Public Safety Employees Association Health and Welfare Trust

1. April 2009 Public Safety Employees Association Health and Welfare Trust Wes Yoder, Trust Consultant

2. General Information • Sponsored by the Public Safety Employees Association of Alaska (PSEA) • Governed by a Board of Trustees elected by PSEA members participating in the Trust • Current participants include: • Alaska State Troopers • Airport Police and Fire Officers • Juneau Police Department • Fairbanks Police and Fire Departments • Trust website: http://www.pseahealth.org • Health benefits purchased through Premera Blue Cross Blue Shield of Alaska • Trust administered by Labor Trust Services, Anchorage, AK

3. Eligibility and Benefits • To be eligible for benefits, an employee must: • Be a regular and active employee of an employer participating in the Trust • Regularly work a minimum of 25 hours per week if salaried or 20 hours per week if part-time • Have the required contribution made by their employer and received by the Trust • Eligibility is on a family basis. All eligible dependents are covered when the employee becomes eligible • Eligible dependents include: • Legal spouse or same-sex domestic partner • Natural or adopted children under age 25 who are unmarried and primarily dependent upon the employee for support

4. Eligibility and Benefits • Medical, prescription drug, dental and vision benefits provided by Premera Blue Cross Blue Shield of Alaska • Business travel accident insurance provided through CIGNA • Death benefit provided by the Trust

5. Benefit Summary

6. Benefit Summary

7. Benefit Summary

8. Trust Funding and Administration • Trust is funded by employer and member (participant) contributions. • Total required contribution rate established each July by the Board of Trustees. • Current required monthly contribution rate (effective July 1, 2008) is $1,117 per participant per month. • Total contributions remitted monthly by each employer to the Trust administrator, Labor Trust Services, Inc. (LTS). • LTS forwards eligibility and premiums to insurers and provides COBRA administration for the Trust.

9. Historical Expenses • Over the last five years, Trust expenses have increased 10% annually. • Currently over 97% of expenses are used for purchasing benefits, with less than 3% of expenses attributed to Trust operations.

10. Historical Income vs. Expenses • Over the last several years, expenses have outpaced income. • For the current policy period (July 2008 – June 2009) the Trust is expected to deficit spend approximately $350,000 ($47 per participant per month).

11. Historical Assets • Net assets available for benefits have declined. As of November 30, 2008, the Trust had approximately $2.4 million in net assets. This represents approximately 3.4 months of current projected expenses.

12. Historical Claims Utilization • Claims have increased significantly during the current contract period. • The Trust is 100% experience rated. Each year Premera sets the Trust’s premium rates based on the Trust’s own historical utilization hc&gb\pseawa\reports\2009\trust report

13. Projection for July 2009 – June 2010 Contract Period • Based on projected premium increases at July 1, 2009, a significant deficit is projected for the upcoming contract period (approximately $217 PPPM). • The projected deficit will need to be offset by the following: • Increases in employer contributions (varies by employer) • Increases in participant contributions • Benefit changes to reduce premium costs

14. Options • The Trustees value your input • Each year the Trustees have to balance the cost of benefits with the available contributions. • If benefits remain at current levels, significant increases in participant contributions will be required. • Increases in participant contributions can be lessened with benefit changes. Examples include: • $300 deductible/80% coverage/$2000 OOP max ~ $40 per month • $500 deductible/70% coverage/$3000 OOP max ~ $100 per month • Rx - $8 generic copay/20% brand copay ~ $6.50 per month • The Trustees will continue to review strategies to control costs over the long term.

15. What Can You Do? • Being a smart health care consumer can help lower costs. • Use generic prescriptions when possible • Currently 65% of prescriptions received by Trust participants are generic. • On average, brand name drugs can cost three to five times more than generic drugs. • If you are currently taking a brand name drug, ask your doctor or pharmacist if there is a generic drug that would work. • Use a Premera preferred provider when available • Preferred providers have agreed to discounted fees as payment in full for their services. • Preferred providers cannot balance bill you for amounts above the agreed upon fee. • During 2008, medical preferred provider discounts for the Trust totaled $1.3 million (approximately $174 per participant per month). • Remember to update your enrollment data with the Trust office (LTS) whenever you have a change in dependent status (i.e. marriage, divorce, birth, child attaining age 25).

16. Other Information • Current PSEA Health and Welfare Trustees • Rob Cox – Alaska State Troopers, PSEA President • Chip Gallagher – Airport Police and Fire • Mo Hughes – Alaska State Troopers • Tim Schoenberg – Alaska State Troopers • David Wrightson – Juneau Police Department • Robert Thompson – Fairbanks Police Department • PSEA Trust Administrative Office (LTS) Contact Information P.O. Box 93870 Anchorage, AK 99509 3380 C Street, Suite 107 Anchorage, AK 99503 Local: .................................................. (907)561-5119 Toll Free:........................................... 1-800-325-6532 • Premera Customer Service (Claims Questions) - 1-800-508-4722

17. Questions?

18. Services provided by Mercer Health & Benefits LLC