California Employees

Open Enrollment Actions Change medical and/or dental plan Enroll in medical, dental, vision Add eligible family members Opt out of medical, dental, or vision Cancel or enroll in TIP Enroll in new Health Care Reimbursement

Account Enroll in or change DepCare

Timing Open Enrollment runs from 8:00 a.m.

(PST) on Friday, November 1 through midnight on Saturday, November 30

Core employees use forms to make changes Must be received in local Benefits or Payroll

office by 5:00 p.m. on November 27

Changes effective January 1, 2003 Including new costs

Challenges facing Large Purchasers for 2003

Overall 2003 health plan increases ranging from 25% to 45%o Higher increases for Medicare plans

Increases across all plan types – HMOs, POS and PPO

Slow economy – limited compensation adjustments anticipated for employees

Shrinking marketplace and options (e.g., Medicare+ Choice plans)

Future State’s budget crisis continuing Medical inflation continuing; esp. Rx UC looking at group purchasing for Rx May pilot a consumer model plan Contribution strategy task force continuing

UC Health Plans An employer can control:

Who is covered Which plans are offered How the plans are designed

An employer cannot control: Provider withdrawals from medical plans Plans merging or going out of business Plan withdrawals from service areas Health plan policy

Example: Approved prescription drug lists (formulary)

Employee Monthly

Costs

New Rate Structure

Three tiers (old design) Four tiers (new design)

Single Self

Two-party Self plus child(ren)

Family Self plus adult

Self plus family

New Rate Structure Better aligns rates with actual cost of care

for children and adults Employee with children now less

expensive than two adults or a family

Transitional Allowance Employee costs are lower for employees

who earn $40,000 or less per year Makes rates more affordable Medical Contribution Base is determined

by FTE salary rate: As of prior January Upon hire No mid-year adjustments

Medical Plan Choices for 2003 Health Maintenance Organizations (HMOs)

Health Net Kaiser PacifiCare

Point-of-Service (POS) plan Blue Cross Plus

Preferred Provider Organization (PPO) plan Blue Cross PPO

Fee-for-Service plan Core

New Blue Cross Plans UC Care (administered by Aetna) no

longer offered New plans:

Blue Cross PLUS--point of service (POS) plan Blue Cross PPO--preferred provider plan

Blue Cross of California will also administer the Core and High Option Plans

Transition from Aetna to Blue Cross

Check your Open Enrollment Statement ** You must name a PCP if going into Blue Cross PLUS,

even to keep your UC Care PCP

2002 Plan 2003 Plan (if you do nothing)

UC Care and you live in the Blue Cross PLUS service area

Blue Cross PLUS **

UC Care and you do not live in Blue Cross PLUS service area

Blue Cross PPO

Blue Cross PLUS Point-of-Service (POS) Plan

Two level plan design network and out-of-network combines managed care and self-referral

Network benefits through 14,000 physicians, PCP selection required, care authorized by PCP

Out-of-network benefits through 40,000 PPO physicians or all other physicians, you self refer

Employee must reside in CA Dependents can live out-of-state and receive non-

network benefits

Blue Cross PLUS In-Network

Must choose PCP, Primary Medical Group (PMG), or Participating Physician Group (PPG) for each family member Use online plan directories for provider codes

http://atyourservice.ucop.edu/ go to contacts

You pay co-payment for most services $20 for most doctor’s office visits

No claim forms

Fast Track for Blue Cross PLUS For those currently in UC Care AND in a

Blue Cross PLUS service area Must select a PCP if they’re going into

Blue Cross PLUS Even if they want to keep the same physician If no action taken Blue Cross will be assign a

PCP.

Special worksheet included in OE packet

Blue Cross PLUS Out-of-Network You may choose any provider, but you

pay more of the costs Annual plan deductible

$500 individual; $1,500 family

You pay 30% for most services, after deductible No “balance billing” if you use a Blue Cross

PPO Provider

You must file claim forms

Blue Cross PLUS: Out-of-network costs

$30 (30% of UCR)

$50 (balance billing)

$80 TOTAL

$30 (30% of contracted rate)

$30 TOTAL

You pay

$70 (70% of UCR)$70 (70% of contracted rate)

Plan pays

$100$100.00UCR

$150$100 (contracted rate)Cost of Service

Non-PPO ProviderPPO Provider

Blue Cross PPO In-network, PPO providers

Annual deductible: $250 individual; $750 family You pay 20% after deductible

Out-of-network Annual deductible: $500 individual; $1,500 family You generally pay 40% for services

Plan pays 60% of reasonable and customary charges

You must file claim forms

Blue Cross PPO: Cost example

$40 (40% of UCR)

$20 (balance billing)

$60 TOTAL

$20 (20% of contracted rate)

$20 TOTAL

You pay

$60 (60% of UCR)$80 (80% of contracted rate)

Plan pays

$100$100UCR

$120$100 (contracted rate)Cost of Service

Non-PPO Provider (out-of-network)

PPO Provider

(in-network)

Provider Directories Link to provider sites and Health Pages

through UC benefits website http://atyourservice.ucop.edu

Call providers directly Toll-free numbers in Open Enrollment booklet

Web resources http://atyourservice.ucop.edu Medical Plan Chooser

TBA

Health Pages http://www.uc.thehealthpages.com/

Carrier websites http://atyourservice.ucop.edu/contact/medical_plan.html

Health Care Reimbursement

Account

What is an FSA?

