2014 Benefit Changes in response to the ACA HR Pros - April, 2013 Office of Human Resources

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)


• In Health Savings Account Plan– $250 / $500 reduction in HSA account– $500 / $1,000 increase in out-of-pocket

maximum


• 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


• 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?

Documents

2014 Benefit Changes in response to the ACA HR Pros - April, 2013 Office of Human Resources