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HomeMy WebLinkAbout2000-02-16 Agenda Packet - Board (16) TDPUD STAFF REPORT TO: Board of Directors FROM: Mary Chapman, Administrative Services Manager SUBJECT: Discussion of the NRECA medical insurance plan DATE: !February �0, 2000 . _ ""'AGENDA:# At the last board meeting, questions were raised regarding the changes in the NRECA medical, dental and prescription plans that the District provides for its employees and directors. These changes were made effective January 1, 2000. 1 will do my best to explain the changes and how the NRECA Insurance Trust works. Premiums are collected from all of the members of the NRECA insurance program and deposited into the Trust; claims are paid out of the Trust. In essence, the insurance program is a large self-insured plan maintained solely for the members of NRECA and is administered by NRECA's RS&I Department. Each year, the RS&I Department staff reviews the status of the insurance Trust. They then recommend ways to change the insurance program to cut costs and they re-price the premiums that the members have to pay in order to maintain each of the plans. Besides the plan that the District has, NRECA also has a Preferred Provider Plan (PPO) and a Health Maintenance Organization Plan (HMO). The District's plans are called Electrecomp Medical and Electredent R & C Dental. We receive a 6% discount off of our rates for each year that our Wellness Program qualifies. We also receive a discount because the District self-funds the first night stay in a hospital. On 1/1/99, NRECA made a change to the prescription plan because of substantial increases in prescription costs. Peter entered into an interim agreement with the union to absorb a portion of the cost of the increase until 12/31/99, when the union agreement between the District and the IBEW expired. NRECA also increased the medical and dental premiums for 1999. This year, NRECA made several changes to the insurance program including increasing the premiums. Three of the changes cannot be bought back; three of the changes can be bought back by any member (the District, not an individual). The three changes that cannot be bought back are: 1) Two years of free insurance for the survivors of a deceased employee. 2) No carryover of insurance charges from October, November& December into the next year. 3) Discontinued credit accumulation for those employees who have duplicate coverage under a spouses insurance. The three changes that can be bought back are: 1) Prescription drug program can be bought back to the one that was in effect 111/99 to 12/31/99. 2) The $200 diagnostic X-ray and lab coverage. 3) The $300 supplemental accident coverage. The following is a summary of the increased premiums for 2000 and the cost of the various coverage that can be bought back. 1999 premiums for medical, dental & prescription-basic plan $374,140.00 Increased premium for basic plan for 2000 54,542.00 Prescription buyback 11,600.00 $200 diagnostic x-ray and lab coverage buyback 5,698.00 $300 supplemental accident coverage buyback 1,523.00 Total basic plan with all three buy-backs $447,503.00 1999 premiums (374,140.00) Total increase in medical insurance premiums for 2000 with buybacks $ 73,363.00 To help the Board to better understand how much the medical, dental and prescription coverage premiums have increased over the years, I have listed the annual premiums paid by year. In doing the calculations, I based them on the current level of employees. Coverage Annual $ Increase Over % Increase Over Year Premium Prior Year Prior Year 1993 $289,536 1994 $295,247 $ 5,711 1% increase 1995 $292,428 $ 2,819 <1% increase 1996 $288,424 ($4,004) 1% decrease 1997 $300,869 $12,445 4% increase 1998 $347,607 $46,738 15% increase 1999 $374,140 $26,533 7% increase 2000 $428,682 $54,542 14% increase These increases equal a 48% increase from 1993 to 2000. Over the years, the District has not changed the basic plan benefits. The plan still offers a $200 deductible, an $8,000 coinsurance, SHARE with 20% penalty, employee/spouse exam, dental coverage including 2 cleanings per year, $50 deductible, 80% coverage on basic dental work and 50% on major dental work. There have been some plan changes which include the items discussed above; there has also been the addition of a prescription card, additional counseling benefits and the use of Lab One for certain lab tests to be paid at 100%. I have attached NRECA's letter which explains the take-aways in more detail. When you read the letter, you will see that they expect the increases in premiums to continue. I suspect that they will also continue to trim benefits here and there in order to keep the basic plan and the Trust in tact. National Rural Electric Cooperative Association A Touchstone Energy®Partner �ac 4301 Wilson Boulevard Arlington,VA 22203-1860 Telephone:(703)907-5500 TT-(703)907-5957 www.nreca.org To: Benefits Administrator 05044-001 From: Anthony Marinello Executive Director, Marketing & Service Operations Retirement, Safety & Insurance Department Re: Benefit Changes and Rates for 2000 Plan Year Date: September 1999 This letter and the materials enclosed describe changes in the group benefits plans for the 2000 plan year. It is vitally important that you read all of this material, since these changes affect your benefit plans. Please take special note of the changes in the areas of prescription drug benefits, supplemental accident, and diagnostic x-ray and laboratory provisions explained in this letter. Also enclosed with this package are your 2000 group benefit rates and a form to indicate your medical plan choice