CITY OF HOMERCOUNCIL MEETINGAugust 4, 2014

Presented by:Jeff PaxtonPrincipal & Senior Consultant

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City of HomerDiscussion Topics

• Benefit Plan Financial Performance

• Effect of January 2014 Plan Changes

• ACA Excise Tax

• Benefit Plan Benchmark Comparison

• Fully Insured Marketing Status

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Benefit Plan Financial Performance

Contract PeriodTotal Paid

Funding Level $1,028,691Total Fixed Costs $225,815

Net Paid Claims $741,957Total Expenses $967,772Gain / (Loss) $60,919Expense Loss Ratio 94.1%

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2013 Avg. Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

Monthly Funding Monthly Expenses YTD Average Funding YTD Average Expenses

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Benefit Plan Financial Performance

A B1 B2 B3 B C D E F G HFunding Waiver Stop Loss Admin. Fixed Net Paid Total Expense Gain/(Loss) Emp Cost Per

Level Expenses Charges Fees Costs Claims Expenses Loss Ratio Monthly Count EmployeeB1+B2+B3 B+C D/A A-D D/G

2013Plan Yr. $1,967,039 --- $394,976 $41,840 $436,815 $1,780,675 $2,217,490 112.7% ($250,451) 1,191 $1,861.87---Mo. Avg $163,920 --- $32,915 $3,487 $36,401 $148,390 $184,791 112.7% ($20,871) 99 $1,861.87---

Jan-14 $171,097 $3,250 $30,644 $2,923 $36,817 $123,748 $160,565 94% $10,532 83 $1,931.87Feb-14 $171,097 $3,500 $30,644 $2,923 $37,067 $141,588 $178,654 104% ($7,558) 83 $2,147.28Mar-14 $171,530 $4,000 $31,013 $2,953 $37,966 $78,432 $116,398 68% $55,132 84 $1,384.58Apr-14 $171,232 $4,500 $29,905 $2,848 $37,253 $76,368 $113,622 66% $57,610 81 $1,401.78

May-14 $172,416 $4,750 $31,013 $2,939 $38,702 $109,482 $148,184 86% $24,232 84 $1,766.54Jun-14 $171,321 $5,250 $29,905 $2,856 $38,011 $212,338 $250,349 146% ($79,029) 81 $3,088.39Jul-14

Aug-14Sep-14Oct-14Nov-14Dec-14

2014Plan Yr. $1,028,691 $25,250 $183,123 $17,442 $225,815 $741,957 $967,772 94.1% $60,919 496 $1,949.86Mo. Avg $171,449 $4,208 $30,521 $2,907 $37,636 $123,659 $161,295 94.1% $10,153 83 $1,949.86Avg Mo.Change $7,529 N/A ($2,394) ($580) $1,235 ($24,730) ($23,495) $31,024 -17

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Benefit Plan Financial Performance

Expenses through June

Expenses through May

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Benefit Plan Financial PerformanceHistorical Expense Summary

Plan Year 2011 2012 2013 2014

Medical Plan $1,571.32 $1,748.57 $1,755.43 $1,842.59Dental Plan $74.38 $86.29 $83.75 $83.02Vision Plan $17.92 $18.26 $22.70 $24.25

Total Expenses PEPM $1,663.61 $1,853.12 $1,861.87 $1,949.86

Percent of Change 2011 to 2012 2012 to 2013 2013 to 2014

Medical Plan 11.3% 0.4% 5.0%Dental Plan 16.0% -3.0% -0.9%Vision Plan 1.9% 24.3% 6.8%

Total Expenses 11.4% 0.5% 4.7%

*PEPM - Per Employee Per Month

$0

$500

$1,000

$1,500

$2,000

$2,500

2011 2012 2013 2014

Medical Plan Dental Plan Vision Plan

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Effect of January 2014 Plan Changes

Enrollment Migration Analysis

As of December 2013 As of May 2014 Change in Distribution

Total Total

Employee Only 23 Employee Only 31 8

EE + Spouse 24 EE + Spouse 16 (8)

EE + Child 2 EE + Child 2 0

EE + Children 2 EE + Children 6 4

EE + Sp + Child 13 EE + Sp + Child 7 (6)

EE + Sp + Children 33 EE + Sp + Children 22 (11)

Total 97 Total 84 (13)

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Effect of January 2014 Plan Changes

• FINANCIAL CHANGES through June 2014

7.3% reduction in Stop Loss premium payments.

16.6% reduction in Health Plan administration costs.

3.4% increase in total fixed costs (employees waiving coverage).

16.7% reduction in claim costs.

12.7% reduction in total expenses.

4.7% increase cost per employee per month.

