Board and Employee

Insurance Advisory Committee Meeting

2015 - 2016

July 29, 2015

Health Plus Observations and Recommendations – Plan Cost 2016

Health Plus ObservationsLPSS Medical Trend Less than 3% for 2015LPSS RX Trend 20%+ for 2015LPSS Total Medical Trend including RX 8.95% for 2016Blue Cross administrative fee will remain the same for 2016

Health Plus RecommendationsAdditional 4.2% in Premium or Benefit Reductions

2

LPSS Accrual Rate Development Through February 2015Current Year

Paid Claims $42,078,717

Annual Trend Assumption 8.95%

Specific Threshold $500,000

PPO and TPA fees $2,199,671

Stop-Loss-Premium $8.99/employee $575,431

PCORI Fee ($2.08 pmpy) $18,949

PPACA Reinsurance Fee ($27 pmpy) $245,970

Total Expenses $3,040,021

Less Estimated RDS Recovery $915,758

Less Estimated Rx Rebates $697,314

Net Total Annual Expenses $1,426,949

3

LPSS Recommended 1-1-2016 Change in Medical Plan Accrual Rates

Prior Year Current Year Indicated

Meld of Indicated

Health Plus Recommended

OverallWeighting

+5.5% 25%

+3.7% 75%

+4.2% +4.2%

Enrollment Average for

2008

Current Rate

Recommended July 1, 2011

Rate

Current Annual

Premium

Recommended Annual

Premium

SingleFamilyTotalChange in PremiumPercentage Change

3,0442,2895,333

$568.58$1,049.93

$592.26$1,093.66

$49,608,241 $51,674,382 $2,066,140 +4.2%

4

Health Plus Observations and Recommendations – Medical Plans

Health Plus Observations Enhanced Plan and Basic Plan lack sufficient premium spread of

15% to 20% No true low cost option for LPSS employees

Health Plus Recommendations Increase deductible by $250, out of pocket max by $600 and copays

for specialist by $10 on Enhanced Plan No premium increase on Enhanced Plan Eliminate the current Basic Plan and add a Basic Plan with a PCP

copay as the new Basic Plan with reduced premium. Increase deductible for employee/dependent for the High Deductible

Health Plan. No premium increase on High Deductible Health Plan.

5

2016 Enhanced PPO Alternate Benefit Option

Enhanced PPO Current Alternate

Deductible

Individual

Family

In-Patient Hospital

$800

$2,400

Deductible + 20%

$1,050

$3,150

Deductible + 20%

Coinsurance

In-network

Out-of-Network

80%

60%

80%

60%

Physician Copay

Quality Blue Primary

Specialist Copay

$40

N/A

$40

$40

$25

$50

Out-of-Pocket Max

(Medical & RX Combined)

Individual

Family

$3,400

$4,500

$4,000

$9,000

*Differential from Current Plan: 0.9780*$250 deductible credit for Wellness participation*Out of pocket maximum includes deductible 6

LPSS 2016 – Enhanced Plan Premium

Enhanced Plan

Current Effective January 1,

2016

BoardPortion of Increase

Employee Portion of Increase

Employee CurrentMonthly

Employee Total

January 1, 2016

Active $738.00 $738.00 $0.00 $0.00 $211.00 $211.00

Active + 1 $1198.00 $1198.00 $0.00 $0.00 $496.00 $496.00

Active + Family $1564.00 $1564.00 $0.00 $0.00 $724.00 $724.00

7

2016 Basic Alternate Benefit Option

BASIC –

PCP Copay

Current

Basic

Alternate

PCP Copay Deductible

Individual

Family

In-Patient Hospital

$950

$2,850

Deductible + 20%

$3,500

$7,000

Deductible + 30%

Coinsurance

In-network

Out-of-Network

80%

60%

70%

50%

Physician Copay

Quality Blue Primary

Specialist Copay

Deductible + 20%

N/A

Deductible + 20%

$40

$25

Deductible + 30%

Out-of-Pocket Max(Medical & RX Combined)

Individual

Family$4,000

$4,500

$6,500

$13,000

*Differential from Current Plan: 0.8449*$250 Deductible credit for Wellness participation*Out of pocket Maximum includes deductible

