City of PlanoCity of PlanoOpen EnrollmentOpen Enrollment

Plan Year 2010Plan Year 2010

Health Plan OverviewHealth Plan Overview

Self –Insured PlanSelf –Insured Plan

– Benefit plans are governed by the City of Plano Benefit plans are governed by the City of Plano Welfare Benefits Plan through a Risk Pool with Welfare Benefits Plan through a Risk Pool with oversight by the City Manager and Risk Pool oversight by the City Manager and Risk Pool Trustees, Deputy City ManagersTrustees, Deputy City Managers

– Plan Design and funding recommendations presented Plan Design and funding recommendations presented to the Risk Pool Trustees and City Manager by to the Risk Pool Trustees and City Manager by cooperative effort of Human Resources benefits staff cooperative effort of Human Resources benefits staff and Hay Group (benefits consultants)and Hay Group (benefits consultants)

– Plan Year is calendar year and does not coincide with Plan Year is calendar year and does not coincide with fiscal year – References are based on Plan Year and fiscal year – References are based on Plan Year and for Medical onlyfor Medical only

Health Plan OverviewHealth Plan OverviewCity absorbed most of the medical cost increases from 2004 - 2008City absorbed most of the medical cost increases from 2004 - 2008

2006 - City along with Hay Group developed a strategic approach 2006 - City along with Hay Group developed a strategic approach and organization philosophy to manage the health planand organization philosophy to manage the health plan

– The City of Plano desires a long term strategic plan for management of The City of Plano desires a long term strategic plan for management of its benefit programs. This strategic plan will involve a philosophy and its benefit programs. This strategic plan will involve a philosophy and objectives to be put into place and maintained for the long term.objectives to be put into place and maintained for the long term.

– The philosophical position will establish a basis upon which future The philosophical position will establish a basis upon which future benefit plan designs will be developed.benefit plan designs will be developed.

– ““The City cares about its employees and will provide a competitive The City cares about its employees and will provide a competitive benefit program that offers;benefit program that offers;

Affordable choicesAffordable choicesConsistent level of cost structures andConsistent level of cost structures andEncouragement for healthy living”Encouragement for healthy living”

Health Plan OverviewHealth Plan OverviewPlan Year 2008Plan Year 2008

Moved Medicare eligible retirees to fully insured Moved Medicare eligible retirees to fully insured Medicare Supplement Plan to reduce claims exposure Medicare Supplement Plan to reduce claims exposure and GASB liabilityand GASB liability

September 2008 – funded GASB, reducing Health September 2008 – funded GASB, reducing Health Claims Fund by $15.5 millionClaims Fund by $15.5 million

Modifications were made to rate structure, moving from 6 Modifications were made to rate structure, moving from 6 tiers to 4 tiers as basis for future implementation of tiers to 4 tiers as basis for future implementation of Contribution PhilosophyContribution Philosophy

2008 Medical plan2008 Medical plan– Using a 10% annual trend factor (increase in marketplace) for Using a 10% annual trend factor (increase in marketplace) for

medical and the projected paid claims, Health Claims budget medical and the projected paid claims, Health Claims budget was increased 12.5% over 2007was increased 12.5% over 2007

– Subsidy of 93% of cost for both employees and dependentsSubsidy of 93% of cost for both employees and dependents– 2 plan options - $500 or $1000 deductible2 plan options - $500 or $1000 deductible

Contribution PhilosophyContribution Philosophy

In 2007 & 2008, communicated Contribution Philosophy to share more In 2007 & 2008, communicated Contribution Philosophy to share more cost with employees over timecost with employees over time

Medical Rate Implementation StrategyMedical Rate Implementation Strategy– 20092009

93% subsidy for Employees93% subsidy for Employees85% subsidy for Dependents 85% subsidy for Dependents

– 2010201092% subsidy for Employees 92% subsidy for Employees 80% subsidy for Dependents80% subsidy for Dependents

– 2011201190% subsidy for Employees 90% subsidy for Employees 75% subsidy for Dependents75% subsidy for Dependents

Plan Year 2009Plan Year 2009

Analysis of 2007 & 2008 claims resulted in one Core Analysis of 2007 & 2008 claims resulted in one Core Plan offering for 2009 with $1000 deductible to Plan offering for 2009 with $1000 deductible to create:create:– StabilityStability– Predictability of costs, claims, revenue Predictability of costs, claims, revenue