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2018 ACA Excise Tax

2013 NATIONAL SURVEY OFEMPLOYER-SPONSORED HEALTH PLANSCITY OF HOMERAugust 2014

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About the Survey

EmployersNumber of participants

City of Homer 1

City <500 106

50-199 Employees 315

National All 2842

• The employer groups shown in this presentation are:

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Demographics

City of Homer City <50050-199

Employees National All

Average employee age 47 43 41 41

% of female employees 33% 31% 47% 43%

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+0.5% +5.1% -1.6% +2.1%

$12,340$9,805 $10,779$10,558$9,966

$11,736

$22,237 $22,342

City of Homer City <500 50-199 Employees National All

2012 % Change 2013

*Total health cost includes medical, dental, Rx and specialty benefits

Average total health benefit cost* per employee

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Employee contribution for individual coverageAverage monthly contribution ($)

City of Homer City <50050-199

Employees National All

PPO / POS Buy-up - $89.53Core - $79.99 $120 $124 $143

HMO $0 $111 $151 $169

HSA-eligible CDHP $0 $43 $72 $76

HRA-based CDHP $0 $45 ID ID

Dental $5.01 $22 $23 $30

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Employee contribution for individual coverageAverage contribution as a % of premium

City of Homer City <50050-199

Employees National All

PPO / POS Buy-up - 11%Core - 12% 14% 24% 30%

HMO 0% 23% 32% 33%

HSA-eligible CDHP 0% 25% 21% 23%

HRA-based CDHP 0% 8% ID ID

Dental 15% 55% 64% 68%

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Employee contribution for family coverage*Average monthly contribution ($)

*Family coverage is defined as coverage for employee, spouse and two children

City of Homer City <50050-199

Employees National All

PPO / POSBuy-up - $509.43

Core - $240.00

$340 $545 $540

HMO $0 $352 $549 $584

HSA-eligible CDHP $0 $171 $318 $422

HRA-based CDHP $0 $217 ID ID

Dental $25 $58 $68 $72

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Employee contribution for family coverage*Average contribution as a % of premium

*Family coverage is defined as coverage for employee, spouse and two children

City of Homer City <50050-199

Employees National All

PPO / POS Buy-up - 18%Core - 10% 33% 52% 56%

HMO 0% 28% 48% 49%

HSA-eligible CDHP 0% 19% 34% 42%

HRA-based CDHP 0% 19% ID ID

Dental 21% 60% 70% 73%

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City of Homer 2013

City of Homer 2014 City <500

50-199 Employees National All

Average % of employees waiving own coverage

0% 20% 8% 20% 22%

% of employers offering incentive to waive coverage

No Yes 42% 11% 11%

Coverage waivers

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City of Homer 2013

City of Homer 2014 City <500

50-199 Employees National All

% of employees electing dependent coverage

73% 62% 58% 45% 53%

Make spouses ineligible for coverage if other coverage is available

No No 6% 9% 4%

Surcharge applies for spouses with other coverage available

No Yes 0% 2% 1%

Dependent coverage

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In-network City of Homer City <50050-199

Employees National AllDeductible required (% of employers) Yes 87% 93% 91%

Median individual deductible amount Buy-up - $400

Core - $1,500 $750 $1,000 $1,500

Median family deductible amount

Buy-up - $1,200Core - $4,500 $1,500 $3,000 $3,000

PPO / POS deductibles

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City of Homer City <50050-199

Employees National All

Median copay amount Buy-up - $30Core - $35 $20 $25 $25

PPO / POS in-network primary care physician (PCP) visit cost-sharing

PPO / POS emergency room visit cost-sharing

City of Homer City <50050-199

Employees National All

Median emergency room copay amount

Buy-up - $100Core - $150 $100 $150 $100

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Individual OOP maximum City of Homer City <50050-199

Employees National All

Median for in-network services

Buy-up - $2,400Core - $4,500 $2,000 $3,000 $3,000

PPO / POS out-of-pocket (OOP) maximums*

Family OOP maximum

Median for in-network services

Buy-up - $7,200Core -

$12,500 $4,000 $6,000 $6,000

*Includes deductible

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Retail City of Homer City <50050-199

Employees National All

GenericBuy-up - $10Core -$25 $9 $12 $12

Brand-name formularyBuy-up - $20Core -$50 $24 $33 $32

Brand-name non-formularyBuy-up - $30Core -$75 $47 $56 $54

Copayments in prescription drug plansAverage copayment among employers with three payment levels

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-3.0% +2.2% -8.9% -0.1%

$852

$653$763$764$717

$834

$1,036 $1,005

City of Homer City <500 50-199 Employees National All

2012 % Change 2013

Average cost of dental coverage, per employee

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2015 Fully Insured Marketing Status