agenda€¦ · stephanie lilly-palmer dr. lanita white greg rogers carla haugen – chair renee...

AGENDA

State and Public School Life and Health Insurance Board

June 18th, 2019

1:00 p.m.

EBD Board Room – 501 Building, Suite 500

I. Call to Order .......................................................................................... Carla Haugen, Chair

II. Approval of May Minutes ..................................................................... Carla Haugen, Chair

III. ASE-PSE Financials ......................................................... Bonnie Casey, EBD Comptroller

IV. Subcommittee Update ........................................... Chris Howlett, EBD Executive Director

V. 2020 Rates ............................................................ John Colberg & Gaelle Gravot, Cheiron

VI. Director’s Report ................................................... Chris Howlett, EBD Executive Director

VII. Adjournment ......................................................................................... Carla Haugen, Chair

Upcoming Meetings

July 23rd, 2019, August 20th, 2019, September 17th, 2019

NOTE: All material for this meeting will be available by electronic means only

Notice: Silence your cell phones. Keep your personal conversations to a minimum.

STATE AND PUBLIC SCHOOL LIFE AND HEALTH INSURANCE BOARD MEETING MINUTES

191st meeting of the State and Public School Life and Health Insurance Board (hereinafter called the Board), met on June 18, 2019 at 1:00 p.m. in the EBD Board

Room, 501 Woodlane, Suite 500, Little Rock AR 72201.

Date | time 6/18/2019 1:00 PM | Meeting called to order by Carla Haugen, Chair

Attendance

Members Present Members Absent

Cindy Allen Dr. John Kirtley

Stephanie Lilly-Palmer

Dr. Lanita White

Greg Rogers

Carla Haugen – Chair

Renee Mallory - Vice-Chair

Dori Gutierrez

Melissa Moore

Lisa Sherrill

Cindy Gillespie – Proxy – Jimmy Fields

Dr. Terry Fiddler

Herb Scott

Chris Howlett, Employee Benefits Division Executive Director

OTHERS PRESENT:

Rhoda Classen, Cory Walker, Eric Gallo, Theresa Huber, Sharon Parker, Bonnie Casey, Lanita Wasson, Krista Grafe, EBD; Dr. Dwight Davis, UAMS EBRX; Jessica Akins, Takisha Sanders, Health Advantage; Elizabeth Montgomery, ACHI; Sylvia Landers, Securian; Greg Jones, Mainstream; Ronda Walthall, Wayne Whitley, ARDOT; Andy Davis, ADG; Suzanne Woodall, MedImpact; David Kizzia, AEA; John Bridges, AAEA; Jack Hopkins, Centene; Martha Hill, MW; Cynthia Foster, Phillip Narrine, ASP; Jenny Carlisle, AEDC; Jimmy Fields, DHS; Bill Clary, ARSEBA; Frances Bauman, NovoNordisk; Lura Campbell, Donna Morey, ARTA; Christian Gonzalez, AG; Jenna Goldman, Delta Dental; Todd Forwood, CYC; Wanda Henry, AGPC; Sheila Weddington; Diann Gwatney, Gabby Eaton, MG Smith, Marty Morgan, Lex Dobbins, Gary Walker, Retiree

Approval of Minutes by: Carla Haugen, Chair

MOTION by Mallory:

Motion to accept the May 21st, 2019 minutes.

Lilly-Palmer seconded; all were in favor.

Minutes Approved.

Financials by: Bonnie Casey, EBD Comptroller

Casey reported the financials for May 2019. For PSE in the month of May, we paid four (4) weeks of claims for both medical and pharmacy; the

FICA savings received for the month was $545,000, and $2.7 million for the year. We had a net gain

of $2.8 million for the month and a net gain $16.4 million year-to-date. Net assets available are $79

million.

For ASE in the month of May, we paid four (4) weeks of claims for both medical and pharmacy. We

had a net gain of $3.1 million for the month and a net gain of $12.6 million year-to-date. Net assets

available are $21.7 million.

The projected vs. actual claims and expenditures report shows the numbers from the current month,

the year-to-date (YTD) and the differences. The monthly amounts are for May 2019 and YTD

amounts are for January-May 2019.

Subcommittee Updates by: Chris Howlett, EBD Executive Director

Howlett provided a brief recap of the June Quality of Care and Benefits Subcommittee meetings.

There was a recommendation from the Benefits Subcommittee for the Board by Shelby McCook to

recommend:

• PSE: No rate increase along with no changes in plan benefits.

• ASE: 5% rate increase across the board. No changes in plan benefits.

2020 Rates by: John Colberg & Gaelle Gravot, Cheiron

Colberg & Gravot provided 2020 and 2021 ASE/PSE considerations for change as listed below:

PSE

• Current projections show no rate increase needed for 2020

• Changes in rates and/or benefits could be needed for 2021

• Rate increases for 2020 would reduce changes needed for 2021

ASE

• Significant changes in rates and/or benefits are needed in ASE for 2020

• Significant changes may also be required for 2021 – However, the plan also has about a 1/3 chance of not requiring any changes for 2021.

