2014 benefit changes in response to the aca hr pros - april, 2013 office of human resources
TRANSCRIPT
2014 Benefit Changesin response to the ACA
HR Pros - April, 2013
Office of Human Resources
The “Affordable Care Act”
…by any other name…
• ACA• Patient Protection and Affordable
Care Act (PPACA)• Health Care Reform• Obamacare
…may, or may not, be a rose
Is the ACA a good thing?
• Many more Americans will have coverage – but not everyone
• Many with poor coverage have better coverage– but many won’t have quite as good coverage as now
• This will come at a cost – More out-of-pocket costs in our plan. More taxes going to the Feds.– It may take longer to get an appointment with a provider.
• Health care delivery in America does need reforming!– Costs more and produces worse outcomes.– Why? Providers get paid for the wrong thing: Services
instead of Results. • In the end, you will have to decide whether it’s a good thing.
Will it effect the UPlan?
HCR has already affected the UPlan…
…but not as much as many other employer plans!
2011: • Adult child coverage to age 26
– That’s currently costing roughly $2M a year
2013:• Health Care Exchanges begin Enrollment
– Challenge for us to help employees understand what’s happening
• Healthcare Flexible Spending Account limited to $2,500• Some minor changes in benefits• Changes in the way that appeals are handled• Value of your 2012 tax-exempt medical insurance shows on W-2
Effects on UPlan
2014:• January 1: Exchanges deliver coverage
– Like most large employers, we will “play” (pay or play)– Benefits remain a key component of our employee value proposition
• Requires a complicated way of determining Full Time eligibility
2015 (2016?):• Auto-enrollment required
• New employees will automatically be enrolled for employee-only coverage. They will have to enroll their dependents to get coverage, and can opt out if desired.
• Overrules MN State Law
2018: (here’s the “biggie”)• An Excise (“Cadillac”) Tax will be imposed on “high value” plans
UPlan is a “High Value” plan
“Plan Value” is defined by the ACA as the sum of:
Employer contribution to premium
+ Employee contribution to premium
+ any Health Flexible Spending Account amounts
Out-Of-Pocket costs are not included!
A “High Value” plan is any plan that exceeds these annual amounts in 2018:– $10,200 for individual; $27,500 for family– UPlan has options at $8,000 individual; $21,000 family now!
When the “Cadillac Tax” hits…
• A tax rate of 40% of the Plan Value in excess of the maximum allowed will be imposed.
• Five year (2018-2022) estimate of UPlan exposure:
$48,000,000– Assumes we do nothing
• The University must not pay this tax! – For financial reasons– For political (public relations) reasons
Our Goals…
Maintain quality, affordability, and choice in the UPlan
Avoid the Excise Tax
Continue to manage healthcare trend
Changes begin in 2014
Why this early?• Must have plan value calibrated before 2016 to
ensure safe harbor• Need a minimum 18 months of experience to
measure impact of changes, plus time to make adjustments prior to 2016
• Also, high risk of making changes for 2015 because of overlap with ESUP
• Pushes us to January 1, 2014
We must reduce Plan Value
• Three strategies– Ongoing cost-effective care initiatives– Adjusting the benefit design– Miscellaneous other changes
2014 medical changes
Increase Out-Of-Pocket costs.• In ‘traditional’ plans:
– Introduce deductibles on all non-copay items• $100/$200 on Medica Elect Essential• $200/$400 on Medica Insights and Choice
– Increase primary care and related copays by $10• Primary, internal medicine, OB/GYN, pediatrics• Also chiropractic, acupuncture, physical, occupational &
