss Coverage ($175,000) $ 813,056 Administrative Fees $ 376,131 Prescription Drug Credit $ (199,924) State Tax $ 18,294 Total Cost $15,515,178 Employee Usage drives cost of claims Risk of unexpected cost minimized $21.41 PE/PM $(11.38) PE/PM 2.25% Stop Loss

6. Ways to contain costs….. Page 6 McNeary, Inc. Medical Claims Hospital Specialists Doctor Visits Out-patient Urgent Care/Emergency Care Physical Therapy Imaging Pharmacy Laboratory Surgery $14,507,621 Stop Loss Coverage ($175,000) $ 813,056 Administrative Fees $ 376,131 Total Cost Estimate $ 15,515,178 Involve Employees in their health care (Wellness) Increase Risk Negotiate with vendor Change Plans design, shift costs, and manage disease costs

7. Page 7 SPS Demographics and Trends a step ahead McNeary, Inc.

8. Page 8 McNeary, Inc. 8 Year History of Health Benefit Costs * Affordable health care began 2012-2013 plan year *Changes to benefits made (shift in costs) 2013-2014 plan year *Enrollment change of 68 employees contributed to lower increases 6% 14% 61% Increase

9. SPS Enrollment Trends Page 9 McNeary, Inc. Average Employees15661488 Expense per Employee$8,946$8,605 Average Members27192651-2.5% Expense per Member $5,152$4,830-6.3% Average # Employees1,5661,488-5.0% Average # Members2,7192,651-2.5% Average # Members/policy1.741.782.6% Average Age Employees46.9347.581.4% Average Age Members37.5437.921.0% Table 1 Table 2 Table 3 Note: Expense per employees/members only includes cost of claims not total costs 2013-2014 2014-2015 2013-20142014-2015 2013-2014 2014-2015

10. SPS Trends Page 10 McNeary, Inc. Site of Care2013-2014% of Total2014-2015% of Total% Change In-patient Facility$2,377,862 17.0%$2,482,970 19.4% 4.4% Out-patient Facility$4,130,727 29.5%$3,254,611 25.4% -21.2% Inpatient Professional$ 421,387 3.0%$ 446,283 3.5% 5.9% Outpatient Professional$4,129,105 29.5%$3,301,546 25.8% -20.0% Pharmacy$2,892,812 20.6%$3,262,328 25.5% 12.8% Total$14,008,781 100.0%$12,803,642 100.0% - 8.6% Note: enrollment numbers dropped 68 employees during this time period

11. SPS top most Manageable Medical Conditions Page 11 McNeary, Inc. Medical Condition Asthma Cerebrovascular disease Chronic Respiratory disease Coronary Artery disease Depression Diabetes High Cholesterol Hypertension (High Blood Pressure) Rheumatoid Arthritis

12. Page 12 McNeary, Inc. Medical Claims Hospital Specialists Doctor Visits Out-patient Urgent Care/Emergency Care Physical Therapy Imaging Pharmacy Laboratory Surgery $14,507,621 Contain Medical claims by: Wellness Program Employees become involved in improving health Employee Group becomes healthier Manage/eliminate risk of disease Explore Pharmacy to provide medicine at/near cost to employees 2013-2014 Plan year spent $3.2m Explore Wellness Clinics to reduce cost of Doctor, Urgent Care, and Emergency care visits, provide disease management

13. Page 13 McNeary, Inc. Estimated Cadillac Tax impact Year 2015 2016 2017 2018 2019 2020 2021 2022 HMO Single6,6227,0867,5828,1138,6819,2889,93810,634 Single (FSA)7,9748,4388,9349,46510,03310,64011,29011,986 Family18,76120,07521,48022,98324,59226,31428,15630,127 Family (FSA)20,11321,42722,83224,33525,94427,66629,50831,479 2015 2016 2017 2018 2019 2020 20212022 PPO Single7,6518,1878,7609,37310,02910,73211,48312,287 Single (FSA)9,0039,53910,11210,72511,38112,08412,83513,639 Family21,26022,74824,34026,04427,86729,81831,90534,139 Family (FSA)22,61224,10025,69227,39629,21931,17033,25735,491 Estimated Excise Tax Impact 2018 20192020 2021 2022 TOTAL$8,190$20,385$55,427$155,312$322,935 Annual Plan Cost Limits ($) Single10,20010,40410,61210,82411,041 Family27,50028,05028,61129,18329,767

14.  Health Care clinics run by school division at cost  Pharmacy for employees with health care clinic  Wellness programs that pay employees to maintain healthy life style choices Page 14 McNeary, Inc. What are other school districts doing?

15.  Wellness Program launch (Fall 2015)  Exploring joint Pharmacy/Health Clinics for employees as a joint project with the city Page 15 McNeary, Inc. What is Suffolk Public Schools planning?

16.  Creation of committee to explore offering several health care plans to include:  High deductible, low monthly cost plan (Account based HP)  Changes to PPO plan to eliminate “Cadillac Tax” expense (2018)  Changes to HMO plan to eliminate “Cadillac Tax” expense (2020)  Permission to explore joint Pharmacy/Wellness clinics for SPS/City employees Page 16 McNeary, Inc. Next Steps…

17. Questions? Page 17 McNeary, Inc.