Discussion:

PSE

White: On the PSE side, are we doubling the reserves? Colberg: No, any time we allocate reserves for future contributions, Board policy is that you use

half of that the first year, 30% the second year, and 20% the third year. If we allocate $20 million, we would use $10 million the first year, $6 million the second, and $4 million the third.

White: What are we using this year? Colberg: We are allocating $35 million and we will use $17.5 million in 2020, about $10 million in

2021, and $7 million in 2022. Dr. Fiddler: Depending on the desired reserve levels, the Board determines what we want to have

as our desired reserve level or is that a prepared percentage of the total number of assets that we have? methodology?

Howlett: Relative to the 50,30,20 methodology, that was Board approved. As far as the allocation and reserves, the white level is catastrophic reserves. The catastrophic reserves were established right after I arrived. It is used in the event that we have a higher claims base or something hit us, we have about 3 months of claims experience (PSE) in reserves set aside.

ASE

Howlett Are you saying that there is a 29% chance we will not hit the target and have to even touch the catastrophic?

Colberg: I’m saying that there is a 73% chance that you won’t get to the catastrophic and that’s looking at variation and claims.

Haugen: With the 5% rate increase across the board, we may or may not touch the reserves at all? That doesn’t take in to account any pharmacy initiatives or anything else we are doing on the plan to try to save.

Colberg: Those are already in there. Howlett: Operationally, we have some specialty pharmacy pieces as well as some network

things we worked on that generates about a million and a half back to the plan. That is calculated in here, however, that’s also split between both trust funds, more heavily on the ASE. We have a few initiatives that won’t kick off until mid to late summer that are not in here.

Dr. Fiddler: I thought a month ago we were concerned with a large rate increase to keep us out of the reserves on the ASE side. Is this saying that’s not happening?

Haugen: It’s saying that there is only a 70% chance that we won’t even dip down into reserves now for 2019.

Howlett: Remember, as we have been going over this for several months, this is modified as we progress. Historically, we have pretty significant trends that have been set. The only other exception we see there is when we have about 13,000 participants that actually hit their complete out of pocket max and then the plan pays 100%. We usually do not see

that until later in the fall. Our experience is updated each month and with those updates, it also updates our trend scenarios.

Colberg: The main difference is the fact that we are taking that catastrophic reserves down to $16 million which frees up over $15 million to go into the reserve allocation. Essentially, that saves 8% of a rate increase. Instead of being at 13% we are at 5%.

Gravot: The presentation to the Benefits meeting on Friday for ASE was not dipping into the catastrophic reserves in which case we were talking about a 16% rate increase. Because we are taking some of the money from the catastrophic reserve, we have that money now available to allocate and that reduces that increase to recommendation is, 5%.

Lilly-Palmer: One of the things we discussed heavily was the parity to Medicare and we’ve got the state retirees who are better with a 5% increase and not touching the Medicare. You have a smaller 5% increase now as opposed to 2021 when it would have to be heavier than the 16%. So, if we have a 73% chance of not having to dip into the catastrophic reserve, that is basically how we came to that conclusion. Plus with the Medicare retirees, you have the Medicare rebates. There were a lot of factors involved in that.

Haugen: The recommendation from the Benefits subcommittee was for PSE there will be no rate increase along with no changes in plan benefits and for ASE there will be a 5% rate increase across the board (Actives, Medicare, and non-Medicare eligible) with no changes in plan benefits.

MOTION by Lilly-Palmer: I make a motion for no changes in PSE and 5% across the board for ASE with no benefit changes. Herb seconded

Dr. Fiddler: So, we are going from 2018 at $30.6 million and taking $16 million and will be left with

$16 million left in catastrophic reserves. Is that a good number? How much do you try to have in catastrophic reserve?

Howlett: Typically, we have done a month and a half on ASE and three months on PSE based on economy of scale. That puts us just shy of a month of claims experience.

Colberg: Back in 2016 it was 11. They were basically doing about a half month of claims. Dr. Fiddler: And that is not what you wanted? Howlett: We started establishing a reserves in 2016. We have continued to build that up over the

next subsequent 2 years and have maintained that average of $30.6 million. Do I have reservations against landing at $16 million? I do not.

Scott: To be perfectly clear of what we are voting on, especially in ASE. We are talking 5% increase across the board in ASE which means both active and retirees. There is no change in benefit plan, which is the drug coverage, or deductibles that have currently been set. Motion Approved.

Director’s Report by: Chris Howlett, EBD Executive Director

Chris gave a brief recap and thanked everyone for all their hard work. We work very closely with our

relationship with ARSEBA. We have landed at no rate increase for either Dental or Vision. I am still

working with state procurement on the life insurance that is due. We are good through 1/1 and I have

a couple of options I am waiting to hear back on. I should have that by the first of week and will have

that at the subsequent Board meeting.

