2014 FLEX BENEFITS PLAN DESIGN

2014 FLEX BENEFITS PLAN DESIGN Status of Flex Plan Expenditures, 2014 Plan Design Options, and Flex Contract RFP & Renewals May 2013 Personnel Depart...
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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%

5

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 ∗ ∗ ∗ ∗ ∗

15

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

16