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Robert Heller
Presenting:
Alpha Benefits Group
Health Market ReviewPlease silence your cell phone.
Full Service Employee Benefit Firm
Brokerage & Consulting
Voluntary Benefits
Human Resource Support Services
Retirement Plans
Executive Benefits
Property & Casualty
Plymouth Meeting
Locations
Plymouth Meeting
Camp Hill
Bethlehem
Locations
New Camp Hill Office – Moving May 1, 2006!
COBRA Administration
Section 125 Cafeteria PlanPremium Only Plans (POP)
Flexible Spending Accounts
Full Flex Credit Based Plans
High Deductible Plan Design & AdministrationMedical Expense Reimbursement Plans (MERP Plan)
Health Reimbursement Arrangements (HRA)
Health Savings Accounts (HSA)
TM
Retirement Plan Services401(k)Roth 401(k)Profit Sharing403(b)New Comparability
Executive BenefitsKey Person CoverageDeferred CompensationSplit Dollar PlanEstate PlanningLong Term Care
Welfare Plan Documents5500 FilingWrap Plan Documents
Starting Point in Process
“Good Ole’ Boy Network” Changing
Trust and Confidence
What You Should Expect From a Broker:Knowledge of the Marketplace
Customer Service and Support
Clout With Carriers
Gets a Head Start on the Renewal Process
Value Added Services
COBRA Administration
Employee BenefitCommunication
Human ResourceServices
Personalized Claims Administration
SHRM Membership
Wellness Support
Many options are rate neutral regardless
of whether you are working directly with a carrier
or working through a broker.
Demand
From Your Broker!
Year In Review…
Single Digit Increases
Some Rate Decreases
Alpha’s average starting renewal in the past six months is 11%, aftergoing to market, it drops to 2%
Looks Good for Rest of 2006 & 2007
Still too Expensive
Year Single Cost % Increase Dollar Increase
2002 $250 N/A N/A
2003 $300 25% $50
2004 $360 20% $60
2005 $450 25% $90
2006 $490 9% $40
Percent vs. Dollar Increases
Why Good News?
Credible Data
Competition
Catch Up to Rest of the Country
Wellness Initiatives
Concerns
Aging Population
Pharmacy Component
Technology
Todd Hons
Presenting:
Medical Carrier Updates
Healthcare Survey Results
Carrier Updates
New Participation Guidelines75% participation required after spousal waivers
Spousal waivers from any carrier are valid (must provide photocopy!)
No more than 50% of the group may waive coverage
New Prescription Drug Plans – Effective 4/1/2006 or Upon RenewalFor groups 2-99 – new business or upon renewal must take one of the new options
New 3-tier co-pays and deductible options
CurascriptsNew specialty drug vendor for self-injectable drugs
KHP Prescription Drug Coverage Will Be TerminatedEffective at the first renewal on or after June 1, 2006
A Capital BlueCross prescription plan will replace the existing plan
Medical Underwriting for Groups 2-19 – Effective March 1, 2006Groups will receive discounted illustrative rates
Must submit application and HIPAA authorization form 30 days in advance
Final rates will be based on medical information received and final enrollment
Keystone Health Plan Central Works Through the CBC Broker Program – Effective January 1, 2006
Major advantage for groups 2 to 99
Groups may work with a broker atno additional cost (up to 99)
Important Rx ChangeIf a brand is prescribed and a generic is available and the member chooses the brand, he or she will be required to pay the brand co-pay plus the cost difference between the brand and generic
First HealthReplaces PHCS as HealthAmerica’s National Network
Gettysburg Hospital Tentatively Rejoining Network This Year
Individual Applications Required For Groups 51-99 Individual applications with medical questions required for each employee to get final rates in all counties except Lehigh, Northampton, and 5 county Philadelphia area
Average rate increase 3.5%
95% of companies completing applications enroll
Rx SelectFor Groups > 50 Employees
Standard Option for PPO Plans
Available as Rider for POS Plans
Removes Prior Authorization for Most Drugs
Proton Pump Inhibitors, Nexium, etc.
3-tier Prescription Incentive Change – Effective May 1, 2006Currently, when a brand name drug is purchased instead of the available generic medication, the member must pay the brand co-payment, plus an ancillary charge. Upon renewal, HA is updatingthe Rx coverage to remove the ancillarycharge. Therefore, members will only be billed the third tier co-payment.