8

LPSS 2016 – Basic PPO-PCP Copay Premium

Basic PPO-PCP Copay Plan

CurrentBasic Plan

Effective January 1,

2016

BoardPortion of Decrease

Employee Portion of Decrease

Employee CurrentMonthly

EmployeeTotal

January 1, 2016

Active $651.00 $553.00 -$47.00 -$51.00 $149.00 $98.00

Active + 1 $1087.00 $923.00 -$82.00 -$82.00 $409.00 $327.00

Active + Family $1425.00 $1211.00 -$107.00 -$107.00 $608.00 $501.00

9

2016 Blue Saver (HDHP) Benefit Option

Blue Saver

High Deductible Current Alternate

Deductible

Individual

Family

In-Patient Hospital

$2,500

$5,050

Deductible + 20%

$3,000

$6,000

Deductible + 20%

Coinsurance

In-network

Out-of-Network

80%

60%

80%

60%

Physician Copay

Specialist Copay

Deductible + 20%

Deductible + 20%

Deductible + 20%

Deductible + 20%

Out-of-Pocket Max(Medical & RX Combined)

Individual

Family

$5,000

$10,050

$6,000

$12,000

*Differential from Current Plan: 0.980*$250 Deductible credit for Wellness participation*ACA requires Embedded deductible for 2016

10

LPSS 2016 – High Deductible Premium

High Deductible

Health Plan

Current Effective January 1,

2016

BoardPortion of Increase

Employee Portion of Increase

Employee CurrentMonthly

EmployeeTotal

January 1, 2016

Active $353.00 $353.00 $0 $0 $9.00 $9.00

Active + 1 $590.00 $590.00 $0 $0 $124.00 $124.00

Active + Family

$722.00 $722.00 $0 $0 $213.00 $213.00

11

Health Plus Observations and Recommendations - RX

Health Plus Observations RX Trending at 20% + for 2016 RX Specialty Trend 30%+ for 2016 RX Plan design lacks percentage of cost copay on specialty medications

– Tier 4 PBM repricing – CVS and ESI/BC repriced 94,558 claims resulting in a

savings with ESI/BC of $946,840 annually

Health Plus Recommendations Move PBM claims processing to ESI/BC effective January 1, 2016 Increase copay for Tier 2 and Tier 3 prescriptions Add percentage of cost copay for Tier 4 specialty medications All plans will have common out of pocket for medical and RX

12

LPSS PBM Repricing CVS and ESI/BC Repriced 94,558 LPSS RX

claims from 7/1/2014 through 12/31/2014CVS Proposed ESI Proposed

RX Count $94,517 $94,558

Ingredient Cost $7,055,307 $6,724,664

Dispensing Fee $76,199 $108,344

Current Gross Cost $8,436,340 N/A

Gross Cost $7,131,506 $6,833,008

Rebates $783,427 $958,349

Net Plan Cost $6,348,079 $5,874,659

Semi-Annual Difference $473,420

Annual Difference $946,840

13

LPSS 2016 – RX Benefit ChangesEnhanced and Basic Plans

2015 Current RX Benefits 2016 Proposed RX Benefits

Tier 1 $10 Tier 1 $10

Tier 2 $25 Tier 2 $30

Tier 3 $50 Tier 3 $60

Tier 4 N/A Tier 4 10% Coinsurance

Out of Pocket RX Max

N/A Out of Pocket Max

Same as medical plan

14

Health Plus Observations and Recommendations - Retirees

Medicare Eligible Individuals (MEIs) Health Plus Observations

LPSS current MEI total premium $367.01. Anticipated 2016 MEI total cost $524.28.

LPSS subsidizes each Blue Cross MEI $237.44 per person compared to the current Humana Medicare Advantage Plan

Current Blue Cross ASO Plan coordinates with MEIs to $0 copay, $0 deductible and $0 out of pocket maximum. RX copays apply

Health Plus Recommendations Increase Premium on Blue Cross ASO plan for MEIs Blue Cross ASO plan – keep current coordination at $0 copay and $0

deductible Humana Advantage plan (Passive PPO) – $0 physician copay and $0 hospital

inpatient copay Add third offering to all MEIs - Humana Advantage HMO with $0 Physician

copay and $0 hospital inpatient copay. 15

LPSS 2014-2016 MEI Medical and RX Cost Analysis

  2014 Avg. MEI Monthly Cost

2015 Estimated MEI Cost Monthly Cost

2016 Estimated MEI Monthly Cost

Administration $33.05 $33.05 $33.05 Stop Loss $8.99 $9.71 $10.49 Medical Claims $193.43 $201.17 $209.21 Rx Claims $228.04 $262.25 $301.59 PCORI and PPACA Reinsurance Fees $4.83 $4.83 $4.83 Total Cost $468.34 $511.01 $559.17        Less RDS $34.89 $34.89 $34.89 Net Total Cost $433.45 $476.12 $524.28        Humana MA Premium $285.84 $286.84 $333.84 Net Monthly Savings PMPM $147.61 $189.28 $190.44 Net Annual Savings PMPM $1,771.38 $2,271.34 $3,201.23