speech therapy, MH/SA
– Introduce higher copays for specialty care• $15 higher than primary care ($10 higher in ACO plan)
2014 medical changes
• In Health Savings Account Plan– $250 / $500 reduction in HSA account– $500 / $1,000 increase in out-of-pocket
maximum
2014 medical changes
• Introduce a new, ACO (Affordable Care Organization) Plan in our choices– High-quality, cost effective, but restrictive– Benefits slightly higher than Base Plan– Costs slightly lower – a “buy down” plan– Four Twin Cities ACOs within this plan
• Fairview, HealthEast, Park Nicollet, Ridgeview– Fairview currently includes UMP specialists, but not
UMP primary care– Park Nicollet does not include HP primary or specialty
• Some potential to include Duluth care system
2014 medical changes
• ACO Plan continued– Annual Elections - Employee & all family
members must be in same ACO for the full year– No referrals needed within ACO network.– BUT referrals outside the ACO highly unlikely!– Travel benefit covers care outside service area
• Emergency, urgent & non-emergency care– Care within service area, but outside of ACO, is
out of network– Expect providers to reach out to new members
2014 pharmacy changes
• Increase Tier 3 – Non-formulary brand copay to $75– Encourages use of Tier 1 and Tier 2
clinically appropriate, cost effective medications
– Current appeals & Prior Authorization provisions remain in effect
Plan comparison – Elect / Essential & ACO
Medica Elect/ Essential & New Medica ACO Plan
Elect/EssentialCurrent Design
Elect/EssentialNew Deductible & Co-pay Design
ACO PlanNew Deductible & Co-pay Design
(Lower Premium than Elect/Essential)
Category In Network Out of Network In Network Out of Network In Network (specific ACO)
Out of Network
Deductible None $600/$1200 $100/200 or $200/400
$600/$1200 $100/200 or $200/400
$600/$1200
Preventive care 100% 100% 100%
Physician care $15 copay Deductible/70% $25 PCP/$40 SPC
Deductible/70% $20 PCP/$30 SPC Deductible/70%
Convenience care $10 copay Deductible/70% $15 copay Deductible/70% $15 copay Deductible/70%
Urgent Care $15 copay $15 copay $25 copay $40 copay $20 copay $20 copay
Emergency room $90 copay $90 copay $100 copay $100 copay $100 copay $100 copay
Lab 100% Deductible/70% Deductible/100% Deductible/70% Deductible/100% Deductible/70%
MRI $30 copay Deductible/70% Deductible/100% Deductible/70% Deductible/ 100% Deductible/70%
Hospital 100% Deductible/70% Deductible/100% Deductible/70% Deductible/100% Deductible/70%
Other copays: chiro, MH, etc.
$15 Deductible/70% $25 PCP/$40 SPC
Deductible/70% $20 PCP/$30 SPC Deductible/70%
Rx benefits $10/30/60 copay with $750/$1,500 OOP max.
$75 copay for Tier 3 medications $75 copay for Tier 3 medications
Annual OOP limits $2,500/$4,000 $2,500/$4,000 $2,500/$4,000
Plan comparison - Insights
Medica Insights Insights - Current Design Insights - New Deductible & Co-pay Design
Category In Network Out of Network In Network Out of Network
Deductible None $600/$1200 $200/400 $600/$1200
Preventive care 100% 100% 100% 100%
Physician care(Tiers 1/2/3) $15/$30/$50 Deductible/70% $25/$40/$65 Deductible/70%
Convenience care $10 copay Deductible/70% $25 copay Deductible/70%
Urgent Care $15/30/50 $15/30/50 $40 copay $40 copay
Emergency room $90 copay $90 copay $100 copay $100 copay
Lab 100% Deductible/70% Deductible/100% Deductible/70%
MRI $30 copay Deductible/70% Deductible/ 100% Deductible/70%
Hospital 100%/$200 copay /$200copay
Deductible/70% Deductible/100% Deductible/70%
Other copays: chiro, MH, etc. $15 copay Deductible/70% $25 PCP/$40 SPC Deductible/70%
Rx benefits $10/30/60 copay with $750/$1,500 OOP max.