Haugen: Before I adjourn, I have been on this Board for well over 10 years and a lot of the

members are new this year. I have been really of appreciative of what has been brought

to this Board, the good questions asked and even challenging the members who have

been here a long time. It is never easy to ask for rate increases and each of you have

dug into everything in just the last few months. Being on this Board this long, this is the

quickest we have come to making a decision and that’s because of all the great

questions. I appreciate all the hard work getting us to this part and although for some of

the employees it is an increase, I think everyone has made the right decision and I hope

you stand proudly behind that. Thank you for your good work.

MOTION by Dr. Fiddler:

I motion to adjourn the meeting.

Lilly-Palmer seconded; all were in favor.

Meeting Adjourned.

Benefits and Quality of Care Sub-Committee

June 18, 2019

1

State and Public School Life and Health Insurance Board Benefits Sub-Committee and Quality of Care Summary Report

The following report resulted from a meeting of the Benefits Sub-Committee and Quality of Care meeting. Topics Discussed: - Approval of Minutes - Financials *Benefits only - Wasteful Services Follow-Up *Quality of Care only - Catapult Update *Quality of Care only - 2020 Rates *Benefits only - Director’s Report Cheiron Update: John Colberg & Gaelle Gravot, Cheiron Colberg and Gravot provided 2020 ASE/PSE considerations as listed below:

PSE

• Current projections show no rate increase needed for 2020.

• Changes in rates and/or could be needed for 2021.

• Rate increases for 2020 would reduce changes needed for 2021.

ASE

• Significant changes in rates and/or benefits are needed in ASE for 2020.

• Significant changes may also be required for 2021 o However, the plan also has about a 1/3 chance of not requiring any

changes for 2021.

MOTION by McCook: I recommend to the Board:

• PSE: No rate increase along with no changes in plan benefits.

• ASE: 5% rate increase across the board. No changes in plan benefits.

Scott seconded. All were in favor. Motion Approved

2020 Rate Projections

Gaelle Gravot, FSA, MAAA

John Colberg, FSA, MAAA

Arkansas State Employees

& Public School Employees

Health Benefits Program

June 18, 2019

Board Meeting

6/18/2019

Topics

Page

1) Plan Funding and Updates 3

2) Updated PSE Projections 5

3) Updated ASE Projections 13

AppendicesA. 2019 Final Rate Details 24

B. 2019 Plan Design 28

C. Assumptions, Use & Disclosures 30

2

6/18/2019

Plan Funding Illustration

3

State/District Contrib.

Emp/Ret

Contrib.

Other Income

Claims (& expenses)

ReservesBuild Use

6/18/2019

Changes in Projections Since May

• May claims, enrollment, and financials

• Experience period

– April 2018 - March 2019 for medical• Same as presented in May but one additional month of

runout

– June 2018 – May 2019 for pharmacy• Updated from May 2018 – April 2019

• All projections based on Benefits Committee recommendations

– No rate increase or benefit changes for PSE

– 5% rate increase with no benefit changes for ASE

4

6/18/2019

PSE Projected Experience

5

Actual Projected Projected

ACCOUNTING BASIS 2018 2019 2020

State Contributions for Plan Year 88.1$ 88.1$ 88.1$

Minimum District Contributions 87.0 89.2 93.9

Participant Contributions 130.4 133.1 135.7

Other Income 13.8 14.4 13.9

Reserve Allocated 4.5 12.7 25.2

TOTAL INCOME 323.7$ 337.5$ 356.8$

Medical Claims Paid + IBNR Change1

(232.9) (245.1) (265.6)

Pharmacy Claims Paid + IBNR Change1

(56.4) (61.6) (59.7)

Expenses / Other (30.9) (30.4) (31.5)

TOTAL EXPENDITURES (320.1)$ (337.1)$ (356.8)$

NET PLAN GAIN / (LOSS) 3.6$ 0.4$ 0.0$

PLAN ASSETS (END OF YEAR)

Net Assets (Prior to IBNR) 160.6$ 148.3$ 123.1$

IBNR Reserve (29.0) (28.0) (28.0)

Catastrophic Reserve (58.5) (58.5) (58.5)

Reserve for Current and Future Premiums (25.2) (47.8) (22.5)

NET ASSETS AVAILABLE 47.9$ 14.0$ 14.0$

ENROLLMENT

Active Employees (includes COBRA) 46,006 46,715 48,347

Retirees 15,710 16,408 17,198

TOTAL ENROLLED 61,716 63,123 65,545

TOTAL INCOME PEPM 437$ 446$ 454$

TOTAL EXPENDITURES PEPM (432)$ (445)$ (454)$ 1 The IBNR Change reflects only the June 30 modification shown on the financial statements.

6/18/2019

PSE Enrollment

6

6/18/2019

PSE Financial Projections

7

6/18/2019

PSE Projected Assets

8

The graph below shows the distribution of assets under random trend scenarios with asset values

ranked from largest to smallest and compared to reserves.

