AEA Move plans - Anchorage Education Association

Report
Anchorage Education Association
Plan Design Selection
Fall 2013
NEA-Alaska Health Plan, Chief Financial Officer
[email protected]
Reasons to consider alternative
medical/dental plan designs
 Premium Growth
 Cadillac Tax
 Increase Dental, could add Ortho
 Waiver Contribution ends in July 2015
 Difference between A/A and C/A, C/B
 Lower overall costs
Premium Growth
 NEA-Alaska Health Plan average increase in premiums




has been less than 10% annual since 1997
Substantially lower than Statewide increases
Other groups/employers have increased deductibles
and OOP’s over the years yet continue to have double
digit increases
1996/1997, $100 deductible premium was $435 monthly
2013/2014 premium is $1797 monthly
Cadillac Tax
 The Affordable Care Act contains a provision that will




tax entities that provide a health care benefit that is
considered a “Cadillac” plan. Cadillac status is
determined by the amount of annual premium paid
Assessed tax rate is 40% of amount beyond threshold
Threshold for the tax is annual premium greater than
$27,500
Conservative premium increases will price current
plan design at annual cost of $31,571.85 by 2018
Generating probable penalty $1,628.75 per individual
Increase Dental Coverage
Add Orthodontia
 Currently selected Plan offers only $2,000 in annual
dental coverage
 There is no orthodontia coverage available
 For a decrease in premiums dental coverage of $3,000
is available
 For a small increase in premium orthodontia coverage
for all family members ($2,000) is available
Year 1 (July 2013 – June 2014)
Plan Year 1
Annual
Premium
Employer
Waiver
Employee
Contribution Contribution Contribution
A/A no ortho
$21,564
$17,580
$2,324
$1,660
C/A No Ortho
$18,300
$17,580
$720
$0
C/B No Ortho
$18,168
$17,580
$588
$0
C/B w Ortho
$18,384
$17,580
$804
$0
Waiver
Balance
6/13
$7,488,415
ASD CY
waiver
Contrib.
Balance
Available
Premium
Employer
Employee
Plan A/A
$1,797
$1,465
$332
($7,118,412)
$7,981,320
$8,351,323
Plan A/A 6 mo
Plan C/B 6 mo
$1,797
$1,514
$1,465
$1,465
$ 332
$ 49
($6,101,496)
($ 900,522)
$7,981,320
$8,467,717
Year 2 (July 2014-June 2015)
Plan Year 2*
Annual
Premium
Employer
Waiver
Employee
Contribution Contribution Contribution
A/A no ortho
$23,720
$18,480
$2,622
$2,618
C/A No Ortho
$20,130
$18,480
$1,650
$0
C/B No Ortho
$19,985
$18,480
$1,505
$0
C/B w Ortho
$20,222
$18,480
$1,742
$0
Assume 10%
Premium
Employer
Employee
Waiver
ASD
Waiver
Contrib
Balance
Available
Plan A/A
$1,977
$1,540
$437
($8,031,186)
$8,389,920
$8,710,057
Plan C/B
$1,665
$1,540
$125
($4,594,500)
$8,389,920
$12,263,137
Year 3 (July 2015 – June 2016)
Plan Year 3*
Annual
Premium
Employer
Waiver
Employee
Contribution Contribution Contribution
A/A no ortho
$26,092
$18,480
$2,540
$5,072
C/A No Ortho
$22,143
$18,480
$3,663
$0
C/B No Ortho
$21,984
$18,480
$3,504
$0
C/B w Ortho
$22,244
$18,480
$3,764
$0
Assume 10%
Premium
Employer
Employee
Waiver
ASD
Waiver
Contrib
Balance
Available
Plan A/A
$2,175
$1,540
$635
($7,780,020)
$0
$930,037
Plan C/B
$1,832
$1,540
$292
($10,732,752)
$0
$1,530,385
Terms
Deductible – Monies paid for expenses before co-insurance
kicks in
Out Of Pocket – (OOP) After deductible, cost sharing
begins. Trust pays 80%, member pays 20%. Member share is
capped. Once Cap is met, Trust pays 100%.
Premium – Cost of Health Insurance Policy
Paycheck Deduction – Amount due from employee/member
for insurance coverage
Plan Differences
Benefits
Plan A/A
Plan C/A
No Ortho
Plan C/B
No ortho
Plan C/B
With Ortho
Deductible
$100/$300
$500/$1,500
$500/$1,500
$500/$1,500
Out Of Pocket
(OOP)
$1,000/$3,000
$2,000/$6,000
$2,000/$6,000
$2,000/$6,000
RX
$10/$20/$30
