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
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