Retiree Medical Study

1. Retiree Medical Study Leadership Update October 2015

2. Retiree Medical Study Objectives • Ensure retirees and university are getting the most for their dollar • Affordable, accessible retiree medical plans are now available in the market • Taking advantage of options such as Medicare subsidies could lower costs • Ensure university can continue insurance benefits (medical, dental, life) for current retirees • By 2019 the liability for current and future retiree medical benefits will be over $1 billion, increasing to $4.5 billion in 30 years • Recent finalized Governmental Accounting Standards Board (GASB) ruling means the university will need to begin to fund the liability • This is additional money that will increase the benefit rate 3 2

3. Our challenge: Current liability projection $4.5B in 2045 $808M 3 5

4. Project timeline Progress to Date Announce Study @ Launch Dedicated Website Conduct Listening Tour Develop Potential Designs Finalize Plan Analysis Develop Implementation/ Communication Strategy Announce Direction TRAC Review Conduct Focus Group Testing Retiree plan implemented Review Current Plan Conduct Benchmarking and Marketplace Review @ Guiding Coalition Meetings Website Updates Educational Resources 4

5. Current Retiree Insurance Program Eligibility for insurance benefits • Age 55 and at least 10 years of service, or age 60 with at least 5 years of service • Generally, spouses are eligible for lifetime coverage • Same eligibility applies to retiree dental and life • Must have UM benefits prior to retirement 5

6. Current retiree medical plans • Pre Medicare retirees • PPO Plan • Healthy Savings Plan • Post-Medicare retirees • myRetiree Health Plan • Healthy Savings Plan • Subsidy – UM subsidy varies based on age and years of service at retirement but averages 50% 6

7. Changes outside the university • Only 6 million of 45 million Medicare retirees have coverage through an employer plan • Market plans for Medicare-eligible are robust and offer universal access • Significant federal subsidies are available to complement or replace Medicare • Enhanced Medicare pharmacy benefit by 2020 (provided through Affordable Care Act) • Pre-65 options are developing 7

8. The “levers” for Retiree Medical Program • Eligibility and/or vesting (who gets benefits?) • Who receives the benefit (and for how long)? • How much of a benefit do they receive? • Are spouses covered; what about widow(er)s? • Plan design (what do they get?) • Cost sharing for medical expenses • Coinsurance, copays, deductible • Employer funding (how much does UM pay?) 8

9. Current retiree recommendations • Preserve plans (medical, dental, life) • Continue current UM subsidy of premiums • Take advantage of market options to increase value / lower cost 9

10. Status of future retiree medical benefitsfor active employees • Plan will likely close to new hires • Multiple options developed • Being reviewed by the Total Rewards Advisory Committee (TRAC), who will make recommendation(s) to VP of HR • Targeting December 2015 or February 2016 recommendations to Board of Curators • Ample time and support resources will be provided to faculty and staff to consider any changes 10

11. 2016 Annual Enrollment HRC August 2015

12. Your role as a leader • Make sure you’re informed • Understand generally the when and what of Annual Enrollment so you can help inform your faculty and staff • Know that active enrollment could result in defaults if your employees do not take action • We need your buy-in and support for your employees during the process

13. Important dates to take action • Before enrollment: Choose insurance that is right for you Benefits guide Meetings & one-on-ones Plan comparator Campus Benefits Reps. / HR Service Center Be tobacco free http://umurl.us/enrollment

14. Important dates to take action • During enrollment: Select your plans Log into myHR Make your selections You’re not done until you click “Submit” Don’t default! https://myhr.umsystem.edu

15. Important dates to take action • After enrollment: Make the most of your benefits Review your confirmation Complete your HSA paperwork Keep an eye out for new cards Consider investing your premium savings http://umurl.us/enrollment

16. SECTION TWO: Insurance options

17. Medical options

18. Medical options, cont’d. What’s different • Premiums • Tobacco discount & attestation • New medical plan administrator:United Healthcare • New HSA administrator: Optum Bank • Same prescription administrator, ExpressScripts, for all plans • RX Deductible on the custom network plan • Out of pocket maximum changes • Check provider lists – may have changed. What’s the same • HSA contributions Amounts prorated after 1st quarter • Custom Network remains in Columbia only • Active enrollment

19. Other insurance plans • Dental, vision, life, and accidental death & dismemberment • No change in plan structure • Premiums – no change • Long Term Disability (LTD) • During the two-week period of Annual Enrollment only, faculty and staff have a unique opportunity to enroll in Option A or Option B Long Term Disability (LTD) without providing evidence of insurability or otherwise going through underwriting • Those who currently have LTD coverage, will default to the same coverage but can make changes • Those who waived in previous years, will automatically be enrolled in university paid Option A • Privacy notices • We will be ensuring that all employees are alerted to our privacy notices • Always available at http://umurl.us/notices

20. SECTION THREE: Wellness Incentive

21. Tier 2: $350 * Tier 1: $100 * $450 incentive program 50 points • Take the Wellness Pledge in myHR with Annual Enrollment 350 points • Choose healthy habits and activities that work for your lifestyle. Examples: • Healthy eating • Join a Weight Watchers program • Mindful-based stress reduction classes • Participate in daily exercise 50 points • Take an online Personal Health Assessment * Taxable income. Voluntary retirement plan savings are also deducted. Must pay premiums for medical insurance to be eligible. Must be actively employed at time of payout to earn the incentive.

22. $450 incentive program, cont’d. What’s different • Rest of incentive program begins November 1, after taking the pledge during Annual Enrollment • No biometric health screening • Expanded activities • Either incentive points or prizes under the Million Step Pedometer Program; not both • Tobacco-free / tobacco cessation program no longer earn incentive points—replaced by premium discount What’s the same • Must be a primary subscriber to university medical insurance to be eligible • Must be an active employee at the time of payouts • Must earn the initial 100 points by April 30 to receive $100 in your May paycheck; and the remaining 350 points by September 30 to receive $350 in your October paycheck * Taxable income. Voluntary retirement plan savings are also deducted.