Town of Arlington Public Employees2011 Health Insurance Options

October and November Meetings 2010

Version 4.0 10.19.10

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The Problem - Healthcare Costs are Increasing

Leaner budgets are squeezing everyone– Reduced local aid– Lower revenues with bad economy– No real cost-reduction strategies– National Healthcare Reform

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Healthcare Discussion - Background Information

Ongoing discussions date back several years– Rising healthcare costs impacting Town budget– Affects employees, retirees and the Town– Joint labor-management committee completed extensive

review of health plan Group Insurance Commission

– Town proposed to join GIC in 2009, Unions rejected proposal

Municipal and State financial issues affect us– $4.5 million Town deficit and growing– FY12 looks worse both for Commonwealth and local towns– Budget woes impact our livelihood– Retiree coverage is vulnerable to changes

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Healthcare Discussion - Why Consider a Change Now?

● Estimated FY12 deficit is $6.3 million

● Status quo approach● Means Town spends $1.4 million MORE on health insurance than

currently● Need to find cost savings elsewhere

● State contemplating changes● Legislative proposals that may not be in our favor● Legislature likely to take action in coming months● On the political agenda for governor’s race

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Overview - Three Choices to Consider

Option 1 – Do nothing, keep current plans and contribution splits – Town absorbs $1.4 million increase

Option 2 – Total replacement with new HPHC plans– $1.5 million in Town savings; NO wage increases

guaranteed; contract negotiations continue

Option 3 – Go to GIC– $3.2 million in Town savings

$1.8 million net savings for Town AFTER guaranteed wage increases and Medicare Part B

$1.4 million to Employees/Retirees (Salary increases of $1,100,683 and Medicare Part B reimbursements of $332,160)

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Option 1 - No ChangesTown Absorbs $1.4 million Additional Costs

All plans will remain the same No protection for retirees

– Town can increase cost sharing for retirees

Premiums will increase– HMO Blue

Rates will increase 11.6% Individual and10.8% Family– Blue Care Elect

Rates will increase 19.3% Individual and 20.5% Family– Blue Choice

Rates will increase 20.5% for both Individual and Family– HPHC HMO

Rates will not increase

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Option 2 – Total Replacement with HPHCTown Saves $1.5 million

● Replace all BCBS plans with HPHC (HMO, PPO, POS)● Higher copays

● New Retiree Plans

● HPHC “High” and “Low” options, national network

● Effective January 1, 2011 or when practical

● No retiree contribution changes for one year

● Town to pay $40 per month for Medicare Part B

● Each union must ratify, 1 year agreement

● Each union continues contract negotiations; no guaranteed wage increases

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Option 2 – HPHC Total Replacement Plan Design Changes

Plan Feature Network Blue HMO (current)

Harvard Pilgrim HMO (proposed)

PCP, OB, GYN, MH, PT, Chiro

$10 copay $20 copay*

Specialist, O/P Specialty Care

$10 copay $40 copay*

Emergency Room $50 copay $75 copay

Inpatient Hospital Care No copay $250 copay

Day Surgery No copay $100 copay

Prescription Drugs  

  RetailMail Order (90 day)

$10/$20/$35$10/$20/$35

$10/$20/$35$20/$40/$105

• See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays.• Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization

and outpatient surgical services.

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Option 2 – HPHC Total Replacement Cost for Members

Current PlansJan. 1, 2011

HPHC ConsolidatedJan. 1, 2011

Monthly Estimated (Savings) or Cost

Annual Estimated (Savings) or Cost

Plan RenewalHMO Blue

HPHC (new)

Single 15% $116.07 $98.88 ($17.19) ($206.28)

Family 15% $307.16 $261.35 ($45.81) ($549.72)

Plan HPHC HMO HPHC (new)

Single 15% $94.17 $98.88 $4.71 $56.52

Family 15% $242.01 $261.35 $19.34 $232.08

Plan Medex III HPHC (new)

Single Retiree

25% $107.36 $98.88 ($8.48) ($101.76)

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Option 2: HPHC Total Replacement Plan Design Changes Continued

Plan Feature Harvard Pilgrim HMO (current)

Harvard Pilgrim HMO (proposed)

PCP, OB, GYN, MH, PT, Chiro

$10 copay $20 copay

Specialist and O/P Specialty

$10 copay $40 copay*

Emergency Room $50 copay $75 copay

Inpatient Hospital Care No copay $250 copay

Day Surgery No copay $100 copay

Prescription Drugs  

  RetailMail Order (90 day)

$10/$20/$35$20/$40/$105

$10/$20/$35$20/$40/$105

• See HPHC Summary of Benefits for full description of tier 1 and tier 2 copays.• Proposed plan has a $2,000 individual/$4,000 family yearly out-of-pocket maximum for inpatient hospitalization

and outpatient surgical services.

