APRIL 13-16, 2016
Build and Maintain a High-Functioning Insurance Committee: Maximize Your Employee Benefits Program
THESE MATERIALS HAVE BEEN PREPARED BY BURNHAM BENEFITSTHEY HAVE NOT BEEN REVIEWED BY STATE CASBO FOR APPROVAL, SO THEREFORE ARE NOT AN OFFICIAL STATEMENT OF CASBO
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• Part 1: Creating a High Functioning Benefits Committee• Part 2: Plan Basics, Tools, & Tips• Part 3: The Insurance Committee and the ACA• Open Dialogue
Agenda
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Part 1: Creating a high functioning Insurance Committee
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First things First… Build a foundation of trust
• In order for this to get off the ground, the committee members need to view the district as honest, committed to its word, communicative and proven with its actions OUTSIDE of the committee
Building the Benefits Committee
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Have the “we’re in
this together attitude”
Bargaining Unit
members
New and tenured
employees
District HR / Finance
Balanced mix of all parties
Picking the right members
Building the Benefits Committee
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Building the Benefits Committee
Arm your committee with information
• Group Insurance 101 Training• ACA Overview• Latest products with Medical Carriers• Regional Landscape for Benefits• Review Vehicles to Purchase Benefits• Factors that Drive a Renewal• Role of Consultant, Carrier, JPA or Trust
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Find a balance between information and confirmation
Building the Benefits Committee
Status Quo
Educate on available options
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Building the Benefits Committee
Transparency
• Set goals and strategies each year – REPORT on results• Share claims data if available• Discuss district budgets and impact on benefits decisions• Carrier network changes & contracting• Benchmarking information• Rate histories• Federal/State/Local cost drivers
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Best Practices for the Benefits Committee
Committee Best Practices for Success
• Regularly scheduled meetings (monthly or at least quarterly)• Strong, regular attendance by all members• Encourage ALL members to participate and contribute… no
“listeners only”• Distribute meeting agenda in advance of the meeting, allow
members to add to it• Have a good balance of Union and Management representation• Allow enough time for the meeting and stick to allotted time • Create minutes that are jointly approved by the committee• Have a mechanism for the committee to communicate amongst
itself
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Best Practices for the Benefits Committee
Committee Best Practices for Success…cont.
• Have a “Pre-Meeting” with core group• Open invitation for committee members to bring interested guests
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Role of the Benefits Committee
Main Responsibilities
• All stakeholders involved in the committee educate their respective groups about the benefit program, goals, and challenges
• Ongoing communication with bargaining groups• Provide recommendations, not replacing bargaining• Help the district plan for its Healthcare needs• Educate themselves on the market, alternatives, and cost-drivers
Benefits set the table for larger negotiations discussions!
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Role of the Benefits Committee
Role of the Committee Member
• Act in good faith• Be ethical and forthcoming• Abstain from voting if you have a financial interest or conflict• Make recommendations to the bargaining units • Humanize H&W Benefits, don’t exploit as bargaining chip
Take care of those that take care of our kids!
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Role of the Benefits Committee
Meet with District vendors
• Medical carrier representatives• Actuaries (ESPECIALLY if with CALPERS)• Technology options• Build rapport and trust with district partners• Network updates• Product updates and enhancements
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Role of the Benefits Committee
The Marketing Process
• Pick the right carriers/vendors that fit with the District’s culture• Deciding to look at school pools• Self-Funding options for medical, dental, and/or vision• Setting a timeline• Interview finalists• Criteria on picking best fit carriers/vendors• Accepting change if new partners are awarded
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Role of the Benefits Committee
Expense vs. Cost
VS.
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Role of the Benefits Committee
The Advantages of a High Functioning Committee
• Union and Management have equal access to information and benefits professionals
• Collaborative learning environment• Information shared equally and timely with all parties• Better understanding and comfort with the benefits plans and
costs
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Role of the Consultant, JPA/Trust, & Carriers
How to leverage outside help
• Consultants can be valuable unbiased resources• Moderate insurance committee meetings• Source of information to educate the committee• Has a pulse on what’s going on in the market• Not beholden to the inforce carriers/vendor• Should clearly disclose compensation and financial interests
• Lean on your carrier partners and invite them to present to the committee
• Share latest product/network developments• Set the table for upcoming renewal or market
challenges• Sounding board for issues/concerns facing your
employees
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Part 2: Plan Basics, Tools & Cost Containment Strategies
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JPA’s, Trusts, & Carriers
JPA – Joint Powers Authority• Pool of public educational agencies established for the purpose of
purchasing employee benefits• Public entity doing public business• Fiduciary liability resides with District and JPA• Most JPAs are represented by management
• Pool of public educational agencies established for the purpose of purchasing employee benefits
• Private entity/corporation doing public business• Fiduciary responsibility resides with Trustees• Trusts are jointly represented by management and labor
Trust
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JPA’s, Trusts, & Carriers
JPA / Trust Pool• All board decisions are made by Trustees/JPA/Trust governing
board• Rates are determined by experience of whole pool• Pools may be geographically rated• Carriers & benefits are chosen by JPA/Trust Governing board• Most pools are “blind” – no individual experience available• Members may be assessed for deficits• JPA/Trusts pay claims and/or premium for fully insured products
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JPA’s, Trusts, & Carriers