$75 copay for Tier 3 medications
Annual OOP limits $2,500/$4,000 $2,500/$4,000
Plan comparison – Choice Nat’lMedica Choice National
Medica Choice National - Current Design Medica Choice National – New Deductible & Co-pay Design
Category In Network Out of Network In Network Out of Network
Deductible None $600/$1200 $100/200 or $200/400 $600/$1200
Preventive care 100% 100%
Physician care $30 copay Deductible/70% $40 PCP/$55 SPC Deductible/70%
Convenience care $10 copay Deductible/70% $20 copay Deductible/70%
Urgent Care $30 copay $30 copay $55 copay $55 copay
Emergency room $90 copay $90 copay $100 copay $100 copay
Lab 100% Deductible/70% Deductible/100% Deductible/70%
MRI $30 copay Deductible/70% Deductible/ 100% Deductible/70%
Hospital $200 copay then 100% Deductible/70% Deductible/100% Deductible/70%
Other copays: chiro, MH, etc. $30 copay Deductible/70% $40 PCP/$55 SPC Deductible/70%
Rx benefits $10/30/60 copay with $750/$1,500 OOP max. $75 copay for Tier 3 medications
Annual OOP limits $2,500/$4,000 $2,500/$4,000
Plan comparison - HSA
Shift some costs out of the rates
• Move costs for internal administrative costs, and Wellness Incentives, out of the premiums– Costs charged to fringe pool, but not to
UPlan Medical program– Reduces cost of all plan options
Multiple base plans cause tax exposure
Base Plans Employee Only 2013
Rates
Total Cost Employee CostWellness / Standard
Rates
Twin Cities – Medica Elect / Essential
$276.35 $24.39 / $35.93
Duluth – Medica Elect / Essential
$327.64 $24.39 / $35.93
Greater Minnesota – Medica Choice
Regional
$377.70 $24.39 / $35.93
Combining base plans helps
• Combining the Twin Cities, Duluth, and Greater-MN base plans into one reduces the excise tax exposure.– Same benefits, total cost, and employee
cost for new single base plan– Networks will differ– Non-metro costs will come down; very
slight increase for Twin Cities costs
Family tier cost causes exposure
Medica Choice 2013 Rates
Total Cost Employee Cost Wellness / Standard
Employee $306.20 $54.24 / $65.78
Employee & Child/Children
$530.32 $133.29 / $144.83
Employee & Spouse / SSDP
$655.87 $163.84 / $179.22
Employee & Family $878.54 $224.72 / $240.10
Combining tiers helps
• Spouse/SSDP and Family tiers are combined.• This reduces exposure to the Excise Tax by pulling
down the cost of the Family tier.• However, this significantly increases cost for
employees currently in the Spouse/SSDP tier.
2013 Coverage Tiers 2014 Coverage Tiers
Employee only Employee only
Employee + Child/Children Employee + Child/Children
Employee + Spouse/SSDPEmployee + Family
Employee + Family
Premiums (Standard) $ Change % Change
Premiums (Wellness) $ Change % Change
