Office of Group Benefits Tommy D. Teague Chief Executive Officer TODAY’S SMART CHOICES... TOMORROW’S HEALTHY SAVINGS.

Office of Group BenefitsTommy D. Teague

Chief Executive Officer

TODAY’S SMART CHOICES...

TOMORROW’S HEALTHY SAVINGS

EligibilityEligibility

Full-time employees and retirees of… state agencies state colleges and universities participating school boards

…and legal dependents: Legal spouse Never-married child from birth to age 21 Never-married child age 21-24 (if full time student)

Effective date of coverage is first day of month after enrollment plus 30 days

OGB Plan Member PremiumsOGB Plan Member Premiums

Plan member pays 25% of premium for self

Plan member pays 50% of premium for any dependents

Aggregate contribution level is 29% by plan member

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Retiree Health CoverageRetiree Health Coverage

OGB Health PlansOGB Health Plans

4 plans -- for all plan members

PPO (self-insured & administered by OGB)

HMO (self-insured; administered by Humana)

EPO (self-insured; administered by UnitedHealthcare)

Medical Home HMO (fully-insured & administered by Vantage)

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OGB Medicare Advantage OGB Medicare Advantage Health PlansHealth Plans

5 plans – only for retired plan members with Medicare Part A & Part B

3 Medicare Advantage HMO plans Humana HMO (only in certain areas of LA) Peoples Health (only in certain areas of LA) Vantage/POS Option (statewide)

2 Private Fee-for-Service (PFFS) plans Humana PFFS (nationwide) SecureHorizons Medicare Direct (nationwide)

Total Enrollment 132,305***

Active employees 86,253 65%

Retired employees 46,052 35%

*** figures don’t include LSU plans

OGB Health Plan EnrollmentOGB Health Plan EnrollmentOGB Health Plan EnrollmentOGB Health Plan Enrollment

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OGB Budget

FY 2010

$1.264 billion

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Fiscal Year 2009-10Fiscal Year 2009-10

Fund Balance as of August 14, 2009

$484,176,551

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OGB Administrative CostsOGB Administrative Costs

MEDICAL BENEFITS

DRUGS

ADMINISTRATIVE

MENTAL HEALTH

Administrative costs are 3% of total costs

MEDICAL BENEFITSMEDICAL BENEFITS

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OGB Organization

332 employees

5 divisionsBenefit Services

Customer Services

Information Services

Quality Assurance & Administration

Legal & HIPAA

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OGB Organization

Chief Executive OfficerTommy Teague

Benefit ServicesHubert Lincecum

Customer ServicesMalcolm Veazie

Administration &Quality Assurance

Brenda St. Romain

Information ServicesCharles Jumonville

Legal & HIPAA ComplianceTommy Benoit

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CHIEF EXECUTIVE OFFICERTommy Teague

(3 positions)

BENEFITS SERVICESHubert Lincecum(152 positions)

INFORMATION SERVICESCharles Jumonville

(53 positions)

ADMINISTRATIONBrenda St. Romain

(36 positions)

CUSTOMER SERVICESMalcolm Veazie(76 positions)

LEGAL/HIPAATommy Benoit(10 positions)

ELIGIBILITY

CLAIMS PROCESSING

FISCAL

FLEXIBLE BENEFITS & IMAGING SERVICES

SYSTEMS

APPLICATIONS

PLAN ADMINISTRATION

QUALITY ASSURANCE

HUMAN RESOURCES

COMMUNICATIONS

PROCUREMENT

DEVELOPMENT

SUPPORT SERVICES

PROVIDER SERVICES

AGENCY SERVICES

PLAN MEMBER SERVICES

LEGAL

HIPAA

FRAUD & ABUSE

INTERNAL AUDIT(4 positions)

OGB Organization

Retired Employees 46,573

With Medicare 27,854

(Medicare is primary) 59%

Without Medicare 18,719

(OGB is primary) 41%

EnrollmentEnrollmentEnrollmentEnrollment

Life InsuranceLife Insurance

Group term life plan

Prudential

State pays 50% of premium for employees and retirees

Employee pays premium for dependent life

Reduced coverage and premiums, on July 1 after reaching age 65 and age 70

Basic Plan

Option I Option II

Employee $5,000 $5,000

Spouse $1,000 $2,000

Each Child $ 500 $1,000

Life InsuranceLife Insurance

Basic Plus Supplemental Plan

Option I Option II

Employee:

Based on schedule to

maximum of $50,000

Based on employee’s

annual salary

Based on employee’s

annual salary

Spouse $2,000 $4,000

Each child $1,000 $2,000

Life InsuranceLife Insurance

GASB 45 / OPEB LiabilityGASB 45 / OPEB Liability

Historically, governments accounted for retiree health care benefits on pay-as-you-go (PAYGO) basis.

– Cost of covering active employees was only a function of current year costs

– Did not reflect total cost of employee health coverage …only included current year

– Without projected future costs, governmental entities’ financial statements did not fully disclose all costs

– GASB requires disclosure of future costs associated with current services

– Those future costs are classified as OPEB

GASB 45 / OPEB LiabilityGASB 45 / OPEB Liability

OPEB (other post-employment benefits) – a compilation of all non-pension benefits an employee receives after retirement

Examples include:Health benefitsDental, vision and hearing coveragePrescription drug coverageLife insuranceLong-term care commitmentsLong-term disability

GASB 45 / OPEB LiabilityGASB 45 / OPEB LiabilityLiability calculation assumptions:

Benefit composition

Medical inflation

Turnover rate

Mortality assumption

– Will employee live to reach retirement?

– How long will retiree live in retirement?

Discount rate

Other factors that affect number of dependents

GASB 45 / OPEB LiabilityGASB 45 / OPEB Liability GASB 45 does not require funding of the calculated liability

Decision to fund or not is significant:– Funded plans have lower liabilities– Unfunded plans have larger liabilities– Rating agencies may consider funding

Funding requirements are strict; funds must be held in irrevocable trust

Depending on funding or not:

State’s liability now stands at

$13.7 billion over 30 years….and growing