NEA-Alaska Health Plan Anchorage Education Association Plan Design Selection Fall 2013
Rhonda R. Kitter NEA-Alaska Health Plan, Chief Financial Officer firstname.lastname@example.org
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
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 All other benefits remain consistent throughout plan designs
Effects of Plan C/B on SingleTotal Costs reflect High Usage of Health System 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 2Total Costs reflect High Usage of Health System 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 moreTotal Costs reflect High Usage of Health System 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