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

Page 1

Overview of Self-Funded Health Plans

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McNeary, Inc.

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?

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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:

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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:

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Components of Self-Funding

Page 5McNeary, Inc.

Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging 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

Ways to contain costs…..

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Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging Pharmacy Laboratory Surgery

$14,507,621

Stop Loss Coverage ($175,000) $ 813,056

Administrative Fees $ 376,131

Total Cost Estimate $15,515,178

Involve Employeesin their health care (Wellness)

Increase Risk

Negotiate with vendor

Change Plans design, shift costs, and manage disease costs

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SPS Demographics and Trends

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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

SPS Enrollment Trends

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Average Employees 1566 1488

Expense per Employee $8,946 $8,605

Average Members 2719 2651 -2.5%

Expense per Member $5,152 $4,830 -6.3%

Average # Employees 1,566 1,488 -5.0%

Average # Members 2,719 2,651 -2.5%

Average # Members/policy 1.74 1.78 2.6%

Average Age Employees 46.93 47.58 1.4%

Average Age Members 37.54 37.92 1.0%

Table 1

Table 2

Table 3

Note: Expense per employees/members only includes cost of claims not total costs

2013-2014 2014-2015

2013-2014 2014-2015

2013-2014 2014-2015

SPS Trends

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Site of Care 2013-2014 % of Total 2014-2015 % 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

SPS top most Manageable Medical Conditions

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Medical Condition

Asthma

Cerebrovascular disease

Chronic Respiratory disease

Coronary Artery disease

Depression

Diabetes

High Cholesterol

Hypertension (High Blood Pressure)

Rheumatoid Arthritis

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Medical ClaimsHospital SpecialistsDoctor Visits Out-patient Urgent Care/Emergency Care Physical TherapyImaging 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

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Estimated Cadillac Tax impact Year 2015 2016 2017 2018 2019 2020 2021 2022

HMOSingle 6,622 7,086 7,582 8,113 8,681 9,288 9,938 10,634Single (FSA) 7,974 8,438 8,934 9,465 10,033 10,640 11,290 11,986Family 18,761 20,075 21,480 22,983 24,592 26,314 28,156 30,127Family (FSA) 20,113 21,427 22,832 24,335 25,944 27,666 29,508 31,479

2015 2016 2017 2018 2019 2020 2021 2022

PPOSingle 7,651 8,187 8,760 9,373 10,029 10,732 11,483 12,287Single (FSA) 9,003 9,539 10,112 10,725 11,381 12,084 12,835 13,639Family 21,260 22,748 24,340 26,044 27,867 29,818 31,905 34,139Family (FSA) 22,612 24,100 25,692 27,396 29,219 31,170 33,257 35,491

Estimated Excise Tax Impact 2018 2019 2020 2021 2022TOTAL $8,190 $20,385 $55,427 $155,312 $322,935

Annual Plan Cost Limits ($)Single 10,200 10,404 10,612 10,824 11,041

Family 27,500 28,050 28,611 29,183 29,767

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

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What are other school districts doing?

Wellness Program launch (Fall 2015)

Exploring joint Pharmacy/Health Clinics for

employees as a joint project with the city

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What is Suffolk Public Schools planning?

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

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Next Steps…

Questions?

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