The scenarios do not reflect the likelihood of variations in other factors such as income, population, or

pharmacy initiatives.

Catastrophic Alloc. for 2020 Past Contrib. IBNR Zero

97.9% 99.9%+ 99.9%+ 99.9%+% of scenarios greater than or equal to reserve 99.9%+

$-

$20

$40

$60

$80

$100

$120

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns

% of Scenarios greater than or equal asset value

ASE 12/31/2019 Assets vs. Reserves

IBNR Past Contrib. Allocations Allocation for 2020 Catastrophic Reserve Assets

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns


PSE 12/31/2019 Assets vs. Reserves


6/18/2019

PSE Projected Assets

9






90.5% 99.9%+ 99.9%+ 99.9%+% of scenarios greater than or equal to reserve 99.9%+

$-

$20

$40

$60

$80

$100

$120

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns




$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns


PSE 12/31/2020 Assets vs. Reserves


6/18/2019

10

PSE Rate Projections

The tables above show the aggregate increase in employee/retiree contributions needed under each

scenario assuming no changes in benefits, state contributions, or desired catastrophic reserve. The

actual increase by plan and tier would be determined by the Board.

2020 Rate Increase of 0%2020 2021 2022

1) 5.5% Medical / Pharmacy all years 0% 17% 21%

New Reserves Allocated ($ million) $35.3 $14.0 $0.0





4) 1 year at 0% Medical / Pharmacy, then 5.5% 0% 0% 14%




6/18/2019

11

PSE Rate Projections

The graph above shows the aggregate increase in employee/retiree contributions needed under each scenario assuming no

changes in benefits or State contributions. The actual increase by plan and tier would be determined by the Board. The

scenarios do not reflect the likelihood of variations in other factors such as income, population, or pharmacy initiatives.

0% 10% 20% 30% 40%

42.1% 61.4% 76.6% 88.0% 93.8% 0% Rate Increase in 2020% of scenarios less than or equal to increase

0%

10%

20%

30%

40%

50%

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Em

plo

ye

e/R

eti

ree

Ra

te In

cre

ase

% of Scenarios less than or equal to rate increase

PSE 2021 Random Trend Rate Increase Scenarios

0% Rate Increase in 2020

6/18/2019

PSE Summary

• Current projections show no rate increase

needed for 2020

– Benefits Committee Recommendation is no

rate increase

• Changes in rates and/or benefits could be

needed for 2021, depending upon desired

reserve levels

12

6/18/2019

ASE Projected Experience

13

Actual Projected Projected

ACCOUNTING BASIS 2018 2019 2020

Employer Contributions 174.7$ 174.9$ 174.9$

Participant Contributions 96.7 97.2 101.7

Other Income 19.7 21.1 20.0

Reserves Allocated 18.0 21.7 25.1

TOTAL INCOME 309.1$ 314.9$ 321.7$

Medical Claims Paid + IBNR Change1

(201.4) (200.9) (214.9)

Pharmacy Claims Paid + IBNR Change1

(82.5) (86.5) (84.5)

Expenses / Other (22.7) (21.7) (22.4)

TOTAL EXPENDITURES (306.6)$ (309.1)$ (321.7)$

NET PLAN GAIN / (LOSS) 2.5$ 5.8$ 0.0$

PLAN ASSETS (END OF YEAR)

Net Assets (Prior to IBNR) 103.8$ 87.9$ 62.7$

IBNR Reserve (27.1) (26.2) (26.2)

Catastrophic Reserve (30.6) (16.0) (16.0)

Reserve for Current and Future Premiums (37.0) (45.6) (20.5)

NET ASSETS AVAILABLE 9.1$ 0.1$ 0.0$

ENROLLMENT

Active Employees (includes COBRA) 26,297 26,177 26,161

Retirees 12,375 12,696 12,977

TOTAL ENROLLED 38,672 38,873 39,138

TOTAL INCOME PEPM 666$ 675$ 685$

TOTAL EXPENDITURES PEPM (661)$ (663)$ (685)$

1 The IBNR Change reflects only the June 30 modification shown on the financial statements.

6/18/2019

ASE Enrollment

14

6/18/2019

ASE Financial Projections

15

6/18/2019

ASE Projected Assets

16






70.3% 99.4% 99.9%+ 99.9%+% of scenarios greater than or equal to reserve 99.9%+

$-

$20

$40

$60

$80

$100

$120

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns




6/18/2019

ASE Projected Assets

17






73.3% 93.7% 98.6% 99.4%% of scenarios greater than or equal to reserve 99.9%+

$-

$20

$40

$60

$80

$100

$120

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Mil

lio

ns




6/18/2019

18

The tables above show the aggregate increase in employee/retiree contributions needed under each

scenario assuming no changes in benefits, state contributions or desired catastrophic reserve. The

actual increase by plan and tier would be determined by the Board.