(premiums)(premiums)– Sustainability of health plans now and in the Sustainability of health plans now and in the

futurefuture– Manage costs effectively and consistently for Manage costs effectively and consistently for

employees and the Cityemployees and the CityBegan implementing the Contribution Philosophy Began implementing the Contribution Philosophy (93%/85%) (93%/85%)

2008 Actual Plan Experience2008 Actual Plan Experience

Claims incurred 1/1/08 – 12/31/08Claims incurred 1/1/08 – 12/31/08Large number of High Cost ClaimantsLarge number of High Cost Claimants– 10 claimants reached Stop Loss of $150,000 10 claimants reached Stop Loss of $150,000

compared to 4 in 2007compared to 4 in 2007– $1.3 million in claims above $150,000 (based on $1.3 million in claims above $150,000 (based on

3/31/09 paid claims)3/31/09 paid claims)– 56 claimants >= $50K compared to 32 in 2007 56 claimants >= $50K compared to 32 in 2007 – 1.1% of membership drove 42% of medical cost1.1% of membership drove 42% of medical cost– Total claims for medical and Rx rose 33% in 2008Total claims for medical and Rx rose 33% in 2008– Additional 13% City contribution was added to Additional 13% City contribution was added to

medical rates beginning 3/19/2009 to cover the medical rates beginning 3/19/2009 to cover the excess claimsexcess claims

Resulted in subsidy now being 94% for employees and 87% Resulted in subsidy now being 94% for employees and 87% for dependentsfor dependents

Comparison of Large ClaimsComparison of Large Claims2007 & 20082007 & 2008

Paid as of 1/31/09Paid as of 1/31/09

• Approximately 2/3 of the $4.2 mil increase in claims in 2008 can be attributed to claims in excess of $50,000.

Comparison of Claims DistributionComparison of Claims Distribution

Indicateshigher thanexpected amount oflarge claims

•The Normal Distribution is an estimate of claims by claim size based on a largeDatabase of claims experience used by Hay Group in their Benefits Pricing Model

Clinical Cost Drivers - 2008Clinical Cost Drivers - 2008•Top 5 Diagnoses account for 52% of total medical cost

Key DiagnosisKey Diagnosis FactsFacts % High Cost % High Cost (>$50K) (>$50K)

Musculoskeletal Musculoskeletal SystemSystem

Highest overall cost; Highest overall cost; Back pain is 57% of Back pain is 57% of this cost; 59% is the this cost; 59% is the employeeemployee

35%35%

NeoplasmsNeoplasms Highest increase in Highest increase in number of claimantsnumber of claimants

61%61%

Circulatory SystemCirculatory System 37%37%

Injury/PoisoningInjury/Poisoning 29%29%

Respiratory SystemRespiratory System Asthma – 49% childrenAsthma – 49% children 19%19%

Cost by Benefit TypeCost by Benefit Type

Inpatient Hospital Room & BoardInpatient Hospital Room & Board– 2007 - $1.3 M2007 - $1.3 M– 2008 - $3.3 M2008 - $3.3 M

Hospital Admits per 1000 membersHospital Admits per 1000 members– 2007 - 58.3 (4817 members)2007 - 58.3 (4817 members)– 2008 - 57.7 (4919 members)2008 - 57.7 (4919 members)

Hospital Days per 1000 membersHospital Days per 1000 members– 2007 - 205.5 (4817 members)2007 - 205.5 (4817 members)– 2008 - 312.3 (4919 members)2008 - 312.3 (4919 members)

ER Events – increased 3.4% from 2007ER Events – increased 3.4% from 2007Primary Care Visits – increased 1.8% from 2007Primary Care Visits – increased 1.8% from 2007

Recap of Plan Year 2008 and Recap of Plan Year 2008 and 2009 YTD2009 YTD

Large claimsLarge claims– 2008 had an unusually high number of high costs 2008 had an unusually high number of high costs

claimantsclaimants– Continuing to pay claims in 2009 for claims incurred in Continuing to pay claims in 2009 for claims incurred in