EE OnlyE/E & Choice Reg. $ 36.56 $ 0.63 1.8% $ 25.02 $ 0.63 2.6%ACO * $ 35.30 $ (0.63) -1.8% $ 23.76 $ (0.63) -2.6%Insights $ 58.58 $ 1.30 2.3% $ 47.04 $ 1.30 2.8%Choice National $ 65.58 $ (0.20) -0.3% $ 54.04 $ (0.20) -0.4%HSA $ 36.85 $ 0.47 1.3% $ 25.31 $ 0.47 1.9%
EE & Sp/SSDP **E/E & Choice Reg. $ 142.86 $ 27.40 23.7% $ 127.47 $ 27.39 27.4%ACO * $ 137.70 $ 22.24 19.3% $ 122.32 $ 22.24 22.2%Insights $ 197.92 $ 39.72 25.1% $ 182.53 $ 39.71 27.8%Choice National $ 215.02 $ 35.80 20.0% $ 199.63 $ 35.79 21.8%HSA $ 144.13 $ 27.86 24.0% $ 128.74 $ 27.85 27.6%
EE & Child(ren)E/E & Choice Reg. $ 95.06 $ 1.68 1.8% $ 83.52 $ 1.68 2.1%ACO * $ 91.60 $ (1.78) -1.9% $ 80.06 $ (1.78) -2.2%Insights $ 130.94 $ 2.96 2.3% $ 119.40 $ 2.96 2.5%Choice National $ 144.39 $ (0.44) -0.3% $ 132.85 $ (0.44) -0.3%HSA $ 95.98 $ 1.20 1.3% $ 84.44 $ 1.20 1.4%
FamilyE/E & Choice Reg. $ 142.86 $ (11.79) -7.6% $ 127.47 $ (11.80) -8.5%ACO * $ 137.70 $ (16.95) -11.0% $ 122.32 $ (16.95) -12.2%Insights $ 197.92 $ (14.02) -6.6% $ 182.53 $ (14.03) -7.1%Choice National $ 215.02 $ (25.08) -10.4% $ 199.63 $ (25.09) -11.2%HSA $ 144.13 $ (11.46) -7.4% $ 128.74 $ (11.47) -8.2%
* Trend is measured against base plan** Trend is measured against family coverage
2014 Premium Changes
Premiums (Standard) $ Change % Change
Premiums (Wellness) $ Change % Change
EE OnlyE/E & Choice Reg. $ 36.56 $ 0.63 1.8% $ 25.02 $ 0.63 2.6%ACO * $ 35.30 $ (0.63) -1.8% $ 23.76 $ (0.63) -2.6%Insights $ 58.58 $ 1.30 2.3% $ 47.04 $ 1.30 2.8%Choice National $ 65.58 $ (0.20) -0.3% $ 54.04 $ (0.20) -0.4%HSA $ 36.85 $ 0.47 1.3% $ 25.31 $ 0.47 1.9%
EE & Sp/SSDP **E/E & Choice Reg. $ 142.86 $ 27.40 23.7% $ 127.47 $ 27.39 27.4%ACO * $ 137.70 $ 22.24 19.3% $ 122.32 $ 22.24 22.2%Insights $ 197.92 $ 39.72 25.1% $ 182.53 $ 39.71 27.8%Choice National $ 215.02 $ 35.80 20.0% $ 199.63 $ 35.79 21.8%HSA $ 144.13 $ 27.86 24.0% $ 128.74 $ 27.85 27.6%
EE & Child(ren)E/E & Choice Reg. $ 95.06 $ 1.68 1.8% $ 83.52 $ 1.68 2.1%ACO * $ 91.60 $ (1.78) -1.9% $ 80.06 $ (1.78) -2.2%Insights $ 130.94 $ 2.96 2.3% $ 119.40 $ 2.96 2.5%Choice National $ 144.39 $ (0.44) -0.3% $ 132.85 $ (0.44) -0.3%HSA $ 95.98 $ 1.20 1.3% $ 84.44 $ 1.20 1.4%
FamilyE/E & Choice Reg. $ 142.86 $ (11.79) -7.6% $ 127.47 $ (11.80) -8.5%ACO * $ 137.70 $ (16.95) -11.0% $ 122.32 $ (16.95) -12.2%Insights $ 197.92 $ (14.02) -6.6% $ 182.53 $ (14.03) -7.1%Choice National $ 215.02 $ (25.08) -10.4% $ 199.63 $ (25.09) -11.2%HSA $ 144.13 $ (11.46) -7.4% $ 128.74 $ (11.47) -8.2%
* Trend is measured against base plan** Trend is measured against family coverage
2014 Premium Changes
Concluding notes
• We are consulting with BAC now• Negotiating with Labor Represented groups• Planning massive communication campaign,
including:– Facts of ACA
• Clear message that Obamacare is the driver
– Impact on UPlan
Questions?