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Town of Arlington Public Employees 2011 Health Insurance Options

In this document, we discuss the rising healthcare costs and the need for cost savings in the Town of Arlington. We present three options to consider, including staying with current plans, replacing with new HPHC plans, or joining the Group Insurance Commission. Each option has its own savings and benefits. The decision will impact both employees and retirees.

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Town of Arlington Public Employees 2011 Health Insurance Options

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  1. Town of Arlington Public Employees2011 Health Insurance Options October and November Meetings 2010 Version 4.0 10.19.10

  2. 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

  3. 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

  4. 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

  5. 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)

  6. 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

  7. 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

  8. Option 2 – HPHC Total Replacement Plan Design Changes • 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.

  9. Option 2 – HPHC Total Replacement Cost for Members

  10. Option 2: HPHC Total Replacement Plan Design Changes Continued • 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.

  11. Option 3 – Group Insurance Commission (GIC) • 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

  12. Option 3 – GIC Continued • 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

  13. Option 3 – GIC Continued • 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

  14. 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

  15. Option 3 – GIC Cost for Members Note: July 1, 2011 GIC rates estimated at 12% above 2010 rates. PPO splits will be 15% if GIC allows HRAs.

  16. 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

  17. 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

  18. Option 2 – GIC Health Insurance Plans 2009 Enrollment To date, 80% of municipal members have enrolled in a GIC PPO option

  19. Option 3 – GIC Sample Plan Design

  20. GIC – Sample HPHC Independence Hospital Tiers 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.

  21. Option 3 – GIC Sample Plan Design Continued

  22. 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

  23. Option 3 - GIC Continued Eligibility Rules • 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

  24. Option 3 – GIC Resources • 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.comand www.caremark.com/gic

  25. 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

  26. 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

  27. 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

  28. Town of Arlington Health Insurance Options QUESTIONS & ANSWERS

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