2014 FLEX BENEFITS PLAN DESIGN Status of Flex Plan Expenditures, 2014 Plan Design Options, and Flex Contract RFP & Renewals May 2013
Personnel Department – Employee1 Benefits Division
Key Topics ∗ Overview of Flex Plan Benefits Costs and Expenditure Projections ∗ Review of Prior Plan Design Changes & Actions to Mitigate Flex Cost Increases ∗ Benchmarking Data ∗ Timeline for 2013 Flex Plan Activities ∗ Discussion of 2014 Plan Design Strategy, Options, and Decisions 2
Breakdown of Cost Drivers Number of Lives Covered
•Number of Employees •Number of Dependents (Tier Level)
Premium Rates (Price)
Benefit Cost
City Subsidy Amount ($) 3
•Member utilization of plan •Member demographics •Benefit Plan Design •Carrier Contracting/Pricing
•The dollar amount provided to employees to cover the cost of insurance coverage. •This amount is called a City “subsidy” and its codified in MOU or LAAC provisions.
Flex Plan Premium Costs PY 2013
4
Profile Medical Plan Enrollment
Enrollment Breakdown: Employees Dependents
24,682 34,842
41% 59%
Total Covered Lives:
59,524
100%
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Profile Dental Plan Enrollment
6
Flex Benefit Expenditure Per Employee Civilian Flex Average Cost Per Employee $18,000 $16,040 $16,000
$14,836 $13,643
$14,000
$12,494
$12,000
$10,649
$10,000 $8,000
$7,024
$7,574
$8,188 $8,593
$9,094
$11,539
$9,867 $9,969
$6,000 $4,000 $2,000
Projected costs assumes -1% employment growth. Average cost includes all Flex Benefits (health, dental, disability, and life) and Proprietary Departments. 7
FY 17/18 (P)
FY 16/17 (P)
FY 15/16 (P)
FY 14/15 (P)
FY 13/14 (P)
FY 12/13 (C)
FY 11/12
FY 10/11
FY 09/10
FY 08/09
FY 07/08
FY 06/07
FY 05/06
$-
Flex Benefit Expenditure Per Employee Detail
Fiscal Year
Total Flex Costs (Includes Prop. Depts)
Enrollment
Average FY Per Member Cost
PEPFY Growth %
FY 05/06
$
189,766,905
27,018
$
7,024
FY 06/07
$
215,076,770
28,397
$
7,574
7.8%
FY 07/08
$
240,548,196
29,377
$
8,188
8.1%
FY 08/09
$
253,404,124
29,491
$
8,593
4.9%
FY 09/10
$
259,932,657
28,584
$
9,094
5.8%
FY 10/11
$
256,673,296
26,013
$
9,867
8.5%
FY 11/12
$
254,393,241
25,519
$
9,969
1.0%
FY 12/13 (C)
$
265,105,523
24,894
$
10,649
6.8%
FY 13/14 (P)
$
282,756,287
24,503
$
11,539
8.4%
FY 14/15 (P)
$
303,086,807
24,258
$
12,494
8.3%
FY 15/16 (P)
$
327,644,931
24,016
$
13,643
9.2%
FY 16/17 (P)
$
352,740,537
23,776
$
14,836
8.7%
FY 17/18 (P)
$
377,557,000
23,538
$
16,040
8.1%
FY 18/19 (P)
$
402,961,310
23,303
$
17,293
7.8%
Projections as of May 22, 2013. Projections vary depending on changes in enrollment, final premium rates, proprietary department and reimbursement rates. 8
Overview of Flex Expenditure Projections General Fund (excludes Proprietary Departments)
Projected costs for FY 14 to FY 17 assumes -1% employment growth. 9
Review of Prior Plan Design Changes & Actions to Mitigate Flex Cost Increases (slides 10, 11 & 12)
Plan Year 2011 January 1, 2011
Estimated Savings (12 months)
Implemented Health Care Reform Changes (increased adult child eligibly, $0 copay for preventative care, & eliminated lifetime maximum limit).
