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Town of Arlington Public Employees 2011 Health Insurance Options

Town of Arlington Public Employees 2011 Health Insurance Options. October and November Meetings 2010. Version 4.0 10.19.10. The Problem - Healthcare Costs are Increasing. Leaner budgets are squeezing everyone Reduced local aid Lower revenues with bad economy

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Town of Arlington Public Employees 2011 Health Insurance Options

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  1. Town of Arlington Public Employees2011 Health Insurance Options October and November Meetings 2010 Version 4.0 10.19.10

  2. The Problem - Healthcare Costs are Increasing • Leaner budgets are squeezing everyone • Reduced local aid • Lower revenues with bad economy • No real cost-reduction strategies • National Healthcare Reform

  3. Healthcare Discussion - Background Information • Ongoing discussions date back several years • Rising healthcare costs impacting Town budget • Affects employees, retirees and the Town • Joint labor-management committee completed extensive review of health plan • Group Insurance Commission • Town proposed to join GIC in 2009, Unions rejected proposal • Municipal and State financial issues affect us • $4.5 million Town deficit and growing • FY12 looks worse both for Commonwealth and local towns • Budget woes impact our livelihood • Retiree coverage is vulnerable to changes

  4. Healthcare Discussion - Why Consider a Change Now? • Estimated FY12 deficit is $6.3 million • Status quo approach • Means Town spends $1.4 million MORE on health insurance than currently • Need to find cost savings elsewhere • State contemplating changes • Legislative proposals that may not be in our favor • Legislature likely to take action in coming months • On the political agenda for governor’s race

  5. Overview - Three Choices to Consider • Option 1 – Do nothing, keep current plans and contribution splits • Town absorbs$1.4 million increase • Option 2 – Total replacement with new HPHC plans • $1.5 million in Town savings; NO wage increases guaranteed; contract negotiations continue • Option 3 – Go to GIC • $3.2 million in Town savings • $1.8 million net savings for Town AFTER guaranteed wage increases and Medicare Part B • $1.4 million to Employees/Retirees (Salary increases of $1,100,683 and Medicare Part B reimbursements of $332,160)

  6. Option 1 - No ChangesTown Absorbs $1.4 million Additional Costs • All plans will remain the same • No protection for retirees • Town can increase cost sharing for retirees • Premiums will increase • HMO Blue • Rates will increase 11.6% Individual and10.8% Family • Blue Care Elect • Rates will increase 19.3% Individual and 20.5% Family • Blue Choice • Rates will increase 20.5% for both Individual and Family • HPHC HMO • Rates will not increase

  7. Option 2 – Total Replacement with HPHCTown Saves $1.5 million • Replace all BCBS plans with HPHC (HMO, PPO, POS) • Higher copays • New Retiree Plans • HPHC “High” and “Low” options, national network • Effective January 1, 2011 or when practical • No retiree contribution changes for one year • Town to pay $40 per month for Medicare Part B • Each union must ratify, 1 year agreement • Each union continues contract negotiations; no guaranteed wage increases

  8. Option 2 – HPHC Total Replacement Plan Design Changes • See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays. • Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization and • outpatient surgical services.

  9. Option 2 – HPHC Total Replacement Cost for Members

  10. Option 2: HPHC Total Replacement Plan Design Changes Continued • See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays. • Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization and • outpatient surgical services.

  11. Option 3 – Group Insurance Commission (GIC) • Effective July 1, 2011 • Three year agreement • Formal Section 19, Coalition Bargaining agreement • Protects retirees, who gain bargaining rights • Improved contribution splits • HMOs @ 85/15 for all employees/retirees • PPOs @ 85/15 for all employees/retirees • Indemnity Plans @ 75/25 for all employees/retirees • Town will protect members against future GIC increases • Town to pay a higher contribution split if GIC rates increase more than 12% • Town will pay a higher contribution split if GIC deductibles increase more than $100

  12. Option 3 – GIC Continued • Health Reimburse Accounts (HRA) • Town to reimburse employees up to $500 for hospitalization and $150 for day surgery • If HRA is not authorized by GIC, Town will improve the premium split from 85/15 to 86/14 for HMO and PPO plans • Town to pay $40 per month for Medicare Part B • Town committing contract raises • ½% for 7/1/10 • 1% for 7/1/11 • 1% for 7/1/12 • Raises are contingent on contract settlements

  13. Option 3 – GIC Continued • Town savings projected to be $1.8 million AFTER money paid out for town-committed wage increases • Town providing $1,000,683 in wage increases and $332,160 in Medicare Part B reimbursements, which is projected to be $1.4 million in total • Most members will experience lower premiums

  14. Option 3 - GIC Health Insurance Plans • GIC offers multiple plan options for active, retired Medicare and non-Medicare participants • PPO, HMO, Indemnity, Medicare Supplement Plans • Non-Medicare plans include “tiered” copays for doctors and hospitals • Tier levels are based on cost and quality data • Your out-of-pocket costs will depend on the doctors and hospitals you select • Non-Medicare plans include up-front calendar year deductibles

  15. Option 3 – GIC Cost for Members Note: July 1, 2011 GIC rates estimated at 12% above 2010 rates. PPO splits will be 15% if GIC allows HRAs.