Sample of California Carriers, JPA’s & Trusts
Aetna ASCIP
Anthem Blue Cross ACSIG
Blue Shield of California CVT
Cigna REEP
Health Net SCSEBA
Kaiser SISC
United Healthcare VEBA
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Cost Savings Strategies
Narrow Networks• Most medical carriers now offer these plans• JPA’s and Trusts are behind in adding to family of plans• Many employers offer both full and narrow HMO networks together• Southern California has the most options• Conduct a Disruption report if data is available• Cost usually between 5% to 7% lower than full HMO network plans• Kaiser
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Cost Savings Strategies
Exclusive Provider Organization (EPO)• In-Network Only PPO plan• Helps control cost because no out of network benefits• Covered California Exchange offers these plans• SISC, CalPERS, and CVT have plans similar to this because of weak out of network
benefits
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Cost Savings Strategies
High Deductible Health Plans (HDHP’s)• Large deductible must be satisfied before benefits kick in (min of $1,300 in 2016)• Consumerism introduced to employee population (skin in the game)• Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA)• H.S.A typically must satisfy deductible before RX copays apply• Typically, the lowest premium of plans offered• Nationally, fastest growing enrollments in these types of plans (>35%)
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Cost Savings Strategies
Self-Insurance• Self-Insurance (Self Funding) is an alternative means of financing and structuring a
group medical/dental/vision program• The employer assumes the risk of all medical expenses, however;• Eligible expenses over the Stop Loss deductible are reimbursable by the reinsurance
carrier• A TPA operates the plan, including payment of claims, maintaining eligibility, producing
plan documents and ID Cards and much more
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Cost Savings Strategies
Self Insurance vs. Fully insured
Fully Insured Self-Funded
Fixed Costs (premium) Fixed costs + variable costs
Administrator comes with Insurance
Variety of service providers
Governed by state law Governed by Federal law (ERISA)
Standard plans and benefits Flexible plan designs and benefits
All size employers Medium/large employers
Subject to all state and ACA taxes Avoids state and some ACA taxes (2-3% savings)
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Cost Savings Strategies
Power of a benefits marketing• Competition is EVERYWHERE• “Blue on Blue rule” changes playing field• 2nd year rate caps on medical possible• Premium credits/holidays• Wellness budgets from carriers• Fixed fee analysis for self-funded groups• Non medical markets need to be evaluated as well• Explore JPA/Trust/Carrier value added services
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Wellness
Is it the right fit for our district?• How does it fit with our district culture?• Simple but effective programs• Focus on preventative• Crawl before you walk• Negotiate Wellness dollars from carriers or vendors• Determine “carrot” or “stick” principle if introducing incentives• Be realistic about “savings”
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Contributions and Rate Tiers
Contributions• Does district contributions meet ACA affordability test?• Do plans offered by district give choice based on employee contributions?• Create district contributions that lead populations to best performing plans• Evaluate employee/spouse tier costs to drive participation into other employer plan
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Contributions and Rate Tiers
Tier Rates• Composite rates, 2, 3 or 4 Tiers• Supports ACA affordability test• Critical for Cadillac Tax considerations• 4-tier rates could help working spouses to join non-district plan• Will always have “winners” and “losers” with employee population when you leave
composite rates
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Contributions and Rate Tiers
Cash In-Lieu• Offers a defined $ amount to those who waive coverage from the District• Takes money away from health benefits• Can hurt participation, risk pool health, and claims experience• ACA Impacts for affordability test
• IRS Notice 2015-87• “unconditional” vs. “conditional” (tied to other coverage)
Example:Monthly cost of lowest available plan: $100Cash in-lieu offered to those that waive coverage: $200“Cost” used for the affordability test: $100 + $200 = $300
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Part 3: Your Insurance Committee and the Affordable Care Act
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Affordable Care Act
Keep the Committee informed• Employer Mandates• Cadillac Tax in 2018 (now 2020?)• Cost Factors to districts at renewal• Why look at tiered rates if composite rate is currently in place?• Employee Communication
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Affordable Care Act
Cadillac Tax Strategies• Enactment delayed until (at least) 2020• Wait and see approach• Due diligence to forecast costs out to 2020 to see if potential issues arise• Super Composite rates (in most cases) will more likely fail Cadillac thresholds (as we
understand them today)• Share Cadillac Tax analysis with bargaining units and potential costs to the district.
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Affordable Care Act
1094/1095 Reporting• Did you survive? • You are done, right?... If not… YOU’RE LATE!• 1095 extended for 2015 reporting year to 3/31• 1094 to 6/30 (electronically)• Support from County Office? • Outsourced…-ish, solutions?
• Best Practice – Educate your employees on what these forms are and what they mean. Both 1095-C and 1095-B.
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Affordable Care Act
Variable Hour Employee Tracking• Determine Measurement, Administration and Stability periods• 12 months typically works best• Must give hours credits over summer breaks and unpaid holidays• Meet with HR team to determine what employee populations in district average close
to 30 hours per week• Outsource?
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Affordable Care Act
Next Steps• Assess workforce to understand employee population (VHE’s & contributions)• Ensure system is in place to accurately measure hours• Document process for track VHE’s, develop procedures for onboarding newly eligible• Have a robust communication and education campaign for employees• Test your plans; Affordability, Minimum Value, and Cadillac Tax• Re-visit 1095 reporting vendor selection for 2016
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THANK YOU!
Scott Aston, Vice PresidentBurnham Benefits Insurance Services(949) 252-4597 / [email protected]
Rich Russell, Asst. Superintendent –Personnel ServicesWhittier Union High School District(562) 698-8121 x 1030 / [email protected]