Public Employees Benefits Board MeetingJuly 18, 2000Briefing on Long-Term Care Demutualization

Washington State Health Care Authority/PEBB

OverviewBackground on DemutualizationProcessProposal for Board resolution

Washington State Health Care Authority/PEBB

Long-Term Care ProgramLegislative requirement to offer LTC programJohn Hancock Financial Services selected as successful vendor Began offering LTC program for July 1998 coverageOver 1,800 individuals have purchased coverage

Washington State Health Care Authority/PEBB

DemutualizationJohn Hancock Financial Services - converted from a mutual insurance company to a publicly traded stock companyMutual company owned by policy holders, like HCAPolicy holders received stockcalculated with length of time LTC plan has been in effect, total amount of premium paid, and total number of subscribers (enrolled on two key transition dates)

Washington State Health Care Authority/PEBB

Transfer of StockHCA received 79,979 sharesPremiums for LTC paid exclusively by subscribersMost appropriate to transfer shares directly to eligible subscribers

Washington State Health Care Authority/PEBB

Transfer, cont.Shares determinedEligible subscribers determined using two key transfer dates Hancock used (December 31 and August 31) = 1,658 eligible subscribers/dependents Shares based on total premiums paid for PEBB LTC contract; total premiums by each subscriber - as a percentage of total premium paid

Washington State Health Care Authority/PEBB

Transfer, cont.To complete the transfer from HCA to subscribersBoard resolution - intent to transfer shares, authority for LTC administration Medallion guarantee and letter of instructionShare distribution for each subscriber

Washington State Health Care Authority/PEBB

Next StepsHancock mailed initial notification letter for usComplete legal transfer with Board resolution and medallion guaranteeBoard vote - special telephonic board meeting August 1, 2001 at 1:30 (Conference line: 360-923-2997)Final transfer documents to Hancocks agent (Equiserve) who will prepare individual notices and share certificates

Washington State Health Care Authority/PEBB