$
0.53
Consolidated Life and Disability Insurance with single provider
$
(1.95)
Sub-Total Savings:
$1.42 million Estimated Savings (6 months)
Mid Year Plan Changes (Effective July 1, 2011) Increase the Office Visit Copay - HMO to $15 and PPO to $30 Increase PPO Calendar Year Deductible by $250 / individual and $500 / family Increase ER Copay to $100 for all plans Increase prescription drug copays Reduction in medical premium July - December: Capped City dental subsidy at 85% of the Dental PPO Employee Only level Reduction in City contribution towards dental premium July - December Eliminated the $7.50 per pay period Flex Credit Sub-Total Savings:
Total Savings Plan Year 2011:
Savings estimate includes Proprietary Departments. 10
$
(4.42)
$
(1.38)
$
(1.96) $7.76 million*
$9.18 million
Review of Prior Plan Design Changes & Actions to Mitigate Flex Cost Increases Cont.
Plan Year 2012 January 1, 2012
Estimated Savings
Reduced Dental PPO Plan reimbursement for certain procedures from 80% to 50%
$
(0.70)
Employee Benefits Trust Fund Transfer to General Fund
$
(8.10)
Total Savings Plan Year 2012:
11 Savings estimate includes Proprietary Departments.
$8.8 million
Review of Prior Plan Design Changes & Actions to Mitigate Flex Cost Increases Cont. Plan Year 2013 January 1, 2013
Estimated Savings
Employee Benefits Trust Fund Transfer to General Fund
$
(5.0)
Implement Blue Cross Select Network
$
(7.1)
Medical Plan Provider Rate Reduction
$
(0.8)
Freeze Disability Cap
$
(0.1)
Dependent Audit
$
0.25
Total Savings Plan Year 2013:
TOTAL SAVINGS PY 2011, 2012 & 2013
12 Savings estimate includes Proprietary Departments.
$ 12.75 million
$30.7 MILLION
Benchmarking Data Staff and Mercer Consulting will provide the JLMBC with various benchmarking data during the process. The following items are included in the JLMBC materials: ∗ Flex medical plan type enrollment by bargaining unit ∗ Anthem and Kaiser Family Rate Premiums 1997-2013 ∗ Mercer Benefit Benchmarking City of Los Angeles to Other Public Entities – HMO and PPO Plan Copays & Deductibles ∗ Mercer 2012 National Survey of Employer-Sponsored Health Plans 13
Timeline for 2013 Flex Plan Activities Key Milestones for 2013 Plan Year Target Date February April May
Action Items Medical RFP Issued Non-Staff Model RFP Responses Received Staff Model RFP Response Received
June 6, 2013
Mercer and Staff present renewal recommendations to the JLMBC
June 11 and 13
JLMBC makes final 2012 renewal recommendations and plan design changes
June
Personnel Department submits Medical Provider recommendation to Mayor
June
City Council considers JLMBC recommendations for the 2013 Flex Plan Design
June
Staff Starts Open Enrollment Project including implementation of Health Care Reform requirements
June
Contract Negotiations and Implementation Plan Developed
July
Staff and TPA Coordinate Systems Set Up with New Rates
August September October 1st November / December January 1st
Staff presents the 2012 Open Enrollment Campaign to the JLMBC 2012 Plan Design and Flex benefits are communicated to employees Open Enrollment Month Enrollment Process and Coordination 2014 Plan Year Begins 14
Discussion of 2014 Plan Design Options, Strategies and Decision Points
Flex Medical Plans – HMO and PPO Options Flex Plan Design Changes Copays & Deductibles Default Medical Plan – Change to Lowest Cost HMO Plan Alternative Network Options Freeze the basic disability maximum benefit cap to $3,014 per month ∗ Wellness Program ∗ Dependent Audit ∗ ∗ ∗ ∗ ∗
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JLMBC Decisions for PY 2014
∗ Recommendation(s) on medical plan carrier selection ∗ Contract Renewal for Other Flex Carriers ∗ Flex Plan Design ∗ Employee Benefit Trust Fund
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