  16. Option 3 - GIC Health Insurance Plans Continued • Active Employees & Non-Medicare Eligible Retirees • Four PPO Plans • Tufts, HPHC, UniCare (2) • Two Limited Network HMO Plans (new in 2010) • HPHC Primary Choice • Tufts Health Plan • Four Regional HMO Plans • Fallon Direct, Fallon Select, NHP, HNE • One Indemnity Plan • UniCare Indemnity with CIC

  17. Option 3 - GIC Health Insurance Plans Continued • Medicare Eligible Retirees • Retirees must enroll in Medicare if age 65 and eligible for Medicare (Self or Spouse) • Six Medicare Supplement Plans • HPHC, Tufts, Fallon, HNE

  18. Option 2 – GIC Health Insurance Plans 2009 Enrollment To date, 80% of municipal members have enrolled in a GIC PPO option

  19. Option 3 – GIC Sample Plan Design

  20. GIC – Sample HPHC Independence Hospital Tiers Note: The Town is offering an HRA reimbursement of $500/hospital admission if allowed by the GIC, or a reduction in the employee split from 15% to 14% for HMO and PPO plans.

  21. Option 3 – GIC Sample Plan Design Continued

  22. Option 3 – GIC Continued Explanation of ‘up-front’ deductibles • “Up-front deductibles” require the member to pay a stated amount up-front, before certain health insurance benefits are paid by the insurance carrier • GIC deductibles are typically $250 per Individual and $750 per family per calendar year • Care that is subject to a deductible: ER visits, inpatient hospitalization, surgery, lab and blood tests, bone density screenings, x-rays and high tech imaging, durable medical equipment • Care that is exempt from a deductible: prescriptions, office visits, necessary immunizations, medically necessary wigs, hearing aids, mammograms, pap smears, EKGs, colonoscopies • Some of these services will be covered without a required co-pay under National Healthcare Reform

  23. Option 3 - GIC Continued Eligibility Rules • Municipal employees are not eligible for the GIC dental, vision, life or disability programs • Each plan participant must provide birth and marriage certificates to be covered • New hires are eligible the first of the month after 60 days of employment • Retirees over age 65 on Medicare with younger dependents have special enrollment rules

  24. Option 3 – GIC Resources • Access carrier web sites and/or carrier (800) numbers • Review physicians • Review hospitals • Review drug formularies by plan Group Insurance Commission: www.mass.gov/gic Harvard-Pilgrim HC: www.harvardpilgrim.org/gic Tufts Health Plan: www.tuftshealthplan.com/gic Fallon Community HP: www.fchp.org UniCare: www.unicarestateplan.comand www.caremark.com/gic

  25. Summary – Health Plan Options • Option 1 – No change in plans • Current contribution splits • No Medicare Part B reimbursement • Option 2 – HPHC total replacement • Effective January 1, 2011, or as soon as practical • $40 Medicare Part B reimbursement for retirees • Current contribution splits stay in place • Retirees and survivor plans remain in place

  26. Summary – Health Plan Options Continued • Option 3 – GIC • Effective July 1, 2011 • HMO/PPO contribution split @ 85/15% • Indemnity contribution split @ 75/25% • Town to protect members if GIC increases exceed 12% per plan year • Town to protect members if GIC deductible amounts increase more than $100 per plan year • HRA • Up to $500/hospital admission and $150/day surgery • Agreement includes wage increases

  27. Health Plan Options – Index of Materials • 1. Town Fiscal Projections • 2. Letter from Town Manager • 3. Memorandum regarding Harvard Pilgrim Consolidation w/plan changes • 4. Memorandum regarding GIC • 5. Comparison of various plans • 6. Q & A about deductibles • 7. No Change in Current Plans spreadsheet • 8. Current Plans vs. HPHC Consolidation comparison spreadsheet • 9. Current Plans vs. GIC Plans comparison spreadsheet • 10. Proposed GIC plans showing costs/savings with possible wage increases

  28. Town of Arlington Health Insurance Options QUESTIONS & ANSWERS

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