City of Phoenix Retiree Benefits 2017

1. City of PhoenixRetiree Benefits 2017 City of Phoenix Benefits Division Human Resources Department September 2016

2. Today’s Agenda • 1. ARAG Legal Insurance – all retirees • 2. Cigna Dental Coverage – all retirees • 3. OneExchange – all retirees • 4. Catastrophic Rx Reimbursement Program – Medicare retirees • 5. Public Safety Subsidy – Public Safety retirees • 6. If You Are on COBRA • 7. 2017 Retiree Medical Plans – non-Medicare retirees

3. Questions • If you have a general question or need clarification on something being presented, please let us know during the presentation. • Personal questions should be directed to Benefits Office staff at 602-262-4777 or benefits.questions@phoenix.gov.

4. Arag legal insurance • Legal insurance gives you access to • a national network of attorneys to provide a wide range of legal services at no cost. • Documents, forms, tools and resources online. • Legal insurance can be used by the retiree, spouse or domestic partner, and children under age 26.

5. ARAG Legal Insurance • Adoption • Consumer Protection • Defense of Civil Damage Claim • Driving Privilege Protection • Driving Privilege Restoration • Easements • Eminent Domain • Foreclosure Defense • Guardianship/Conservatorship • Defense of Insanity/Incompetency • IRS Audit Protection • IRS Collection Defense • Neighbor Disputes • Personal Bankruptcy • Prenuptial Agreement • Purchase/Sale of a Residence • Social Security/Medicare • Wills and Trusts

6. ARAG Legal Insurance – new coverageJanuary 2017 • Dissolution of Marriage Contested (15 hrs.) • Dissolution of Marriage Uncontested • Estate Administration and Closing (9 hrs.) • Inheritance Rights Protection (6 hrs.) • Minor Traffic Offenses • Post Decree Modification (8 hrs.) • Tax Services • Credit Records and Correction • Property Tax • State Tax Audit • Tax Services – unlimited advice by phone $24.40 per month Retiree, spouse, dependent children

7. Cigna dental coverageDental PPO, Dental HMO • Computer database limitations • Individual dental plans fall short of the City’s dental plans • We found a way to offer Cigna Dental Plans to retirees

8. Cigna Dental Coverage • Rates do not change in 2017

9. Cigna Dental Coverage • ALLEGIANCE COBRA SERVICES handles enrollment and billing. • This is not COBRA coverage. • Complete the enrollment/change form and mail it to Allegiance to the address provided on the form by November 14th. • Make premium payment by check, cashier’s check, or automatic payment from a checking or savings account. • If you want to make automatic payment, complete the Premium ACH Agreement, attach a voided check and include the first month’s premium. Mail it to Allegiance. • Credit card and debit card payments are not accepted. • Enrollment is for a calendar year. Both forms are in the 2017 Retiree Guide and available from the Cigna representative here today.

10. OneExchange Non-Medicare Medicare October 15 to December 7 1-844-824-7657 • November 1 to December 15 • 1-844-824-7658 Call 6:00 a.m. to 7:00 p.m. MT

11. Catastrophic Rx reimbursement program • When you are enrolled in a Medicare Part D pharmacy drug plan, there are four progressive levels of coverage: • 1. Deductible • 2. Co-Pays • 3. Coverage Gap also known as the Donut Hole • 4. Catastrophic Coverage

12. Catastrophic rx reimbursement • The City of Phoenix provides this assistance to Medicare retirees, their spouses, and survivors. • Your out-of-pocket Catastrophic Coverage costs are reimbursed up to $25,000 per year. • You must fill out a form and provide documentation from your Medicare Part D pharmacy plan showing your Catastrophic Coverage level out-of-pocket expense. • You get your reimbursement with your MERP payment. • Call the Benefits Office for more information at 602-262-4777.

13. Public safety subsidyfor public safety retirees and survivors Are there any public safety retirees or survivors here? • Arizona State Statute 38-857 provides for a monthly subsidy to reduce retiree health premium costs. • This subsidy ranges from $100 to $260 per month. Payment is added to MERP. • The City of Phoenix has agreed to take on the responsibility to administer this program for City public safety retirees to allow all of them to participate, if eligible. • Before 2016, the subsidy was available only to those public safety retirees with coverage through the State or through the City. If you had individual coverage elsewhere, you could not obtain this subsidy.

14. Public safety SubsidyFor public safety retirees and survivors • Statute requirements include: • 1. An annual agreement must be completed, signed and returned to the Benefits Office. Agreements will be mailed each year in January. • 2. Active employer group coverage is not eligible for subsidy payment. • 3. Subsidy amount is based on whether you have Single or Family coverage, and whether you and your spouse are Medicare, non-Medicare, or a combination. • 4. Evidence of your insurance coverage is required each year. If you and a spouse each have individual coverage, we need evidence for both of you. • 5. Payment cannot be retroactive beyond January 1 of the current year.

15. Public safety SubsidyFor public safety retirees and survivors • Contact the City of Phoenix Benefits Office • with all questions or concerns. • 602-262-4777 or benefits.questions@phoenix.gov • Do not contact the PSPRS office with questions.