for the 2000 plan year. About your Medical Plan with NRECA NRECA, through the RS&I Department, provides group insurance plans for the membership. These plans are maintained through a VEBA and a 501(c)(9) tax-exempt Trust. Your medical plan is a large self-insured plan maintained solely for the members of NRECA. It is truly your— the membership's—medical plan, administered by the RS&I Department to provide exceptional coverage and service to you, our members. Background on Medical Plan Changes As you are probably aware, health care costs nationwide have been experiencing double-digit increases. Prescription drug costs have increased especially rapidly, and now comprise the fastest-growing component of health care costs. According to health experts, prescription drug costs are expected to grow 13 to 17 percent each year for the foreseeable future. Because of this and other factors, health care costs for the Group Benefits Trust during the past few years were greater than medical premiums collected. The changes made to the plan for the current year, as well as premium increases for medical coverage, helped adjust cooperative ElectREcomp Page I of 5 premiums to more accurately reflect their expenses. Additional changes are necessary going forward to help keep pace with medical inflation and stabilize claims costs to the Trust. NRECA's goal of maintaining a stable and adequately funded medical program ensures that we can continue to offer comprehensive benefits at competitive prices. Medical Plan Changes Prescription Drug Coverage Copayments for prescription drugs will change in 2000 to a flat dollar amount or a percentage of the total cost of the drug, whichever is greater. If the total cost of the prescription is less than either of the above, you will pay the lesser amount. Please note that beginning January 1, 2000, in all cases when a generic drug is available, the plan will only pay for the generic drug. If the physician writes"dispense as written" for a brand name drug, the individual would pay the difference between what the plan would have paid for the generic drug and the brand name drug. This provision will help reduce expenses to the Trust and to the participants, and encourage patients and physicians to take an active role in cost-effective health care. The patient and the physician can choose which drug—the generic, the brand name or a less expensive drug—should be used. 2000 Prescri tion Drug Mana ement Program Standard Co a ments/Co-insurance Generic Drug Brand Name Drug When Brand Name Drug When Generic is Available Generic is not Available Local Pharmacy Greater of$10 or 20%, or The difference between what the Greater of$30 or 20%, or Network (for up the full cost of the plan would have paid for the the full cost of the to a 30-day prescription if it is less generic drug and the cost of the prescription if it is less than supply) than $10 brand name drug. $30 Mail Service Greater of$10 or 20%, or The difference between what the Greater of$30 or 20%, or Pharmacy (for up the full cost of the plan would have paid for the the full cost of the to a 90-day prescription if it is less generic drug and the cost of the prescription if it is less than supply) than $10 1 brand name drug. $30 No one will pay more than $2,000 per person per year for prescription drugs purchased with the prescription drug card. Once a covered individual's out-of-pocket expenses for prescription drugs reaches $2,000 in a calendar year, the plan will pay 100% of prescription drug costs for that individual for the remainder of the year. This applies only to prescriptions processed by Express Scripts using the prescription card, mail order or through claims for reimbursement from Express Scripts. The enclosed rates reflect these changes. While the preferred drug plan described above will help contain escalating prescription drug costs charged to the Trust, you may of course keep your current drug plan for an additional cost. ElectREcomp Page 2 of 5 If you keep your current prescription plan, your rates will be increased accordingly. If you want to find out how much this rate increase would be, indicate your, prescription plan choice on the enclosed medical election sheet and fax it to us at 703-907-5503 for a revised rate quote. (Please fully complete the medical election sheet before you fax it back to us.) Coordination of Benefit Savings Provision for Medical, Dental and Vision In a situation where an individual is covered by two medical, dental or vision plans, and the NRECA plan is the secondary payor, Coordination of Benefits (COB) rules apply. In the past, the savings generated by an individual's coordinated claims may have been used to defray future claims expenses. While we will continue to coordinate claims with other providers, beginning in the 2000 plan year, the coordinated claims savings provision will be eliminated. Deductible and Co-Insurance Carry-Forward Provision far Aledical, Dental and Vision In the past, out-of-pocket expenses applied to an individual's deductible and co-insurance during the last three months of a plan year were applied to that individual's deductible and co-insurance out-of-pocket maximum for the following plan year. This was called the deductible and co- insurance carry-forward provision. Beginning with the 2000 plan year, the deductible and co- insurance carry-forward will be eliminated. Premium Waiver for Future Survivors for Medical, Dental and Vision The plan provided that covered survivors of an employee would have their medical, dental and vision premiums waived for a 24-month period following the death of the employee. Beginning with the 2000 