• A benefit program allowing you to pay for out-of-pocket health care and/or dependent care expenses with pre-tax money

• You contribute to an FSA through payroll deductions

• Two types of FSAs:– Health Care Reimbursement Account

(Medical, Dental, Vision)– Dependent Care Reimbursement

Account• You can participate in one or both

accounts

Health Care Reimbursement Account (HCRA) Contribution Limits

Maximum annual contribution = $5,000 If you and your spouse are both UC employees,

you may each contribute up to $5,000 Minimum annual contribution = $180 HCRA contributions do not reduce the wages

used to calculate UCRP benefits HCRA contributions do not affect the

calculation of your 403(b) Plan maximum annual contribution amount

What are the advantages?

• The tax advantages:– Tax-free money for health care &

dependent care expenses– Lower income taxes– Receive reimbursement throughout

the year – Health care expenses are tax-free

• Immediate availability of Health Care Account funds

• Built-in budgeting

The FSA Tax Advantage

The best way to illustrate the FSA tax advantage is through an example:

Example: With Without Account Account

If your taxable income is: $28,000 $28,000

Less: Pre-tax money you deposit in an FSA: <$1,500> N/A

_________ ________ Adjusted taxable income: $26,500 $28,000

Less: Federal income and Social Security taxes: <$9,447> <$9,982>

Less: The same amount spent in after-tax dollars by non-FSA participants for eligible expenses: $0 <$1,500> ________ ________ Your real spendable income is: $17,053 $16,518

Your tax savings with the FSA: $535

• Medical and Dental– Deductibles & co-

payments– Birth control pills– Prescription drugs– Routine check-ups– Chiropractic services– Dental cleanings &

fillings– Orthodontia not

covered by a dental plan

– And more

• Vision– Eye exams &

eyeglasses– Contact lenses &

supplies– Prescription

sunglasses– Laser eye surgery

• Dependent Care– Daycare– Private babysitter– Care for an

incapacitated adult

What expenses are eligible?

Please see your Plan Documents for more details on eligible expenses.

• Health Care Reimbursement Account:– Employee– Spouse and children– Other IRS qualified dependents

• Dependent Care Reimbursement Account:– Children under age 13– Mentally or physically disabled spouse – Other IRS qualified dependents who are

physically or mentally unable to care for themselves

Who is covered?

Step 1You submit a claim.

– When you incur eligible expenses, you fax or mail a simple claim form to SHPS with an Explanation of Benefits (EOB) and/or receipt when EOB is not available

– Claims can be submitted anytime during the current plan year.

– Claims for the plan year must be received by April 15 of the following year.

How does an FSA work?

It’s easy to use an FSA with SHPS’ simple 2-step process.

How does an FSA work?

Step 2 SHPS sends your money. You can choose to receive reimbursement

via Electronic Funds Transfer (direct deposit) or by check.

SHPS pays claims daily for prompt service Average turnaround for reimbursement is

within 5-7 days of claim receipt. Claim turnaround will not exceed 11 days.

• How will COBRA work?• COBRA is available for continued

participation upon loss of eligibility.• SHPS issues a Qualifying Event Notice

to the participant for continuation of this benefit.

• Cost will be monthly after-tax contribution plus 2%.

• If participant elects COBRA for their Health Care FSA, SHPS will bill monthly

• COBRA Billing Questions should be directed to:

(800) 301-7556

COBRA and the Health Care FSA

Things to remember…

• When you enroll, you elect an amount to cover your expected out-of-pocket health care and/or dependent care expenses for the plan year

• Careful planning maximizes the benefits of an FSA– The IRS has imposed a “use it or lose it”

rule.– Plan your FSA contributions wisely.– Changes to account contributions can be

made at OE or upon change in family/employment status.

– Expenses are reimbursed after they are incurred.

For more information, link to mySHPS website from At Your Service

http://atyourservice.ucop.edu

or go directly to www.shps.net

or call the SHPS Customer Service Center at 1-877-270-3915

SHPS is there to help

Things to consider during OE Self plus child(ren) coverage if your

spouse/partner is eligible for medical coverage through another employer

Health care reimbursement account if your 2003 out-of-pocket expenses will exceed $180

Call the plan to confirm service area, PCP, and prescription drug formulary

Future options

ScholarShare California’s Golden State ScholarShare

College Savings Trust Sponsored by the State of California Administered by TIAA-CREF

Choice of investment allocation options

Available through UC payroll beginning in Spring 2003

ScholarShare After-tax payroll deductions Withdrawals tax free (federal and state) if

used for qualified higher education expenses Including tuition and fees, books, supplies,

room and board

ScholarShare Information available at

www.scholarshare.com

Employees will receive more information in coming months

Keep ScholarShare option in mind when making decisions about DepCare and HCRA