ASE Rate Projections

No Benefit Changes2020 Rate Increase of 5%2020 2021 2022











6/18/2019

19

ASE Rate Projections

The graph above shows the aggregate increase in employee/retiree contributions needed assuming no 2021 changes in benefits

or changes in State contributions. The actual increase by plan and tier would be determined by the Board. The scenarios do not

reflect the likelihood of variations in other factors such as income, population, or pharmacy initiatives.

2021 Rate Increase 0% 10% 20% 30% 40%

30.3% 46.5% 62.6% 74.5% 82.7% 5% Rate Increase for 2020 % of scenarios less than or equal to increase

0%

10%

20%

30%

40%

50%

1% 11% 21% 31% 41% 51% 61% 71% 81% 91%

Em

plo

ye

e/R

eti

ree

Ra

te In

cre

ase

% of Scenarios less than or equal to rate increase

ASE 2021 Random Trend Rate Increase Scenarios

5% Rate Increase for 2020

6/18/2019

ASE Employee Contributions

20

Actives Current Rates

With 5.0%

increase

Additional

Contrib.

Premium

Employee Only $107.92 $113.32 $5.40

Employee & Spouse 390.46 409.98 19.52

Employee & Child(ren) 216.34 227.16 10.82

Family 498.88 523.82 24.94

Est. Monthly Total ($mil) $4.4 $4.6 $0.2

Classic

Employee Only $47.88 $50.28 $2.40

Employee & Spouse 250.32 262.84 12.52


Family 315.18 330.94 15.76


Basic

Employee Only $0.00 $0.00 $0.00

Employee & Spouse 136.46 143.28 6.82


Family 165.46 173.74 8.28


Total (Monthly) ($ mil) $4.7 $4.9 $0.2Est Annual Total ($ mil) $56.5 $59.2 $2.7

6/18/2019

ASE Retiree Contributions

21

NME Retirees Current Rates

With 5.0%

increase

Additional

Contrib.

Premium

Retiree Only $266.40 $279.72 $13.32

Retiree & NME SP 681.88 715.98 34.10

Retiree & Child(ren) 492.28 516.90 24.62

Retiree & NME SP&CH 907.76 953.16 45.40

Retiree & ME SP 514.78 540.52 25.74

Retiree & ME SP & CH 740.66 777.70 37.04


Classic

Employee Only $206.36 $216.68 $10.32

Employee & Spouse 541.74 568.82 27.08


Family 724.06 760.26 36.20


Basic

Employee Only $158.48 $166.40 $7.92

Employee & Spouse 427.88 449.28 21.40


Family 574.34 603.06 28.72


Total (Monthly) ($ mil) $0.8 $0.8 $0.0Est Annual Total ($ mil) $9.5 $10.0 $0.5

Medicare Eligible Current Rates

With 5.0%

increase

Additional

Contrib.

Retiree Only $166.82 $175.16 $8.34

Retiree & NME SP 582.30 611.42 29.12

Retiree & Child(ren) 392.70 412.34 19.64

Retiree & NME SP&CH 808.18 848.60 40.42

Retiree & ME SP 399.66 419.64 19.98

Retiree & ME SP & CH 625.54 656.82 31.28


Total (Est. Annual) $31.0 $32.6 $1.5

6/18/2019

ASE Summary

• Changes in rates and/or benefits are

needed in ASE for 2020

– Benefits Committee recommends 5% rate

increase with no benefit changes

• Significant changes may also be required

for 2021

– However, ASE also has about a 30% chance

of not requiring any changes for 2021.

22

6/18/2019

Cheiron (pronounced kī´· ron), the immortal centaur from Greek mythology, broke away from the pack and was educated by the Gods. Cheiron became a

mentor to classical Greek heroes, then sacrificed his immortality and was awarded in eternity as the constellation Sagittarius.

23

6/18/2019

Appendix A – PSE Actives 2019 Final Rate Details

24

6/18/2019

Appendix A – PSE Retirees 2019 Final Rate Details

25

NME Retirees

Partially Risk

Adjusted Total

Rate

Direct State

Contrib.

Reserve Used /

(Added)