20082008– Ongoing claims for several of the high costs claimants Ongoing claims for several of the high costs claimants

in 2009in 2009– Beginning with Plan Year 2009, moved our Stop Loss Beginning with Plan Year 2009, moved our Stop Loss

provider to UHC so that claims reaching $150K would provider to UHC so that claims reaching $150K would be capped instead of City paying claims over $150K be capped instead of City paying claims over $150K and waiting on reimbursementsand waiting on reimbursements

Recap of Plan Year 2008 andRecap of Plan Year 2008 and2009 YTD2009 YTD

Subsidy levelsSubsidy levels– Plan Year 2008 – 93% subsidy level for both Plan Year 2008 – 93% subsidy level for both

employees and dependentsemployees and dependents– January 2009 – moved to 93% for January 2009 – moved to 93% for

employees / 85% for dependentsemployees / 85% for dependents– March 2009 – City contributions increased March 2009 – City contributions increased

resulting in 94% subsidy for employees / resulting in 94% subsidy for employees / 87% for dependents87% for dependents

OpportunitiesOpportunities

Continue to implement contribution philosophy Continue to implement contribution philosophy and introduce benefit changes which share and introduce benefit changes which share larger % of total cost with employeeslarger % of total cost with employees

Explore additional Medical plan offerings that Explore additional Medical plan offerings that provide real choices for employees in benefits provide real choices for employees in benefits provided and costprovided and cost

Explore options to move non-medicare eligible Explore options to move non-medicare eligible retirees to fully insured product to further reduce retirees to fully insured product to further reduce claims exposure and GASB liabilityclaims exposure and GASB liability

Plan Year 2010Plan Year 2010

Open EnrollmentOpen Enrollment

Health Claims Fund 09/10Health Claims Fund 09/10

* Other Post Employment Benefits

WORKING CAPITAL $ 6,392,671Revenues

EE contributions $ 3,312,688ER contributions 22,530,526ER contributions for Retirees 779,080Cobra receipts 58,049Retiree receipts 521,497ER contribution - OPEB* 5,816,320Interest 255,707

TOTAL REVENUES $ 33,273,867TOTAL RESOURCES $ 39,666,538Operating Expenses

Contractual $ 3,080,464All Claims 22,302,107COBRA Insurance 4,986Retiree Insurance 350,002

TOTAL EXPENSES $ 25,737,559Fund Transfer Out 6,031,883TOTAL APPROPRIATIONS $ 31,769,442WORKING CAPITAL $ 7,897,097Days of Operation 95

Medical – Core Plan with UHCMedical – Core Plan with UHC

No Plan Design ChangesNo Plan Design Changes– Lifetime Maximum of $2,000,000Lifetime Maximum of $2,000,000– 100% preventive coverage100% preventive coverage– Deductible of $1,000Deductible of $1,000– Out of Pocket Maximum of $3,000Out of Pocket Maximum of $3,000– Coinsurance 80%Coinsurance 80%– Office Visit Copay of $25Office Visit Copay of $25

Medical - Core PlanMedical - Core Plan

Rate StrategyRate Strategy– 92% of costs for Employee paid by City92% of costs for Employee paid by City– 80% of costs for Dependents paid by City80% of costs for Dependents paid by City

(monthly) Employee City

Employee onlyEmployee only $38$38 $437$437

Employee + SpouseEmployee + Spouse $189$189 $1039$1039

Employee + ChildrenEmployee + Children $119$119 $759$759

FamilyFamily $297$297 $1473$1473

Pharmacy – CVS/CaremarkPharmacy – CVS/Caremark

Increase in cost is 17.1% attributed to Increase in cost is 17.1% attributed to member utilization, mix of drugs, drug price member utilization, mix of drugs, drug price increases, marketing costsincreases, marketing costs

Member cost share decreased from 2008 to Member cost share decreased from 2008 to 2009 from 26.1% to 18.5% - attributed to 2009 from 26.1% to 18.5% - attributed to elimination of minimum co-payselimination of minimum co-pays

The net effect is an estimated 29% increase The net effect is an estimated 29% increase in the City’s annual drug costin the City’s annual drug cost