16

LPSS – 2016 Retiree Savings EstimateBlue Cross vs. Humana HMO

Avg. # of MEI in 2014 – 1638 Monthly Savings per MEI - $231.88

% Migrating to HMA    Total Annual Savings LPSS Annual SavingsMembers Annual

Savings 20% 328 $912,680 $638,876 $273,804

30% 491 $1,366,237 $956,366 $409,871

40% 655 $1,822,577 $1,275,804 $546,773

50% 819 $2,278,917 $1,595,242 $683,675

60% 983 $2,735,256 $1,914,680 $820,577

70% 1147 $3,191,596 $2,234,117 $957,479

80% 1310 $3,645,154 $2,551,608 $1,093,546

90% 1474 $4,101,493 $2,871,045 $1,230,448

100% 1638 $4,557,833 $3,190,483 $1,367,350

17

LPSS – 2016 Retiree Savings EstimateBlue Cross vs. Humana PPO

Avg. # of MEI in 2014 – 1638 Monthly Savings per MEI - $190.44

% Migrating to HMA    Total Annual Savings LPSS Annual SavingsMembers Annual

Savings 20% 328 $749,572 $524,700 $224,812

30% 491 $1,122,072 $785,451 $336,622

40% 655 $1,496,858 $1,047,801 $449,058

50% 819 $1,871,644 $1,310,151 $561,493

60% 983 $2,246,430 $1,572,501 $673,929

70% 1147 $2,621,216 $1,834,851 $786,365

80% 1310 $2,993,717 $2,095,602 $898,115

90% 1474 $3,368,503 $2,357,952 $1,010,551

100% 1638 $3,743,289 $2,620,302 $1,122,987

18

2016 MEI Retiree Benefit OptionBlue Cross ASO – MEIs

Deductible – Individual $0

Maximum Out of Pocket $2,500 combined

Physician Services

PCP $0 copayment

Specialist $0 copayment

Hospital Services

Inpatient Acute Hospital $0 per admission

Emergency Room $0 copayment

Urgent Care $0 copayment

Ambulance Service $0 copayment

Other Services

DME 0%

Pharmacy $10/$30/$60/10% 19

2016 MEI Retiree Benefit OptionHumana Advantage Passive PPO - $333.84

Current Renewal

Deductible – Individual $0 $0

Maximum Out of Pocket $1,000 combined $1,000 combined

Physician Services

PCP $0 copayment $0 copayment

Specialist $0 copayment $0 copayment

Hospital Services

Inpatient Acute Hospital $0 per admission $0 per admission

Emergency Room $0 copayment $0 copayment

Urgent Care $0 copayment $0 copayment

Ambulance Service $0 copayment $0 copayment

Other Services

DME 0% 0%

Pharmacy $10/$20/$40/$50 from $0 to catastrophic,

5% with max of $50 in catastrophic

Custom RX $2,500 MOOP $10/$30/$60/$10%

from $0 to catastrophic

20

2016 MEI Retiree Benefit OptionHumana Advantage HMO - $292.40

In-Network

Deductible – Individual $0

Maximum Out of Pocket $1,000 combined

Physician Services

PCP $0 copayment

Specialist $0 copayment

Hospital Services Inpatient Acute Hospital $0 per admission

Emergency Room $0 copayment

Urgent Care $0 copayment

Ambulance Service $0 copayment

Other Services DME 0%

Pharmacy $10/$20/$40/$50 from $0 to catastrophic,

5% with max of $50 in catastrophic

21

LPSS 2016 – MEI Retiree Premium

Current

Effective January 1,

2016

Board Portion of Increase

Retiree Portion of Increase

Retiree CurrentMonthly

EmployeeTotal

January 1, 2016

BC ASO Basic

$367.00 $524.28 $78.00 $78.00 $87.00 $165.00

HumanaPPO Passive

$268.00 $333.84 $16.84 $49.00 $0 $49.00

Humana HMO N/A $292.40 N/A N/A N/A $0

22