2019 Retiree

Cost

2018 Retiree

Cost

Assumed

Enrollment

Premium

Retiree Only $555.98 $0.00 ($85.16) $641.14 $641.14 $0.00 0% 484

Retiree & NME SP 1,328.58 0.00 (128.60) 1,457.18 1,457.18 0.00 0% 19

Retiree & Child(ren) 967.92 0.00 (224.68) 1,192.60 1,192.60 0.00 0% 7

Retiree & NME SP&CH 1,555.82 0.00 (452.82) 2,008.64 2,008.64 0.00 0% 4

Retiree & ME SP 747.16 0.00 (47.96) 795.12 795.12 0.00 0% 46

Retiree & ME SP & CH 1,159.10 0.00 (187.48) 1,346.58 1,346.58 0.00 0% 1

Est. Monthly Total ($mil) $0.3 $0.0 ($0.0) $0.4 $0.4 $0.0 0% 561

Classic

Employee Only $313.40 $0.00 $40.10 $273.30 $273.30 $0.00 0% 1,871

Employee & Spouse 717.00 0.00 151.22 565.78 565.78 0.00 0% 257

Employee & Child(ren) 520.80 0.00 50.98 469.82 469.82 0.00 0% 60

Family 900.70 0.00 154.50 746.20 746.20 0.00 0% 38

Est. Monthly Total ($mil) $0.8 $0.0 $0.1 $0.7 $0.7 $0.0 0% 2,227

Basic

Employee Only $251.64 $0.00 $103.14 $148.50 $148.50 $0.00 0% 379

Employee & Spouse 535.16 0.00 265.44 269.72 269.72 0.00 0% 70


Family 603.00 0.00 267.28 335.72 335.72 0.00 0% 21

Est. Monthly Total ($mil) $0.2 $0.0 $0.1 $0.1 $0.1 $0.0 0% 495

Total (Monthly) ($ mil) $1.3 $0.0 $0.1 $1.2 $1.2 $0.0 0% 3,283

Est Annual Total ($ mil) $16.0 $0.0 $1.7 $14.3 $14.3 $0.0

Medicare Eligible

Partially Risk

Adjusted Total

Rate Subsidy

Reserve Used /

(Added)

2019 Retiree

Cost

2018 Retiree

Cost

Assumed

Enrollment

Retiree Only $191.18 $39.62 $50.78 $100.78 $100.78 $0.00 0% 12,155

Retiree & NME SP 747.16 0.00 (36.76) 783.92 783.92 0.00 0% 74

Retiree & Child(ren) 603.11 0.00 (153.99) 757.10 757.10 0.00 0% 17

Retiree & NME SP&CH 1,159.10 0.00 (362.38) 1,521.48 1,521.48 0.00 0% 2

Retiree & ME SP 358.00 74.07 20.89 263.04 263.04 0.00 0% 1,072

Retiree & ME SP & CH 769.93 0.00 (118.65) 888.58 888.58 0.00 0% 0


Total (Est. Annual) $33.3 $6.7 $7.6 $19.0 $19.0 $0.0

Change in Retiree Cost ($/%)

Change in Retiree Cost ($/%)

6/18/2019

Appendix A – ASE Actives2019 Final Rate Details

26

Actives

Risk Adjusted

Total Rate

State Contrib.

& Other

Reserve Used /

(Added)

2019 Employee

Cost

2018 Employee

Cost

Assumed

Enrollment

Premium

Employee Only $510.48 $355.50 $38.06 $107.92 $107.92 $0.00 0% 13,627

Employee & Spouse 1,138.22 660.35 78.41 390.46 390.46 0.00 0% 2,087

Employee & Child(ren) 851.64 561.03 65.27 216.34 216.34 0.00 0% 4,946

Family 1,479.40 865.90 105.62 498.88 498.88 0.00 0% 1,831


Classic

Employee Only $446.18 $351.74 $37.56 $47.88 $47.88 $0.00 0% 1,360

Employee & Spouse 987.56 651.06 77.18 250.32 250.32 0.00 0% 163


Family 1,281.80 853.62 104.00 315.18 315.18 0.00 0% 217


Basic

Employee Only $394.52 $348.40 $37.12 $0.00 $0.00 $0.00 n/a 1,175

Employee & Spouse 864.62 643.04 76.12 136.46 136.46 0.00 0% 126


Family 1,120.10 843.04 102.60 165.46 165.46 0.00 0% 148


Total (Monthly) ($ mil) $18.4 $12.3 $1.4 $4.8 $4.8 $0.0 0% 26,256

Est Annual Total ($ mil) $221.3 $147.4 $16.7 $57.2 $57.2 $0.0 0%

Total Active & Ret ($ mil) $305.0 $185.4 $21.7 $98.0 $98.0 $0.0 0% 39,103

Change in EE Cost ($/%)

Employee Cost assumes wellness participation. Employee Cost without wellness participation are $75 higher than those shown. Total employee cost reflects 10% assumed not to receive $75

wellness credit.

6/18/2019

Appendix A – ASE Retirees 2019 Final Rate Details

27

6/18/2019

28

Appendix B – 2019 PSE Plan DesignBenefit Option Name: Premium Classic Basic

Last Modified: 1/1/2019 1/1/2019 1/1/2019

Provider Network: Health Advantage Health Advantage Health Advantage

In-Network (INN) Benefits

Deductible (Individual / Family) $750 / $1500 $1750 / $27503

$4000 / $8000

Coinsurance 20% 20% 20%

Coinsurance limit (after Ded.) Individual/Family $2500 / $5000 $4700 / $6925 $2450 / $4900

Copays

Office Visit - Primary Care (PCP) $25 Ded. & Coins. Ded. & Coins.

