Whitman College

Fringe Benefits CommitteesMay 14, 2014

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Agenda Healthcare Reform Update Plan Performance Routine and Preventive Care Employee Assistance Plan Transgendered Surgery Update Healthcare/Insurance Market

Changes

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Healthcare Reform – Update - 2014

Individual Exchanges OnlinePSF did a Seminar at Whitman in NovemberOpen enrollment periodOregon is a mess, WA is not

Individual MandateAll Americans must have coverage or pay a

penalty (assessed on tax return) 2014 penalty is $95 or 1% of earnings, increasing

to $695 or 2.5% of earnings in 2016

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Healthcare Reform – Update - 2014

Individual ExchangesIndividual Plans

Subsidies for those who don’t have access to coverage through their employer

– Families won’t be eligible for subsidies if the employee has access to adequate and affordable coverage through their employer

Subsidies for those at 400% of FPL and below Four Benefit Levels – different by state Deductible cannot be higher than $2,000 (except

for young invincible – under age 32)

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Healthcare Reform – Update - 2014

What Changed in 2014?Annual Limits Prohibited On “Essential

Benefits”No Pre-Existing Limitations for AdultsMaximum out of pocket for medical plans

limited to HSA Maximum 2014: $6,350 single, $12,700 family

Copays apply to out of pocket maximum Medical in 2014, Rx in 2015

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Healthcare Reform – Update - 2015

2015 – Employer Mandate (delayed from 2014 to 2015 Pay or Play? What does that mean?

Employers with more than 50 employees are required to provide adequate and affordable medical benefits to their employees (play) OR pay penalties ($2,000/employee if no benefits provided, $3,000/employee if standards not met)

– Adequacy standard – the plan has to cover 60% of the cost of eligible expenses

– Affordability standard – payroll deductions for employee only medical coverage cannot exceed 9.5% of income

– Whitman College meets both standards

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Healthcare Reform – Update - 2015

2015 – Impact on the CollegeWho is the College required to provide

benefits to (to avoid penalties)? Employees who are regularly scheduled to work 30

or more hours per week, or 130 hours per month For those with variable work hours, seasonal, etc.

the government provides a “safe harbor” that allows employers to look back up to 12 months to determine if the 130 hours per month threshold is met

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Healthcare Reform – Update – 2016 and Beyond

2016 Employer reporting requirements (IRS)

2018 Excise tax for high cost plans that (in theory) offer

generous benefits that insolate plan participants from the cost of care (due to low cost share – deductibles, copays, out of pocket maximums)

For plans whose total annual cost exceeds $10,200 individual, $27,500 family

40% tax on amounts over limits

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Plan Performance - Self Insurance A tool for managing cash flow, avoiding

some taxes, more control of the plan Components

Plan Administration (Work of Premera) Insurance (Purchased from Lifewise)

Individual Claimants over $100,000 per year Aggregate of all claims paid during the year (120% of the

expected claims) Paid Claims Incurred But Not Reported (IBNR) Reserves (to be

used to pay claims in the event of plan termination)

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Plan Performance2012 & 2013

*In 2012, there were 5 claimants with total claims in excess of $100,000 and in 2013 there were 3.

Type of Charge Calendar Year2012

2012 PEPM

Calendar Year2013

2013 PEPM

Administration $ 371,341 $ 66.57 $ 379,158 $ 66.93

Insurance $ 807,097 $144.69 $ 866,745 $153.00

Claims Medical/Rx/Vision* DentalTotal Claims

$3,820,951$ 277,081$4,098,032

$685.00$ 49.67$734.68

$3,971,822$ 304,873$4,276,695

$701.12$ 53.82$754.93

Less Reinsurance Pmt -$ 290,317 -$52.05 -$ 267,478 -$47.22

Net Overall Total $4,986,153 $893.88 $5,255,120 $927.65

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Plan Performance2013 & 2014 YTD

*The 2014 first quarter expenses are 7.2% higher than the first quarter of 2013.

Type of Charge Calendar Year2013

2013 PEPM

Jan-March 2014 2014PEPM

Administration $ 379,158 $ 66.93 $ 98,600 $ 68.52

Insurance $ 866,745 $153.00 $ 211,260 $146.81

Claims Medical/Rx/Vision DentalTotal Claims

$3,971,822$ 304,873$4,276,695

$701.12$ 53.82$754.93

$ 924,478$ 81,989$1,006,467

$642.44$ 56.98$699.42

Less Reinsurance Pmt -$ 267,478 -$47.22 -$ 0 -$ 00.00

Net Overall Total* $5,255,120 $927.65 $1,316,327 $914.75

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Plan Performance How does that compare with what we were

expecting for 2013? Total costs were lower than we expected Claimants with expenses over $25,000 were above

norm with 40.4% of total paid claims (norm is between 35% & 38%) by 22 individuals

There were 3 claimants each with total costs over $100,000

Dental costs leveled out

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Plan Performance How did 2013 compare with Whitman’s

Budget? Goal was to under-fund expected costs to use about

$368,036 of current reserve What happened? Budget of $5,341,698 and actual

expenses of $5,257,194 for a gain of $84,504 (98.4% of budget)