plan year, this provision will not apply to new survivors. Any survivor currently in the 24-month premium waiver period will not be affected by the elimination of this provision. Laboratory and X-ray Coverage For the 2000 plan year, we have made an arrangement with LabOne, a national laboratory, to offer discounted laboratory services for covered plan members. There is no cost for these services; however, you will need to elect LabOne services if you want to take advantage of the discounts because participants will need LabOne cards to receive the best benefit. Laboratory services will be covered in full when samples are processed through LabOne. Samples can be taken at the doctor's office and sent to LabOne for processing, or if it's more convenient, patients may visit one of the drawsite locations. There is no benefit limitation or copayment on laboratory services processed though LabOne. This is a win-win situation for your employees and the Trust because employees will not have out-of-pocket costs associated with laboratory services and the Trust will save through the discounts that LabOne offers. ElectREcomp Page ') of 5 If you accept LabOne, but participants do not use the services, claims will be covered at 80% of R&C after satisfaction of the deductible, as usual. A brief explanation of LabOne is enclosed in this package and a comprehensive package of material on LabOne will be sent to you within the next two weeks. Please note: The $200 diagnostic x-ray and lab benefit and the $300 supplemental accident provisions have been unbundled from your coverage for the 2000 plan year and are not included in the enclosed rates. You have the option to include one or both of these benefits in your coverage for an additional premium. You may choose LabOne, the $200 diagnostic x-ray and lab (DXL) benefit, or neither. You may not elect both LabOne and the $200 DXL benefit. The Supplemental Accident benefit may be added in either case for an additional charge. • If neither LabOne nor DXL are selected, laboratory and x-ray services will be covered like any other medical expense (80% after the deductible). • If LabOne is selected, as long as lab samples are processed through LabOne, expenses will be paid at 100%, with no out-of-pocket expenses. However, x-ray services will be covered like any other medical expense. For example, mammograms would be covered at 80% of R&C after the deductible. Following is a summary of other rates for the 2000 plan year: Dental Base rates for the"Reasonable and Customary" dental plans will be increased by a flat 5 percent. Scheduled dental base rates will remain unchanged. Experience-rated systems' dental rates will vary based on the claims experience for their group. The following three provisions have been eliminated: coordination of benefits savings, deductible and co-insurance carry-forward, and premium waiver for future survivors. Vision* No change in base rates. The following three provisions have been eliminated: coordination of benefits savings, deductible and co-insurance carry-forward, and premium waiver for future survivors. Life Insurance Plans* No change in benefits or base rates. Short-Term Disability (A&S)Plans* No change in benefits or base rates. ElectREcomp Page 4 of 5 Long-Term Disability Base rates for the 66-2/3% Plan will increase 10%. Base rates for the 50% Plan will increase 5%. Please remember that due to plan participants' ages and salaries, your system's actual premium adjustment may vary. Accident Plans No change in benefits or base rates. *Rates will vary based on each group's age and demographic data. Please Complete the Enclosed Medical Election Sheet We've given you a lot to review. If you would like to explore plan provision alternatives for your group programs, you may call us at 703-907-6113, fax us at 703-907-5503, or e-mail us at: rerate nre_ ca�org. Please complete the enclosed medical election sheet and fax it to us at 703-907-5503 as soon as possible. In order for benefit changes to be activated on January 1 and be reflected on your January bill, we need your final confirmation of plan provision changes by November 15. If We Don't Hear From You... The enclosed rates will go into effect January 1, and the new drug copayments/co-insurance will apply for all prescriptions filled January 1 or later. Supplemental accident, laboratory and x-ray services will be covered like any other medical expense—no special first dollar coverage provisions will apply. ACW-99-021A ElectREcomp Page 5 of 5 0 National Rural Electric Retirement, Safety and pnC® Cooperative Association Insurance Department 3 NRECA GROUP BENEFITS TRUST MXECA r ANNUAL RERATE ACTION REPORT h09/24/99 PAGE: 1 PETER HOLZMEISTER, GENERAL MANAGER TRUCKEE-DONNER PUD P 0 BOX 309 TRUCKEE CA 9616o SG: 05-044-001 CURRENT 01/01/00 C O V E R A G E MONTHLY RATES MONTHLY RATES LIFE BASIC LIFE - 3 X SALARY $0.32/1000 $0.34/1000 MEDICAL ELECTRECOMP MEDICAL OPTIONS INCLUDE: $200 DEDUCTIBLE, R&B MEDICAL MGMT, $8,000 COINSURANCE : SHARE W/20% PENALTY, EMPLOYEE/SPOUSE EXAM, DIRECT CLAIMS : $30/$10- 20% MAIL RX, MAC A, $30/$10- 20% CARD RX INDIVIDUAL ONLY $236.91 $278.57 (I� SPOUSE ONLY $255.89 $292.94 CHILD (REN) ONLY $213.83 $244.78 SPOUSE & CHILD (REN) ONLY $420.65 $481 .55 MEDICARE RATE $165.84 $195.00 DENTAL ELECTREDENT R & C DENTAL INDIVIDUAL ONLY $25. 12 $26.38 SPOUSE ONLY $30.38 $31 .90 CHILD (REN) ONLY $40.70 $42.74 SPOUSE & CHILD (REN) ONLY $68.79 $72.24 DISABILITY LONG TERM DISABILITY - 26 WEEK/66 2/3% $0.037/100 $0.044/100 LIFESTYLES - 6.o% LIFESTYLE DISCOUNT RENEWAL DATE IS PRIOR TO RERATE EFFECTIVE DATE, DISCOUNT HAS BEEN APPLIED BUT OPTION MUST BE RENEWED.