Lifestyle ReturnsIntegrated health-enhancing incentives into your company’s benefit coverage
Highmark Radiology Management ProgramPartnered with National Imaging Associates (NIA)
Introduced New Programs With Co-pay or Co-insurance on Diagnostic Services
CAT, PET, MRI Scans
MedmarkNew specialty pharmacy for specialty medications such as injectables, biological agents, etc.
ePlatformProgram to manage coverage through online services
If qualified, group gets 2% discount!
For Groups > 50 EmployeesWill accept spousal waivers from any carrier
After spousal waivers, 75% participation required
Does not apply to groups under 50 employees
Highmark Blue Shield must be the sole carrier
A minimum of 50% of the group must enroll
New plans coming out July 2006 for groups 2 – 50High deductible plans with office visit co-pays
United Healthcare/Oxford/MAMSI
Aetna
Third Party Administrator (TPA) located in Lancaster
Provides self-funded and fully insured plans
100% owned by BlueCross of Northeastern PA
Large statewide doctor and hospital network
High deductible with no other features
Health Savings Account (HSAs)
Health Reimbursement Arrangement (HRAs)
Medical Expense Reimbursement Plans (MERP Plan)TM
The Concept Makes Sense
Larger out of pocket cost reduces employer/employee premium
Turns employee into consumer
Employees utilize medical plan pay more
Isn’t insurance designed to pay for catastrophic?
Major insurance carriers slow to adopt plan design
Not enough discount in rates
Employee communication issues
Confusion over regulations
Employers view this as just a “cost shifting” method as opposed to a way to reduce overall costs
Medical Expense Reimbursement Plans (MERP Plan)
Stepping stone to HSAs?
TM
Governed by IRC Section 105
Utilized with an insurance carrier’s high deductible plan
Permits employers to self-insure certain medical expense costs
78% have claims of less than $1,000
35% have no claims!
5% have 50% of the total claims
BUY LESSCOVERAGE
To Reduce Premiums, Buy Less Coverage
Employer secures high deductible plan (i.e. $2,000) for major expenses (in/out patient surgery) from carrier
Generally less than 20% of employees utilize these types of expenses
Communicate lower deductible (i.e. $250) to employees
Employer self insures from $250 to $2,000 ($1,750 maximum exposure), only if actually incurred
Employer utilizes premium discount savings to fund the self insured portion
Typically part of PPO plan with office visit co-pay and drug card
Alpha Benefit Administrators administers the self funded portion for the employer
Advantage over HSA in that the employee can retain the doctor visit co-pays and Rx co-pay card while still having PPO arrangement for service
All expenses over $2,000 are the responsibility of the insurance carrier
Cash flow advantage – Employer only pays if expenses are incurred
Serves as a starting point for getting into high deductible plans without having to communicate a complicated process to employees
Alpha Benefit Administrators can provide proposal on savings and costs
Example 1: 223 EmployeesReceived a 25% Medical Increase = $353,500
Implemented MERP Plan 1-1-05 to 12-31-05
Group made no changes to employees’ benefits
Final increase was 11% or $157,000
Savings of 14% or $196,500
1-1-06 group received 9% increaseIncreased MERP Plan deductible
A decrease in cost is projected
TM
TM
Example 2: 99 EmployeesReceived an increase from an association
Implemented MERP Plan 7-1-04 to 6-30-05
Provided three options to employees
End result was 19% less than the previous year’s cost
Savings of $73,000
7-1-05 group received 14% increase = $65,000Increased MERP Plan deductible
A 3% increase is projected
TM
TM
Example 3: 53 EmployeesReceived a 40% increase = $119,500
Implemented MERP Plan 8-1-04 to 7-31-05
Group made no change in benefits to employees
Final increase was 14% or $42,000
Savings of 26% or $77,500
8-1-05 group received 5% increase Increased MERP Plan deductible
A 6% decrease is projected
TM
TM
High Deductible Plans In-Force
MERP Plans 90
HSA 8
TM
High Deductible Plans In-Force
MERP Plans 90
HSA 8 Alpha Experienced With MERP Plans
Leader in Central/Eastern PA with this concept
More plans in-force than other providers
Not one employer has gone back to the traditional approach
TM
TM
Issues to Consider With Your MERP Plan
Administrator
Independent from carrier
Not as seamless as appears
HRA vs. MERP Plan contractual differences
TM
TM
Why Are HSA’s Now Making More Sense?
Carriers offering more plan designs
Better pricing
Greater employee/employer acceptance
Employers desperate to control costs
MERP Plan/HSA conceptTM
What Makes Alpha’s “HSA Today” Different?
