University of Oklahoma

EMPLOYMENT BENEFITS COMMITTEE

NEL 215

August 20th, 2015

Present:

Committee Members:

Don ClothierGordon ShawRenda PassekTerri Lunday

Debbie CoppJoel BurchamKaren Rupp-SerranoKevin Farmer

Michael Kramer

Others:

Angela HawpeLindsay MitchellLes HovenJessica Cadotte

Kevin BreslinRuth DonahueTed Makowiec

Approval of Minutes

(Clothier) Motion to approve minutes with correction to attendance and spelling.

(Burcham) 2nd the motion

Motion passed. Minutes approved.

2016 Benefits

(Donahue) Throughout 2014, a healthcare strategic planning process was conducted by two committees, a Working Committee and an Executive Steering Committee, both representing University stakeholders. For the 2015 plan year, significant objectives were accomplished, as follows:

  • The PPO and HCA plans for active employees, and the Traditional plan for retirees, were transitioned from a fully insured to a self-funded bases resulting in:
  • Decreased cost due to elimination of risk/profit charges and premium tax
  • Increased control by OU of the plan designs and utilization monitoring and management
  • Establishment of a reserve account and retention of interest earned on the reserve dollars
  • Purchase of stop loss coverage to mitigate OU’s risk of claims fluctuation
  • The contribution strategy was redesigned to require all participants to contribute to the cost of health care.A long term strategy is to reduce the cost for dependent coverage to increase OU’s competitive advantage.

(Breslin) Segal has incorporated BCBS data from the Blue Insight report through June 2015 and reviewed the renewal calculations for accuracy and reasonability. BCBS is calling for a 13.9% increase to the HMO premium for 2016. BCBS used a 6.2% annual medical trend, which is below the Segal recommended range of 7-10%, and a 15.6% drug trend factor, which is above the Segal recommended rage of 13-15%. The projections are based on data for the 12-month period ending on May 31, 2015. If two years of data are used, the required increase would drop approximately two percentage points. Historically, the HMO premium increases have changed from 13% in 2014 to 8.1% in 2015 with a proposed 13.9% for 2016. The national trend from Segal’s National Health Plan Cost Trend Survey of 7% in 2014 to 6.7% in 2015.

Under OU’s self-insured funding arrangements for the Blue Options PPO. Blue Choice HCA and Traditional plans OU takes on all the claims risk in exchange for lower costs due to the elimination of profit, margin and taxes. OU also gets to retain excess premiums during years of favorable claims experience. To protect itself against adverse claims experience, OU purchased stop loss coverage to help mitigate the risk of high claimants. OU’s projected reserve accumulation for June 30, 2015 was $9,008,700. The actual reserve amount during this time sits at $11,069,800 exceeding the Segal projection by approximately $2.1 million.

The self-insured active plans are calling for a 0.1% rate decrease, while the retiree Traditional plan is calling for a 13.4% rate increase. OU’s overall experience has been favorable.

(Kramer) Is there a goal for our reserve?

(Breslin) Yes. The goal is to reach $15 million over a 7 year period. OU will build reserves quickly in the beginning and as time continues on, the incremental increases will slowly go down over time.

(Kramer) Would there be any harm in increasing the reserve by 1.5% instead of 2% for the next year because OU has exceeded the projection amount?

(Breslin) Changing the reserve accumulation target is an option that can be discussed.

OU’s ASO fees and Stop Loss are currently being negotiated with BCBS by Segal. The proposed increase for individual stop loss was rated at a 23.4% increase. Segal believes this to be on the high end and is working with BCBS to lower their requested premium.

Due to the size of OU’s population, Segal does not feel that aggregate stop loss insurance is necessary. Segal recommends the elimination of this insurance policy. This would save OU approximately $104,000.

The ASO fees are under a rate guarantee. The 2016 ASO fee rates are $27.08 PEPM for the PPO and HCA and $35.32 PEPM for the Traditional Plan. The PPO and HCA plans are lower due to prescription drug rebate offsets.

