PUBLIC EMPLOYEES’ BENEFITS PROGRAM Plan Year 2020 Rates March 28, 2019
Executive Summary PEBP continues to see low inflation on medical and dental costs but recently experienced very high pharmacy costs on the CDHP. This has led to an overall rate increase on that plan. The EPO plan is running better than projected and their overall rates have decreased. HPN provided PEBP with two rate renewal options to meet budgetary needs. The Board has a decision to make today on what level of employer contributions produce the desired employee/retiree premiums for Plan Year 2020. Option 1: Return to 2016 Contribution Levels • 93% employee / 64% retiree and premiums increase for all employees on all plans and an increase for retirees on the CDHP and a decrease on the HMO/EPO Option 2: Small Increase to 2018 Contribution Levels • 95.1% employee / 66.4% retiree and premiums for employees and retirees stay flat on the CDHP and decrease on the HMO/EPO Option 3: Larger Employee Increase to 2018 Contribution Levels • 96.3% employee / 66.4% retiree and premiums decrease for employees on all plans and stay flat for retirees on the CDHP while decreasing on the HMO/EPO. March 28, 2019 2
AGENDA ➢ Rate Development ➢ Methodology ➢ Inputs ➢ Experience ➢ Plan Tiers of Coverage ➢ Projected Population ➢ Optional Contribution Percentages March 28, 2019 3
AGENDA (cont.) ➢ Overall Rates ➢ Optional State Employee Rates ➢ Optional State & Non-State Pre- Medicare Retiree Rates ➢ Board Approval March 28, 2019 4
Rate Development Methodology 1. Experience + Projected Trend = Base Rates 2. Base Rates + Administrative Costs = Overall Rates 3. Overall Rates – Employer Contributions (Subsidy) = Member Share (Premiums) March 28, 2019 5
Rate Development Inputs ➢ Legislatively Requested Employer Contribution (FY 2020) ➢ Employees: ➢ Agency Request: $772 ➢ Governor’s Recommended: $757.83 ➢ Today’s Rate Approval: $732.75 (Option 1), $747.75 (Option 2), $757.83 (Option 3) ➢ Pre-Medicare Retirees: ➢ Agency Request: $472 ➢ Governor’s Recommended: $522.68 ➢ Today’s Rate Approval: $529.68 (Option 1), $546.70 (Option 2 & 3) ➢ Updated Population (Point-in-Time Projected Forward) ➢ Experience (Through January, 2019) ➢ Plan Design (Approved at the November 29, 2018 Board Meeting) March 28, 2019 6
Rate Development Experience ➢ Aon provides PEBP with Base Rate Cards projecting claims experience and HPN provides PEBP with Medical/RX rate renewals: State Employees and Retirees CDHP EPO HPN Medical: 1.63% Medical: -2.18% Medical/Rx: 0%/3.7% Rx: 16.91% Rx: 5.34% Dental: 0.13% Dental: 0.13% Dental: 0.13% Overall: 0.01%/3.47% Overall: 4.35% Overall: -0.29% Non-State Employees and Retirees CDHP EPO HPN Medical: 8.83% Medical: 26.72% Medical/Rx: 0%/3.7% Rx: 28.14% Rx: 7.46% Dental: 0.62% Dental: 0.62% Dental: 0.62% Overall: 0.04%/3.52 Overall: 12.66% Overall: 17.74% March 28, 2019 7
Rate Development Plan Tiers of Coverage Established in July 2011 (PY 2012) Participant Only = $X Participant + Spouse = $2X Participant + Child(ren) = $X+$Y Participant + Family = $2X+$Y $X = Average Cost of an Adult $Y = Average Composite Cost of Children March 28, 2019 8
Rate Development Projected Population Average enrollment based on past FY 2018 (Actual) FY 2019 FY 2020 48 month plus any known changes. State Actives 26,078 26,678 27,265 Projected Population is taken from Early Retirees 4,034 4,072 4,117 plan experience on all plans offered by PEBP for Plan Year 2019 Medicare Retirees 6,739 7,232 7,624 (as of March 2019). 36,852 37,982 39,006 Non-State There is an overall projected Actives 8 8 8 population increase of approximately 2.08% for PY20. Early Retirees 1,481 1,163 1,000 Medicare Retirees 5,221 5,284 5,367 6,710 6,455 6,375 Total 43,562 44,437 45,381 Percent Change 1.97% 2.08% March 28, 2019 9
Optional Employer Subsidy Contribution Percentages ➢ Board Policy Establishes: ➢ Standardized differential for plans and dependents ➢ Single blended “statewide” HMO/EPO rate Plan Employees Retirees Option 1 Option 2 Option 3 Option 1 Option 2 & 3 Primary CDHP 93% 95.1% 96.3% 64% 66.4% HMO/EPO 81% 82.6% 83.8% 52% 53.9% Dependent CDHP 73% 75.1% 76.3% 44% 46.4% HMO/EPO 61% 62.6% 63.8% 32% 33.9% March 28, 2019 10
Overall Rates Before Contributions and Premiums State Employees State Retirees Non-State Retirees Tier CDHP HMO/EPO Tier CDHP HMO/EPO Tier CDHP HMO/EPO Employee Retiree Retiree 607.31 789.13 586.28 768.26 1,219.91 773.66 Only Only Only Employee + Retiree + Retiree + 1,123.53 1,533.34 1,102.50 1,512.47 2,369.78 1,523.27 Spouse Spouse Spouse Employee + Retiree + Retiree + 815.37 1,156.86 794.34 1,135.99 1,980.91 1,179.25 Child(ren) Child(ren) Child(ren) Employee + Retiree + Retiree + 1,331.61 1,901.07 1,310.58 1,880.20 3,130.78 1,928.86 Family Family Family March 28, 2019 11
State Employee Premiums State Active Statewide PPO Statewide HMO/EPO Employees Consumer Driven Health Plan PEBP Premier Plan and HPN Plan Tier PY19 Option 1 Option 2 Option 3 PY19 Option 1 Option 2 Option3 Employee 31.73 42.45 31.73 22.71 142.43 151.52 137.31 128.15 Only Employee + 156.04 181.82 156.04 145.25 429.62 445.21 415.64 397.84 Spouse Employee + 82.41 98.62 82.41 72.10 284.89 297.41 274.84 261.41 Child(ren) Employee + 206.72 238.01 206.72 194.65 572.08 591.10 553.17 531.10 Family March 28, 2019 12
State/Non-State Retiree Premiums State / Statewide PPO Statewide HMO/EPO Non-State Retirees Consumer Driven Health Plan PEBP Premier Plan and HPN Plan Tier PY19 Option 1 Option 2 & 3 PY19 Option 1 Option 2 & 3 Retiree 199.56 210.72 199.56 379.06 372.74 354.17 Only Retiree + 470.33 499.80 470.33 896.26 884.81 846.09 Spouse Retiree + 309.96 327.23 309.96 635.63 627.11 597.24 Child(ren) Retiree + 580.72 616.33 580.72 1,152.83 1,139.19 1,089.16 Family Rates above reflect 15 years of service. March 28, 2019 13
Board Approval PEBP Recommends the following: 1. Approve Plan Year 2020 CDHP and HMO/EPO Rates as presented. 2. Select and approve the contribution levels and employee/retiree premiums 3. Allow staff to make technical adjustments as needed. March 28, 2019 14
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