Pharmacy – CVS / CaremarkPharmacy – CVS / CaremarkPlan DesignPlan Design

Mandatory Mail Order for Maintenance Mandatory Mail Order for Maintenance Drugs – Maintenance Choice (CVS Retail Drugs – Maintenance Choice (CVS Retail at Mail Order prices) is still in effectat Mail Order prices) is still in effectTier 4 for Specialty Drugs at $120 Co-pay Tier 4 for Specialty Drugs at $120 Co-pay with limit of 30 dayswith limit of 30 days$100 Family Deductible reinstated$100 Family Deductible reinstatedMinimum Co-pays reinstatedMinimum Co-pays reinstatedMaximum Out of Pocket increased to Maximum Out of Pocket increased to $2500$2500

Pharmacy – CVS / CaremarkPharmacy – CVS / CaremarkFamily Deductible - $100

$2500 Max. OOP/Person

Retail (30 Day Supply) Coinsurance Minimum Maximum

Tier 1 - Generic 15% $6 $15

Tier 2 - Brand Preferred 25% $30 $45

Tier 3 - Brand Non Preferred 40% $45 $60

Tier 4 - Specialty NA $120 $120

Mail (90 Day Supply)

Tier 1 - Generic 15% $12 $30

Tier 2 - Brand Preferred 25% $60 $90

Tier 3 - Brand Non Preferred 40% $90 $120

Tier 4 - Specialty NA NA NA

Dental Plan - 2010Dental Plan - 2010

NO CHANGES in the plan designNO CHANGES in the plan design

60% Employee cost paid by City60% Employee cost paid by City

40% Dependent cost paid by City40% Dependent cost paid by City

(monthly)(monthly) EmployeeEmployee CityCity

Employee OnlyEmployee Only $13.44$13.44 $20.16$20.16

Employee + SpouseEmployee + Spouse $33.60$33.60 $33.60$33.60

Employee + ChildrenEmployee + Children $43.68$43.68 $40.32$40.32

FamilyFamily $69.88$69.88 $57.78$57.78

Vision - UHCVision - UHC

Plan Enhancements:Plan Enhancements:– Current Plan OfferingsCurrent Plan Offerings– PlusPlus

Polycarbonate lenses coveragePolycarbonate lenses coverage

$150 contact lenses allowance for 6 boxes – in lieu of glasses$150 contact lenses allowance for 6 boxes – in lieu of glasses

Monthly Rates:Monthly Rates:– Employee OnlyEmployee Only $ 9.68$ 9.68– Employee + SpouseEmployee + Spouse $15.48$15.48– Employee + ChildrenEmployee + Children $15.84$15.84– FamilyFamily $25.48$25.48

Long Term Disability – Buy UpLong Term Disability – Buy Up

City provides LTD up to 40% of pre-disability City provides LTD up to 40% of pre-disability incomeincomeBuy Up - additional 10% or 20% of pre-disability Buy Up - additional 10% or 20% of pre-disability incomeincome

If you are increasing the amount of coverage, If you are increasing the amount of coverage, you are required to complete Standard’s Medical you are required to complete Standard’s Medical History Statement at: History Statement at: www.standard.com/mybenefits/mhsho.htmlBy 5:00 p.m. Wednesday, October 21, 2009By 5:00 p.m. Wednesday, October 21, 2009

Hospital GapHospital Gap

Offered with no changes in plan design or Offered with no changes in plan design or premiumspremiums

See premiums listed in Open Enrollment See premiums listed in Open Enrollment materialsmaterials

Hospital GapHospital GapPaper Enrollment FormPaper Enrollment Form

Requires Paper Enrollment Form Requires Paper Enrollment Form in addition toin addition to On-Line EnrollmentOn-Line Enrollment– If making a If making a CHANGECHANGE to current coverage to current coverage– If If NEWNEW enrollment enrollment

– Not making a change – NO FORM NEEDEDNot making a change – NO FORM NEEDED

COMPLETED FORMS DUE IN HR NO LATER THAN COMPLETED FORMS DUE IN HR NO LATER THAN 5PM, WEDNESDAY, OCTOBER 21, 20095PM, WEDNESDAY, OCTOBER 21, 2009

Flexible Spending AccountsFlexible Spending AccountsPre-Tax Savings OptionsPre-Tax Savings Options