(Makowiec) OU has a list of proposed initiatives for 2016. First, OU would like to make a plan conversion of the HCA to an HSA, changing the current high-deductible plan to include a health savings account (HSA). Making this change would provide triple tax savings on qualified medical expenses and would be a portable savings vehicle. The plan design should be approximately actuarially equivalent.

OU would also like to freeze the HMO participation for 2016, closing the enrollment into the HMO plan to new participants.

There is also a request for the elimination of the $50 monthly coverage waiver subsidy. This change would align with administrative simplification and the market, as fewer organizations are offering a waiver subsidy. The current payout totals approximately $553,000. Savings would be dependent on how many individuals join the plan.

There is a proposed implementation for separate rates for tobacco users. The difference in rates for tobacco users would be $25.00 more than those of non-tobacco users. This would be utilized as an incentive for tobacco users to attempt to quit. This incentive is becoming more prevalent in the OK market. An attestation would be used at open enrollment as verification.

(Hoven) If OU does an attestation at open enrollment, does that eliminate a passive enrollment?

(Hawpe) Yes. The attestation would require all employees to make an election during open enrollment.

(Copp) What’s the time frame of this becoming prevalent in the Oklahoma market?

(Makowiec) The non-tobacco user trend has really started to take place over the last 5 years and has become more aggressive in the last 3 years.

(Donahue) There are also incremental changes in location and geography. Now that there is a legislative push, more employers will begin to push as well.

(Makowiec) OU would also like to have a medical claims audit done for payment errors and anomalies to ensure contract adherence. This function would be performed by an external party.

To further discussion on Understanding a Health Savings Account (HSA) there are a few key points to how the plan design functions. First, an HSA must be linked to a high-deductible plan with maximum out-of-pocket limits. Funding for an HSA can be made by the employees, employers, or both. Employer contributions are not taxable to the employee and the employee contributions can be made with pre-tax dollars as well. Permissible uses of the HSA are for qualified medical expenses (e.g., out-of-pocket expenses) and employees can roll over any unused funds for future years. An HSA plan is also owned by the employee and is portable on termination of employment, at which time they can be transferred from one HSA administrator to another.

The HSA Contribution limit for 2016 is $3,350.00 for the individual or $6,750.00 for families. It also has a contribution catch-up of $1,000.00 for employees ages 55 and up. The minimum deductible for the individual is $1,300.00 and $2,600.00 for families with a maximum out-of-pocket amount of $6,550.00 for the individual and $13,100.00 for families.

An HSA Plan promotes transparency and more conscientious health care consumers.

(Hoven) What is your experience with the premiums for an HSA plan?

(Makowiec) The plan can be structured so the premium is the same as OU’s current HDHP plan.

Retirement Update

(Hawpe)The percent conversion for voluntary savings plans is finished on the Norman Campus. The conversion for both campuses has gone fairly smoothly. There will also be more educational seminars in the future.

Wellness Update

(Mitchell)There are over 800 participants already registered for the Fun Run and registration continues to run smoothly.

The Standing Desk Program has had a great response in interest with over 800-1000 applications across campuses.

Health Screenings are coming up and the enrollment for those are doing well. There will be dental screenings included as well.

Update from the CHRO

(Hoven) Some of the items discussed today need to be sent to the President and then the Regents for approval in September. Benefits has also put out a Flexible Spending RFP for August 27th.

(Clothier) EBC will be preparing a recommendation for the proposed Tobacco Rates, the elimination of the monthly coverage waiver subsidy, freezing the HMO plan for new 2016 enrollments, the conversion of the HRA to the HSA plan and the changes for Long Term Care.

(Hawpe) We may need to do an e-mail vote on the HMO & HSA due to low attendance in today’s meeting.

(Copp) Will the recommendations include what the rates will be?

(Hawpe) Yes. We are currently waiting for the July data to come back.

(Clothier) I think there will need to be a strong education program on the HSA conversion and the Long Term Care changes.

New Business

(Clothier) With no new business the meeting willadjourn at 2:40 pm.