How about so far 2014? Goal is to under-fund expected costs to use about

$410,000 of current reserve for the year What’s happening? Budget of $1,352,026 and actual

expenses of $1,316,747 for a gain of $35,279 for the first quarter (97.4% of budget)

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Plan Performance History of EE Cost Share for Claims

Paid 2011 Paid 2012 Paid 2013AdministrationStop LossTotal Fixed Costs

$ 355,420$ 643,643$ 999,063

$ 371,341$ 807,097$1,178,438

$ 379,158$ 866,745$1,245,903

Overall H/C Claims, including patient shareLess: Reinsured ClaimsNet Overall Claims

$4,667,859-$ 286,363$4,381,496

$4,778,940-$ 290,317$4,488,623

$4,976,219-$ 267,478$4,708,741

Overall Costs (Fixed + Claims) $5,380,559 $5,667,061 $5,954,644

Patient Cost Share (ded, copay, coins)% of Overall Costs

$ 689,64312.8%

$ 686,908 12.1%

$ 699,52411.7%

Plan Cost Share (paid from reserve acct) $4,690,916 $4,980,153 $5,255,120

EE PR Ded (deposit into reserve acct) $824,154 $1,176,886 $1,274,085

Whitman Cost Share (net paid) $3,866,762 $3,803,267 $3,981,035

Overall Percentage Paid by Employee 28.1% 32.9% 33.1%

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Plan Performance What is driving your medical and

prescription costs? We do an annual deep dive into your claim data De-identified claims information is added to a data

warehouse called MedStat Whitman College utilization is compared with

norms (based on size, industry, company location)

We can drill down to see what is driving costs, where the plan may or may not be working, if people are having their preventive care, etc.

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Plan PerformancePreferred Providers

96.3% of claims99.4% of costsDiscount of 36.5% or $2,884,423 ($509

PEPM)Cost Drivers – outside norms

Outpatient SurgeryOffice VisitsOutpatient Behavioral HealthMusculoskeletal, circulatory problems

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Plan PerformanceTop 10 Major Diagnostic Categories

MDC 2014 % of paid Medical Claims

2013 % of paid Medical Claims

2013 Rank

1. Musculoskeletal 16.6% 15.6% 12. Circulatory 12.5% 8.6% 53. Factors Influencing Health 11.6% 9.8% 24. Cancers 7.0% 9.3% 45. Mental Health 6.8% 9.4% 36. Skin 5.9% 4.0% 97. Eye 5.9% 3.9% 108. Nervous 5.6% 4.9% 79. Pregnancy 4.2% 4.8% 810. Digestive 4.1% 6.4% 6

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Plan PerformanceWhat was the breakout of paid

medical claims?Place of Service 2011 % of

Medical Paid2012 % of

Medical paid2013 % of

Medical PaidPrescription Drugs 17% 16% 16%

Inpatient Hospital 26% 18% 18%

Outpatient Hospital 30% 38% 33%

Office Visits 24% 23% 26%

Surgical Center 2% 2% 3%

Other 1% 3% 3%

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Plan PerformanceTop 10 Claimants

2013 Accounted for 31.8% of total paid medical claims 3 were over $100,000 Variety of Diagnosis

2012 accounted for 33% of total paid medical claims 5 were over $100,000 paid 4 were cancer diagnosis

2011 Accounted for 34% of total paid medical claims 4 were over $100,000 paid Variety of diagnosis

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Plan PerformanceUse of few drive cost of plan (“80/20

Rule”)87.7% of claimants had total paid less

than $5,000 (11.3% of total paid claims) 12.3% of claimants had 88.7% of total paid

claims75.5% had total paid less than $2,500

(9.7% of total)53.7% had total paid less than $1,000

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Plan PerformancePrescription Drugs

83% of scripts were generic, compared with 81.9% in 2012, 71.2% in 2011

Average Paid - Generic $33.56, Brand $287.64

Top 4 were specialty medications2 MS drugs at $4,289 and $4,154 per

script2 for rheumatoid arthritis at $2,464 and

$2,210 per scriptNew Therapies (Specialty)

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Routine and Preventive CareAre Whitman employees and families

having their routine care?890 total covered individualsPreventive care visits: 389, 130 were kidsCervical cancer screenings: 139, 328 females

between 20 and 60Breast cancer screenings: 141, 246 females

over 40Prostate cancer screenings: 67, 220 males

over 40

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Routine and Preventive CareReminders?

From the providers?Premera in 2013

Two year birthday cards with reminders about immunizations (ongoing)

Colorectal Screenings: calls to members age 50 to 75 who had not been screened (according to claim data)

Hypertension – calls to those diagnosed to get their blood pressure monitored

Diabetes phone calls (2) to encourage tests associated with diabetes (eye, H1C, etc)

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Healthcare/Insurance Marketplace UpdatesMany changes, some resulting from

the implementation of the ACAInformation only (you may hear or read

about these)Restriction of coverage for SpousesHigh Deductible Plans

Cost and Quality, Transparency ToolsEmployer Defined Contribution/Private

Healthcare Exchanges (Marketplace)

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Questions?Thank you!