You can help offset increases in your cost You can help offset increases in your cost by participating in FSAby participating in FSAYou can set aside money in Pre-Tax Dollars forYou can set aside money in Pre-Tax Dollars for::– Health Care Premiums – automaticHealth Care Premiums – automatic– Health Care Reimbursement PlanHealth Care Reimbursement Plan

Eligible health care expensesEligible health care expenses

– Dependent Care Reimbursement PlanDependent Care Reimbursement PlanEligible dependent day care expensesEligible dependent day care expenses

– Administered by United HealthcareAdministered by United Healthcare

FSA – Health Care Reimbursement FSA – Health Care Reimbursement PlanPlan

You can set aside up to $5,000 ($2,500 for Part You can set aside up to $5,000 ($2,500 for Part Time employees), Minimum $12.50 per pay Time employees), Minimum $12.50 per pay period, before taxes from your salary per year in period, before taxes from your salary per year in an account to reimburse for eligible health care an account to reimburse for eligible health care expenses that the medical, dental, vision or Rx expenses that the medical, dental, vision or Rx plan doesn’t cover: plan doesn’t cover: – Deductibles Deductibles – Coinsurance Coinsurance – CopaysCopays– Over the counter medicationsOver the counter medications

More information on the cityweb under FSAMore information on the cityweb under FSA– Assistance in calculating a contribution that works for Assistance in calculating a contribution that works for

youyou– List of eligible items that can be claimed under FSAList of eligible items that can be claimed under FSA

FSA – Health Care Reimbursement FSA – Health Care Reimbursement PlanPlan

If expenses are for a medical or dental copay or If expenses are for a medical or dental copay or deductible you do not need to submit a claim – deductible you do not need to submit a claim –

FSA claim processing is automaticFSA claim processing is automatic

Claim reimbursement to you is faster if you set Claim reimbursement to you is faster if you set up Direct Deposit using up Direct Deposit using www.myuhc.com

Reimbursement Claim Forms can be found at Reimbursement Claim Forms can be found at www.myuhc.com or on the city intranet and are or on the city intranet and are REQUIREDREQUIRED for: for:– Pharmacy coinsurance reimbursementsPharmacy coinsurance reimbursements– Over the Counter medications with copies of receiptsOver the Counter medications with copies of receipts

FSA Health Care Reimbursement FSA Health Care Reimbursement PlanPlan

Some examples of covered expenses are:Some examples of covered expenses are:– Lasik for visionLasik for vision– Eyeglasses, including exam feeEyeglasses, including exam fee– Medical deductibles Medical deductibles – Dental expenses not covered by insuranceDental expenses not covered by insurance– Medical, dental and drug coinsurance amounts Medical, dental and drug coinsurance amounts – Medical, dental and drug copaysMedical, dental and drug copays– Eligible Over-the-Counter medicationsEligible Over-the-Counter medications

Expenses from all immediate family members Expenses from all immediate family members (living in the household) are eligible(living in the household) are eligible

FSA – Dependent Care FSA – Dependent Care Reimbursement PlanReimbursement Plan

Contribute up to $5,000 per year ($2,500 if Contribute up to $5,000 per year ($2,500 if married and filing separately or Part Time)married and filing separately or Part Time)Obtain reimbursement for eligible dependent day Obtain reimbursement for eligible dependent day care expensescare expensesProof of expense and Tax ID of care provider Proof of expense and Tax ID of care provider required on claim formrequired on claim formEligible care includes expenses subject to Eligible care includes expenses subject to taxation for:taxation for:– Day care for children or adultsDay care for children or adults– Care in or out of your homeCare in or out of your home– Nursery or pre-school feesNursery or pre-school fees

FSA – Dependent Care FSA – Dependent Care Reimbursement PlanReimbursement Plan

Expenses to allow both spouses to workExpenses to allow both spouses to work

Eligible dependents include:Eligible dependents include:– Children under age 13Children under age 13– Spouse, parent or child over age 13 who live Spouse, parent or child over age 13 who live

with you and cannot care for selfwith you and cannot care for self

Reimbursement Claim Forms can be Reimbursement Claim Forms can be found at found at www.myuhc.com or on the city or on the city intranetintranet