OV - Specialist Care Provider (SCP) $50 Ded. & Coins. Ded. & Coins.

Urgent Care (UC) $100 Ded. & Coins. Ded. & Coins.

Emergency Room (ER) Non-admitted $250 Ded. & Coins. Ded. & Coins.

Emergency Transportation-Ambulance $50 Ded. & Coins. Ded. & Coins.

Hospital Facility - Inpatient & SNF (Co-pay/Admission)4

$0 Ded. & Coins. Ded. & Coins.

Hospital Facility - Outpatient - Co-Pay4


Out-of-Pocket Max (Individual / Family)2

$3250 / $6500 $6450 / $96753

$6450 / $129003

Out-of-Network (OON) Benefits1

Deductible (Individual / Family) $2000 / $4000 $3000 / $60003 Not Covered

Coinsurance 40% 40%


Unlimited / Unlimited Unlimited / Unlimited

Annual Maximum INN / OON Unlimited Unlimited Unlimited

Prescription Drugs

Separate Deductible then the following Copays: None Included with Medical Included with Medical

Retail (31 Days) - Generic/Formulary /Non-Form./ Specialty $15 / $40 / $80 / $100

Mail Order (93 Days) - Generic/Form. /Non-Form./Specialty $45 / $120/ $240/ $300

Non-Formulary Covered Yes No No


$3350 / $6700 n/a / n/a n/a / n/a

Selected Detail Benefits

PsychiatryINN: $25 Copay;

OON: Ded. & Coins.Ded. & Coins. Ded. & Coins.

Rehabilitation (i.e., speech, occup. physical):INN: $25 Copay;

OON: Ded. & Coins. Ded. & Coins.Ded. & Coins.

ChiropractorsINN: $25 Copay;


Hearing AidsNo Copay; Limit of $1400

per ear every 3 years

Ded. & Coins.; Limit of

$1400 per ear every 3 years



Durable Medical Equipment (DME) Ded. & Coins. Ded. & Coins. Ded. & Coins.

Monthly HSA Contributions N/A $0 Single/$0 Family $0 Single/$0 Family1When an in-network provider is not available within 50 miles for a hospital and 25 miles for all other providers, then in-network benefits apply.2OOP Max includes the deductible.3A $2,700 embedded individual deductible maximum applies for family

coverage.4Deductible and Co-Insurance also applies

6/18/2019

29

Appendix B – 2019 ASE Plan DesignBenefit Option Name: Premium Classic Basic

Last Modified: 1/1/2017 1/1/2017 1/1/2017

Provider Network: Health Advantage Health Advantage Health Advantage

In-Network (INN) Benefits

Deductible (Individual / Family) $500 / $1000 $2500 / $50003

$6450 / $12900

Coinsurance 20% 20% 0%

Coinsurance limit (after Ded.) Individual/Family $2500 / $5000 $3950 / $7900 n/a / n/a

Copays

Office Visit - Primary Care (PCP) $25 Ded. & Coins. Ded. & Coins.

OV - Specialist Care Provider (SCP) $50 Ded. & Coins. Ded. & Coins.

Urgent Care (UC) $100 Ded. & Coins. Ded. & Coins.

Emergency Room (ER) Non-admitted $250 Ded. & Coins. Ded. & Coins.

Emergency Transportation-Ambulance $50 Ded. & Coins. Ded. & Coins.

Hospital Facility - Inpatient & SNF (Co-pay/Admission)4


Hospital Facility - Outpatient - Co-Pay4



$3000 / $6000 $6450 / $129003

$6450 / $129003

Out-of-Network (OON) Benefits1

Deductible (Individual / Family) $2000 / $4000 $4000 / $80003 Not Covered

Coinsurance 40% 40%


Unlimited / Unlimited Unlimited / Unlimited

Annual Maximum INN / OON Unlimited Unlimited Unlimited

Prescription Drugs

Separate Deductible then the following Copays: None Included with Medical Included with Medical

Retail (31 Days) - Generic/Formulary /Non-Form./ Specialty $15 / $40 / $80 / $100

Mail Order (93 Days) - Generic/Form. /Non-Form./Specialty $45 / $120/ $240/ $300

Non-Formulary Covered Yes


$3100 / $6200 n/a / n/a n/a / n/a

Selected Detail Benefits

PsychiatryINN: $25 Copay;

OON: Ded. & Coins.Ded. & Coins. Ded. & Coins.

Rehabilitation (i.e., speech, occup. physical):INN: $25 Copay;


ChiropractorsINN: $25 Copay;


Hearing AidsNo Copay; Limit of $1400

per ear every 3 years





Durable Medical Equipment (DME) Ded. & Coins. Ded. & Coins. Ded. & Coins.

Monthly HSA Contributions N/A $25 Single/$50 Family $25 Single/$50 Family1When an in-network provider is not available within 50 miles for a hospital and 25 miles for all other providers, then in-network benefits apply.

2OOP Max includes the deductible.