The only complete focused HSA administrative system in the country
Why would I choose Alpha for my HSA provider?
Value Added Services that we provide:Don’t have to switch HSA providers every time you change medical insurance carriers
Coordinate the HSA with the cafeteria planInsurance premiums & Limited Purpose FSA
Online access to Claims VaultAn electronic storage facility for medical claims & receipts
Available for EOB import when provided by carrier or TPA
“Certification” of qualified medical expenses
Contribution management to eliminate over-contributions
Toll free phone support
Tax form assistance1099, 5498, 1040, and 8889 preparation
Online Access to Your HSA
More than just an account balance
Revolutionary Claims Vault Technology (Patent-Pending)
Claims certification service
Online claims entry
Online withdrawal requests
Interest earned summary (currently paying 4.6%)
Ability to update your HDHP or personal information
SM
Group of 102 EmployeesRenewal premium $763,657 (+$134,853)
Changed carriers to $567,573 annual premium
Savings from original renewal $196,084
Employer funded HSA account $34,500
Employee funded HSA account $43,851
Claims estimate $42,600
Overall increase from prior year $15,873, however, we also got $78,351 in HSA funding for the year!
TM
TM
Developer and leading national provider of workplace wellness paradigm:
Brings workplace wellness to life by humanizing and personalizing the wellness process
Enhances or replaces the traditional wellness delivery technology with persuasive power of personal, face-to-face, human interaction – LIVE, not over the phone or internet
Average participation is over90% of employees
“People Powered Wellness”
Dates for providing Disclosure Notice to CMS
Plan years ending in 2006: March 31, 2006
Plan years ending in 2007 and beyond: Within 60 days after the beginning of the plan year (ex. Plan begins 1/1/2007, deadline is 3/2/2007)
Within 30 days of terminating a plan that provides prescription drug benefits
Within 30 days of a change in the creditable coverage status of a plan that provides prescription drug coverage
Dates for providing a creditable coverage notice to employees/retirees:
By November 15th of each year, starting in 2005
Prior to an individual’s initial enrollment period
Prior to the effective date of coverage for any Medicare-eligible individual that joins your group’s plan
When the plan you sponsor terminates
When the plan you sponsor changes its prescription drug coverage so that it is no longer creditable or becomes creditable
Upon an individual’s request
ZocorComes off patent 6/23/2006
ZoloftComes off patent 6/30/2006
Once generics are available, these drugs will be moved to non-formulary for most carriers
Alpha is often asked what plans and contributions are most common. We surveyed our clients to get a representation
of:
Employer/Employee Contributions Average plan designs
Here are the results
0
5
10
15
20
25
30
35
% o
f C
om
pan
ies
100 90 85 80 75 70 60 55 50 0
Percentage of Employer Contribution to Cost
2004
2005
2006
0
5
10
15
20
25
30
% o
f com
panie
s
100 90 70 50 45 40 30 25 20 15 10 0
Percentage of Employer Contribution to Cost
200420052006
76% of companies surveyed pay 75% or more of the single contribution
66% of companies surveyed pay 20-25% of dependent costs, down from 73% in 2005
26% pay nothing toward dependent costs, up from 21% in 2005
40% of those surveyed said they envision increasing the employees cost next year, down from 60% in 2005
0%
10%
20%
30%
40%
50%
$10 $15 $20 $25 > $25 Plan Copay Amount
% o
f Com
pani
es
2004
2005
2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$0 $1 - $249 $250 $251 -$499
$500 > $500
% o
Com
pan
ies
2004
2005
2006
2004
2005
PPO 66%
PPO 69%
POS 14%
HMO 15%
TraditionalIndemnity 5%
HMO 16%
POS 7%
TraditionalIndemnity 8%
2006
PPO 70%
POS 15%
HMO 12%TraditionalIndemnity 8%
Have already 2%
High probability 16%
Possible 40%
Not Likely 42%
What is the likelihood of your company implementing
an HSA?
79% have a 3-tiered formulary plan as opposed to 78% in 2005 and 70% in 2004
9% have deductibles then coinsurance as opposed to 12% in 2004 and 15% in 2004
10% have a 2-tiered co-pay (usually 10/20) as opposed to 6% in 2005 and 12% in 2004
2% have straight coinsurance as opposed to 4% in 2004 and 3% in 2004
Renewal increase are lower than the previous years
High deductible plans are continuing to become more popular
Results point to two major trends in the industry:
Thank you for attending!
This presentation will be available for download at:
www.alphabenefits.com