ConsumerismConsumerismRxRx – use generics when possible – use generics when possible– This may require that you talk to your doctor about alternative This may require that you talk to your doctor about alternative

drugs and take the drug list with you to your visitdrugs and take the drug list with you to your visitMedicalMedical – use in-network providers – use in-network providers– Ask the provider to ensure they are in-network or call UHC to verify Ask the provider to ensure they are in-network or call UHC to verify

or check myuhc.comor check myuhc.com– Taking card doesn’t mean they are in-network, it only means they Taking card doesn’t mean they are in-network, it only means they

will file the claimwill file the claim– Use Premium rated (****) doctors and facilities when selecting – Use Premium rated (****) doctors and facilities when selecting –

these provide proven high quality (better outcomes) at reasonable these provide proven high quality (better outcomes) at reasonable costscosts

DentalDental – ask for pre-determinations so you will know your financial – ask for pre-determinations so you will know your financial responsibility up front responsibility up front Flexible Spending AccountsFlexible Spending Accounts – enroll – enroll

You are the purchaser of your own health care – Purchase health care You are the purchaser of your own health care – Purchase health care just like you would any other product.just like you would any other product.

Dependent Eligibility DocumentationDependent Eligibility DocumentationOn – Line On – Line ALERTALERT Message Message

Appears only if documentation has Appears only if documentation has notnot been been receivedreceivedAdding new dependentAdding new dependentDuring the Enrollment process in PeopleSoft:During the Enrollment process in PeopleSoft:

AlertAlert: Human Resources Department still needs : Human Resources Department still needs documentation from you concerning this documentation from you concerning this dependent. Dependent eligibility documentation dependent. Dependent eligibility documentation for the dependent (i.e. Marriage license, birth for the dependent (i.e. Marriage license, birth certificate, etc) must be submitted to the Human certificate, etc) must be submitted to the Human Resources Department no later than October 21, Resources Department no later than October 21, 2009. Failure to provide the requested 2009. Failure to provide the requested information by the deadline will result in information by the deadline will result in NO NO COVERAGECOVERAGE for this dependent for the Plan for this dependent for the Plan Year 2010.Year 2010.

Dependent Eligibility Dependent Eligibility DocumentationDocumentation

Refer to page 86 in your SPD: Definition Refer to page 86 in your SPD: Definition of Dependentof Dependent

Typical Documents:Typical Documents:– Marriage licenseMarriage license– Birth certificateBirth certificate– Court OrderCourt Order

New Question at EnrollmentNew Question at Enrollment

““Does your spouse have access to Does your spouse have access to health insurance through their health insurance through their employer?”employer?”

Will not be able to proceed with enrollment Will not be able to proceed with enrollment until question is answereduntil question is answered

Question onlyQuestion only – – NO surcharge being applied NO surcharge being applied and NO spouse will be taken off planand NO spouse will be taken off plan

Important DatesImportant Dates

Enrollment opens October 1, 2009Enrollment opens October 1, 2009Enrollment closes October 21, 2009Enrollment closes October 21, 2009

Enroll through PeopleSoft Enroll through PeopleSoft – All the instructions are in the WORKBOOKAll the instructions are in the WORKBOOK– Websites are listedWebsites are listed

Vendor Brochures and Hospital Gap Paper Vendor Brochures and Hospital Gap Paper Enrollment Form Available onlineEnrollment Form Available online

Confirmation StatementsConfirmation Statements

Confirmation Statements will be sent out Confirmation Statements will be sent out mid-Novembermid-November

CORRECTIONS Only – send to HRCORRECTIONS Only – send to HR

Check on-line through PeopleSoft at Check on-line through PeopleSoft at Employee Self Service to review your Employee Self Service to review your elections at any timeelections at any time

When are Changes Effective?When are Changes Effective?

Payroll deductions begin 12/01/2009Payroll deductions begin 12/01/2009

Coverage begins 01/01/2010Coverage begins 01/01/2010

You MUST enroll to have coverageYou MUST enroll to have coverage

NO DEFAULTSNO DEFAULTS

Open EnrollmentOpen Enrollment

Online enrollment is mandatory for all full Online enrollment is mandatory for all full time employeestime employees

Please enroll even if you are selecting Please enroll even if you are selecting “waive”“waive”

October 1 – October 21, 5:00 pmOctober 1 – October 21, 5:00 pm