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● Effective July 1, 2011● Three year agreement● Formal Section 19, Coalition Bargaining agreement

● Protects retirees, who gain bargaining rights● Improved contribution splits

● HMOs @ 85/15 for all employees/retirees● PPOs @ 85/15 for all employees/retirees● Indemnity Plans @ 75/25 for all employees/retirees

● Town will protect members against future GIC increases● Town to pay a higher contribution split if GIC rates increase more

than 12%● Town will pay a higher contribution split if GIC deductibles

increase more than $100

Option 3 – Group Insurance Commission (GIC)

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● Health Reimburse Accounts (HRA) ● Town to reimburse employees up to $500 for hospitalization and

$150 for day surgery● If HRA is not authorized by GIC, Town will improve the premium

split from 85/15 to 86/14 for HMO and PPO plans

● Town to pay $40 per month for Medicare Part B● Town committing contract raises

● ½% for 7/1/10● 1% for 7/1/11● 1% for 7/1/12● Raises are contingent on contract settlements

Option 3 – GIC Continued

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● Town savings projected to be $1.8 million AFTER money paid out for town-committed wage increases

● Town providing $1,000,683 in wage increases and $332,160 in Medicare Part B reimbursements, which is projected to be $1.4 million in total

● Most members will experience lower premiums

Option 3 – GIC Continued

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Option 3 - GIC Health Insurance Plans

GIC offers multiple plan options for active, retired Medicare and non-Medicare participants – PPO, HMO, Indemnity, Medicare Supplement Plans

Non-Medicare plans include “tiered” copays for doctors and hospitals– Tier levels are based on cost and quality data

Your out-of-pocket costs will depend on the doctors and hospitals you select

Non-Medicare plans include up-front calendar year deductibles

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Option 3 – GIC Cost for Members

Current PlansJan. 1, 2011

% Split

GICJuly 1, 2011Estimated

% Split

Monthly Estimated (Savings) or Cost

Annual Estimated (Savings) or Cost

Plan RenewalHMO Blue

HPHC Independence PPO

Single $116.07 15% $94.86 14% ($21.21) ($254.52)

Family $307.16 15% $231.71 14% ($75.45) ($905.40)

Plan RenewalHPHC HMO

HPHC Independence PPO

Single $94.17 15% $94.86 14% $0.69 $8.28

Family $242.01 15% $231.71 14% ($10.30) ($123.60)

Plan Medex III UniCare w/ CIC

Single Retiree

$107.36 25% $101.71 25% ($5.65) ($67.80)

Note: July 1, 2011 GIC rates estimated at 12% above 2010 rates. PPO splits will be 15% if GIC allows HRAs.

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Option 3 - GIC Health Insurance Plans Continued

Active Employees & Non-Medicare Eligible Retirees

Four PPO Plans– Tufts, HPHC, UniCare (2)

Two Limited Network HMO Plans (new in 2010)– HPHC Primary Choice– Tufts Health Plan

Four Regional HMO Plans– Fallon Direct, Fallon Select, NHP, HNE

One Indemnity Plan– UniCare Indemnity with CIC

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Option 3 - GIC Health Insurance Plans Continued

Medicare Eligible Retirees– Retirees must enroll in Medicare if age 65 and

eligible for Medicare (Self or Spouse)– Six Medicare Supplement Plans

HPHC, Tufts, Fallon, HNE

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To date, 80% of municipal members have enrolled in a GIC PPO option

Option 2 – GIC Health Insurance Plans 2009 Enrollment

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Option 3 – GIC Sample Plan Design

Plan Feature HPHC Independence PPO

  In-Network Out-of-Network

PCP Office Visit $20 copay 20% after deductible

Specialist Office Visit $25 Tier 1$35 Tier 2$45 Tier 3

20% after deductible

Calendar Year Deductible $250/$750 $400/$800

Emergency Room $100 $100

Inpatient Hospital Care Tier 1 $250 per admissionTier 2 $500 per admissionTier 3 $750 per admission