3A $2,700 embedded individual deductible maximum applies for family

coverage.4Deductible and Co-Insurance also applies

6/18/2019

Appendix C – Assumptions, Use & Disclosures

• Projections are based on medical claim experience for April 2018 through March 2019 and on pharmacy claims experience for June 2018 through May 2019, both paid through May 2019, adjusted for demographic, benefits, and network changes.

• Based on actual 2019 enrollment and financials through May

• Annual trends (unless otherwise indicated) of

– 5.5% medical

– 5.5% pharmacy

– 2.0% expenses (no trend for medical claims expense)

• No changes to State Contribution amounts, and minimum District contributions for 2020 of

$161.87 per enrolled employee per month.

• Wellness participation is 90% for PSE and 88% for ASE

• Additional Income (including investment income, FICA savings, pharmacy rebates, and ASE

retiree drug subsidies) in 2020 will be $13.9 million for PSE and $20.0 million for ASE

• Desired contingency reserves of $58.5 million PSE and $16.0 million ASE

• Reserve allocations to reduce contributions remain at 50% for first year, 30% for second year,

and 20% for third year

• Rates shown on the rating worksheets are prior to any risk adjustments

• No changes in benefits (unless otherwise indicated)

• Medical and pharmacy claims expenses annualized from January through May 2019; plan expenses annualized from February through May 2019.

• Per EBD, additional pharmacy savings of $1 million per month is assumed to be achieved starting October 1, 2019, with 55% of those savings attributable to ASE.

30

6/18/2019

Appendix C – Assumptions, Use & Disclosures

• Medical claims trend distributions– Assumed to follow gamma distribution with mean of

4.2%, standard deviation of 4.3%, and skewness of 40%

• Pharmacy claims trend distributions– Assumed to follow gamma distribution with mean of

2.4%, standard deviation of 5.7%, and skewness of 58%

• To simplify calculations, assumed independence– Between ASE & PSE

– From one year to the next

– Between medical and pharmacy

• Additional information is provided on the following two slides

31

6/18/2019

Appendix C – Medical Trends

32

per member per month ASE PSE

- 2009 to 2010 6.1% 4.8%

- 2010 to 2011 2.3% 2.2%

- 2011 to 2012 7.8% 12.3%

- 2012 to 2013 3.5% -1.7%

- 2013 to 2014 -0.4% 0.6%

- 2014 to 2015 0.4% -3.0%

- 2015 to 2016 8.7% 9.5%

- 2016 to 2017 2.4% 2.5%

- 2017 to 2018 10.4% 7.7%

Average

Standard Deviation

4.2%

4.3%

Assumed Trend Rate 4.0% 5.0% 5.5% 6.0%

32%Likelihood of Trends

exceeding assumption49% 40% 36%

6/18/2019

Appendix C – Pharmacy Trends

33

per member per month ASE PSE

- 2008 to 2009 6.9% 2.3%

- 2009 to 2010 1.7% -0.2%

- 2010 to 2011 3.1% -0.2%

- 2011 to 2012 9.3% 3.9%

- 2012 to 2013 1.7% -1.9%

- 2013 to 2014 0.9% -5.0%

- 2014 to 2015 12.4% 1.9%

- 2015 to 2016 3.5% 2.0%

- 2016 to 2017 2.0% -0.7%

- 2017 to 2018 1.8% 2.8%

Average

Standard Deviation 3.7%

2.4%

Assumed Trend Rate 4.0% 5.0% 5.5% 6.0%

Likelihood of Trends

exceeding assumption36% 30% 27% 24%

6/18/2019

Appendix C – Use & Disclosures

• Additional details about assumptions and methods will be provided in follow-up documentation.

• In preparing the information in this presentation, we relied on information (some oral and some

written) supplied by the EBD and the Plan’s vendors. This information includes, but is not

limited to, the plan provisions, employee eligibility data, financial information, and claims data.

We performed an informal examination of the obvious characteristics of the data for

reasonableness and consistency in accordance with Actuarial Standard of Practice No. 23.

• Cheiron's analysis was prepared exclusively for the Employee Benefits Division of the State of

Arkansas for the specific purpose of providing projections and options to the Arkansas State

and Public School Life and Health Insurance Board. Other users of this document are not

intended users as defined in the Actuarial Standards of Practice, and Cheiron assumes no duty

or liability to any other user.

• The figures in this presentation are preliminary and subject to change or modification as more

detailed information is gathered and depending upon decisions made by the Board.

• These slides are designed to accompany the presentation from Cheiron at the June 18, 2019

Board meeting. Additional information will be presented orally that is an important part of this

presentation, and information from these slides should only be used in context with that

presentation.

34

John L. Colberg, FSA, MAAA

Principal Consulting ActuaryGaelle, Gravot FSA, MAAA

Principal Consulting Actuary

agenda€¦ · stephanie lilly-palmer dr. lanita white greg rogers carla haugen – chair renee...

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