$15/$25/$40
$15/$25/$40
$15/$25/$40
RX Mail Order
$20/$40/$60
$30/$50/$80
$30/$50/$80
$30/$50/$80
Dental
$2,000
$2,000
$3,000
$3,000
Dental Ded
$50/$150
$50/$150
$75/$225
$75/$225
Ortho
No
No
No
Yes
Annual Premium
$21,564
$18,300
$18,168
$18,384
Cadillac Tax in 2018
Yes
No
No
No
All other benefits remain consistent throughout plan designs
Effects of Plan C/B on Single
Total Costs reflect High Usage of Health System
Year 1
Plan A/A
Plan C/B
Year 2
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$1,660
$0
Paycheck
Premium
Deduction
$2,618
$0
Deductible
$100*
$500*
Deductible
$100*
$500*
Out of Pocket
$1,000*
$2,000*
Out of Pocket
$1,000*
$2,000*
Total Costs
$2,760
$2,500
Total Costs
$3,718
$2,500
Year 3
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$5,072
$0
Deductible
$100*
$500*
Out of Pocket
$1,000*
$2,000*
Total Costs
$6,172
$2,500
A single individual with no health
concerns/low utilization can save on
premium. Even years of high utilization,
the savings from no premium go towards
deductible/OOP if they have care needs
beyond preventative.
Effects of Plan C/B on Family of 2
Total Costs reflect High Usage of Health System
Year 1
Plan A/A
Plan C/B
Year 2
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$1,660
$0
Paycheck
Premium
Deduction
$2,618
$0
Deductible
$200*
$1,000*
Deductible
$200*
$1,000*
Out of Pocket
$2,000*
$4,000*
Out of Pocket
$2,000*
$4,000*
Total Costs
$3,860
$5,000
Total Costs
$4,818
$5,000
Year 3
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$5,072
$0
Deductible
$200*
$1,000*
Out of Pocket
$2,000*
$4,000*
Total Costs
$7,272
$5,000
A 2 person family with no health
concerns/low utilization
Year 1 : Saves $1,660
Year 2: Saves $2,618
Year 3: Saves $5,072
Year 2 and 3 demonstrate clear advantage
even in years of higher than average
utilization.
Effects of Plan C/B on Family of 3 or more
Total Costs reflect High Usage of Health System
Year 1
Plan A/A
Plan C/B
Year 2
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$1,660
$0
Paycheck
Premium
Deduction
$2,618
$0
Deductible
$300*
$1,500*
Deductible
$300*
$1,500*
Out of Pocket
$3,000*
$6,000*
Out of Pocket
$3,000*
$6,000*
Total Costs
$4,960
$7,500
Total Costs
$5,918
$7,500
Year 3
Plan A/A
Plan C/B
Paycheck
Premium
Deduction
$5,072
$0
Deductible
$300*
$1,500*
Out of Pocket
$3,000*
$6,000*
Total Costs
$8,372
$7,500
How often do 3 or more family
members need extensive medical
care in a given calendar year? In this
Plan very few.
The premium savings are substantial
and even by year 3, plan C is more
attractive.
Guaranteed Expenses (Payroll deductions)
vs. Usage Costs
 Paycheck Premium Deductions are Fixed Costs.
Regardless of use of insurance, payroll deductions will
occur
 Deductible and Out Of Pocket are variable costs. Only
incurred when service beyond preventative are needed
 Assumes there are medical expenses beyond
Preventative (100% coverage)
 Plan C/B adds $1,000 of Dental annually
 60% of adults over age 45 max their current dental
Migration to coverage from waiver
 For the purposes of these illustrations several assumptions
were made
 Overall member/employee counts were held constant
 Enrolled count of approximately 3,063 and waiver counts of
454 were kept constant
 Migration could occur from the waiver to covered count
(reducing available waiver monies) as the payroll deduction
for coverage drops to zero through June 2016

Which may reduce the amount of waiver monies available for Year 3
All information is based upon estimates of employees/covered
lives and premium increases. All of which is subject to change
and may impact estimate of zero year payroll deductions

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