Maximum of 4 per calendar year

 20% after deductible

Outpatient Surgery $150 per occurrence Maximum of 4 per calendar year

 20% after deductible

Prescription Drugs    

  RetailMail Order (90 day)

$10/$25/$50$20/$50/$110

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GIC – Sample HPHC Independence Hospital Tiers

Sample of Network Tier 1 - $250 4/yr

Tier 2 - $500 4/yr

Tier 3 - $750 4/yr

Winchester X

Newton Wellesley X

Children’s X

Dana Faber X

Beth Israel X

Mount Auburn X

Emerson X

Lahey Clinic X

Mass General X

Brigham & Women’s X

Note: The Town is offering an HRA reimbursement of $500/hospital admission if allowed by the GIC, or a reduction in the employee split from 15% to 14% for HMO and PPO plans.

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Option 3 – GIC Sample Plan Design Continued

Plan Feature Tufts Health Plan Spirit

Limited Provider Network, No PCP Referrals

PCP Office Visit $20 copay

Specialist Office Visit $25 Tier 1$35 Tier 2$45 Tier 3

Calendar Year Deductible $250/$750

Emergency Room $100

Inpatient Hospital Care Tier 1 $300 per admissionTier 2 $700 per admissionMaximum of 4 copays per calendar year 

Outpatient Hospital Care $150 per occurrenceMaximum of 4 copays per calendar year

Prescription Drugs  

  RetailMail Order (90 day)

$10/$25/$50$20/$50/$110

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Option 3 – GIC Continued Explanation of ‘up-front’ deductibles

“Up-front deductibles” require the member to pay a stated amount up-front, before certain health insurance benefits are paid by the insurance carrier

GIC deductibles are typically $250 per Individual and $750 per family per calendar year

Care that is subject to a deductible: ER visits, inpatient hospitalization, surgery, lab and blood tests, bone density screenings, x-rays and high tech imaging, durable medical equipment

Care that is exempt from a deductible: prescriptions, office visits, necessary immunizations, medically necessary wigs, hearing aids, mammograms, pap smears, EKGs, colonoscopies

– Some of these services will be covered without a required co-pay under National Healthcare Reform

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Municipal employees are not eligible for the GIC dental, vision, life or disability programs

Each plan participant must provide birth and marriage certificates to be covered

New hires are eligible the first of the month after 60 days of employment

Retirees over age 65 on Medicare with younger dependents have special enrollment rules

Option 3 - GIC Continued Eligibility Rules

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Access carrier web sites and/or carrier (800) numbers– Review physicians– Review hospitals– Review drug formularies by plan

Group Insurance Commission: www.mass.gov/gic

Harvard-Pilgrim HC: www.harvardpilgrim.org/gic

Tufts Health Plan: www.tuftshealthplan.com/gic

Fallon Community HP: www.fchp.org

UniCare: www.unicarestateplan.com and www.caremark.com/gic

Option 3 – GIC Resources

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Summary – Health Plan Options

Option 1 – No change in plans– Current contribution splits– No Medicare Part B reimbursement

Option 2 – HPHC total replacement– Effective January 1, 2011, or as soon as practical– $40 Medicare Part B reimbursement for retirees– Current contribution splits stay in place– Retirees and survivor plans remain in place

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Summary – Health Plan Options Continued

Option 3 – GIC– Effective July 1, 2011– HMO/PPO contribution split @ 85/15%– Indemnity contribution split @ 75/25%– Town to protect members if GIC increases exceed

12% per plan year– Town to protect members if GIC deductible

amounts increase more than $100 per plan year– HRA

Up to $500/hospital admission and $150/day surgery– Agreement includes wage increases

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Health Plan Options – Index of Materials

1. Town Fiscal Projections

2. Letter from Town Manager

3. Memorandum regarding Harvard Pilgrim Consolidation w/plan changes

4. Memorandum regarding GIC

5. Comparison of various plans

6. Q & A about deductibles

7. No Change in Current Plans spreadsheet

8. Current Plans vs. HPHC Consolidation comparison spreadsheet

9. Current Plans vs. GIC Plans comparison spreadsheet

10. Proposed GIC plans showing costs/savings with possible wage increases

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Town of Arlington Health Insurance Options

QUESTIONS & ANSWERS