16. If you are on cobra • If you are a recent retiree, you may have elected COBRA Medical and/or Dental coverage. Please note: • COBRA is a continuation of employee coverage for up to 18 months. • COBRA rates are based on employee rates. • You will receive a packet of information in mid-to-late October with 2017 COBRA rates. • We are still in the process of outsourcing COBRA administration. It has not occurred yet.

17. Non-Medicare retiree healthcare 2017 • For City of Phoenix retirees and their eligible dependents • Legally married spouse • Qualified Domestic Partner (QDP) • Child to age 26 • If the retiree is Medicare eligible, the spouse can enroll alone. • If the retiree and spouse are not eligible for Medicare, the retiree must be enrolled for the spouse to be enrolled.

18. Premium setting processbackground • 1. Since 2005, the City has set the premium rates each year. • Actuaries analyze two years of medical and pharmacy claims. • Future claim costs are projected. • Local and national trends are applied. • 2. Since 2007, Retirees and Employees have had separate rates. • 3. The City now covers only non-Medicare participants. Medicare rates historically subsidized the non-Medicare rates.

19. Premium setting process • 2017 retiree rates initially required a 48% increase for these reasons: • No Medicare participants to subsidize the non-Medicare rates. • The number of non-Medicare participants shrank. • Those who stayed in the City’s plan in 2016 use benefits more heavily than the larger non-Medicare group enrolled in prior years. • Pharmacy costs increased 11.8% and medical costs increased 6.25%. • Retiree rates were not set for 2016. 2015 rates continued through June. • A 6% increase to rates occurred on July 1st, far less than what was needed.

20. Premium setting process • Medical plan changes reduced the 48% increase to 35%. • 25% of the Retiree Rate Stabilization Fund was used to further reduce the increase to 10%. • The Retiree Rate Stabilization Fund is $15 million set aside in 2007 to help retirees reduce their City provided medical plan rates should rates increase significantly. Final Medical Plan Rate Increase for 2017: 10%

21. Non-medicare retiree healthcare 2017 • What does not change? • You continue to have three unique plans: HMO, PPO and High Deductible Health Plan. • You have the same large provider networks. • You have the same large prescription formulary. • You are not required to use mail order to fill prescriptions. • You have comprehensive coverage that includes basic vision coverage. • The Savers Choice Plan is exactly the same.

22. Non-medicare retiree healthcare 2017 • What’s changing? • The out-of-pocket costs have increased.

23. deductibles, coinsurance & Co-pays • A co-pay is a fixed dollar amount paid for a service. • A portion of the total cost. The plan pays the balance. • The Cigna HMO has many co-pays and the PPO has a few co-pays. • Adeductibleis the amount you pay before the plan pays anything. • Similar to a deductible for auto insurance, home owners insurance, etc. • The amounts you pay are based on contracted rates. • All three medical plans now have a deductible.

24. Deductibles, coinsurance & Co-pays • Coinsurance begins after you fulfill your deductible. It is a percentage of the contracted rate. • The PPO has 20% coinsurance in-network. • The HMO and Savers Choice Plan do not have coinsurance. • The contracted rate (sometimes called the “allowed amount”) is the amount the provider has agreed to accept from Cigna or BCBS for the covered service they are providing. If my coinsurance is 20% and my doctor’s contracted rate for an office visit is $90, I will pay $18.

25. PPO Out-of-pocket costs

26. the maximum out-of-pocket amount • All plans have an annual MAXIMUM OUT-OF-POCKET amount. This is the most you will pay per year for covered healthcare services. This is not new. The City’s medical plans have maximum out-of-pocket amounts today. It becomes more important to you in 2017 with deductibles and coinsurance being introduced.

27. Cigna HMO Maximum Out-of-Pocket Your deductible and your co-pays count toward the maximum out-of-pocket amount.

28. PPO Maximum Out-of-Pocket – In Network Your deductible, your coinsurance, and pharmacy co-pays count toward the maximum out-of-pocket amount.

29. High Deductible health Plan (Savers Choice)Maximum Out-of-Pocket Your deductible, your coinsurance, and pharmacy co-pays count toward the maximum out-of-pocket amount.

30. Retiree Medical Plans 2017

31. Medical premiums 2017

32. What does the future hold? • The retiree medical plan is not sustainable. • The Retiree Rate Stabilization Fund will probably be exhausted in two years. • Alternatives need to be identified, particularly for non-Medicare retirees.

33. What does the future hold? • Arizona State Retirement System (ASRS) • This system provides retiree benefits to more than 100,000 retired from state agencies, cities, counties, universities and school districts. • Public safety retirees (Police and Fire) already have access to ASRS retiree benefits because their retirement system, PSPRS, is a state agency. • Efforts are underway to expand the State Statute governing who can be included in ASRS benefits. • We hope that the State Statute will be amended and the ASRS will be willing to include Phoenix and Tucson civilian retirees.

34. What does the future hold? • ASRS offers medical and dental coverage for Medicare and non-Medicare individuals. • OneExchange can be used for assistance in selecting a Medicare or non-Medicare plan. • The Area Agency on Aging is a not for profit organization providing assistance in selecting a Medicare plan.