G.A.I.N.S. Conference 2016 Presented by Todd Hooper G.A.I.N.S. President Non Certified Health Insurance

2 This presentation is for informational purposes only. The information provided on the slides or by the speaker cannot be relied upon as tax or legal advice. The information is current as of May 2016.

Are We Really Still Having This Conversation? Austerity has been reduced Tax digests are slowly coming back Yes ……. but why? Increasing employer premiums Plan design losing value Pension liability

Non Certified Monthly Contributions FY 2009 $ FY 2010 $ FY 2011 $ FY 2012 $ FY 2013 $ FY 2014 $ FY 2015 $ FY 2016 $ FY 2017 $846.20

House Budget pg. 39 February 17, Authorize a pilot program for non-certificated system directed healthcare for a 24 month pilot effective for healthcare coverage January 1, 2017 at the end of which the participating systems may opt to return to the state plan without penalty

As of May 4, 2016 “We have no information to share at this time.” - SHBP So what exactly does that mean? - August 2016 DCH Board meeting – Plan information?

State Sanctioned Study of the SHBP Performed by AON in 2015 Examination of Non-Cert Coverage The study concludes by examining options to provide coverage to Non- Certs. The employer contribution for Non-Certs is currently insufficient to cover these employees’ costs. The study notes two options for addressing this issue: (1)increasing employee contributions or (2) offering a new medical benefit package for Non-Certs, which would reduce the overall benefit package value, yet leave employee payroll deductions at the 2015 level.

AON SHBP Study The study can be found on the Georgia Department of Community Health website at chmarking%20Report_FINAL_ pdf 8

Three primary cost drivers of the SHBP Geographic Location–The Georgia SHBP’s location costs are 6% higher than the mean of the group; Demographics–The Georgia SHBP’s age and gender mix drive costs that are 2% higher than the mean of the group; and Adult Lives per Employee–The Georgia SHBP’s dependent mix yields costs that are 4% higher than the mean of the group.

Active/Non-Medicare Retiree Population The Georgia SHBP has the highest average active/non- Medicare retiree age and highest percentage of females of the Comparators, leading to costs that are around 2% higher than the mean

Is Wellness important? When the Georgia SHBP employee costs are analyzed for an employee who participates in wellness programs and who is not a tobacco user (or is enrolled in a tobacco cessation program), the employee cost picture for the Georgia SHBP improves.

Options? Telemedicine/Virtual Medicine On site health clinics* Delivery system transformation Narrow networks and direct contracting Decision support tools Advocacy Dependent eligibility audit* Employer subsidy adjustment Wellness incentives Medicare Retiree Individual Exchange Strategy 12 What options are available to reduce costs for the membership without reducing the value of the benefits offered?

March 10, 2016 DCH Board Meeting Note

Insurance for Classified Personnel Proposed FY16 Budget “Effective January 1, 2016, eliminate SHBP coverage for non-certified public school employees, as defined in OCGA , who work, on average, fewer than 30 hours per week.” "Public school employee" means an "employee" as defined in paragraph (20) of Code Section [those not eligible for TRS].

DCH Board Minutes December 8, 2011 Report of the Commissioner The first resolution addresses much of the remaining short term deficit by gradually increasing the employer contribution required from local school systems on behalf of non-certificated school personnel. Commissioner Cook stated that the second resolution deals with the long-term liabilities referred to as Other Post Employment Benefits (OPEB). He said in August when the Board presented the plan to address the near-term deficit, he also expressed concern about the long-term liabilities of the plan and promised the Board that the Department would come back by the end of the year with a proposal to address those liabilities. This second resolution seeks to address the OPEB liabilities by making two significant changes to the Board's policies regarding subsidizing SHBP coverage for annuitants. The changes will not affect any current retirees or active employees who have five years or more of active service. The new subsidy policy for annuitants would only impact new hires and active employees with less than five years of active service.

DCH Board Minutes December 8, 2011 (cont.) Commissioner Cook stated these liability projections are not only valuable to DCH and are also used in the department’s planning, they are also used by others including the agencies that establish Georgia’s bond rating. Georgia is currently only one of eight states that has a AAA bond rating. Reducing the State’s current OPEB liabilities is an important step in maintaining its favorable bond rating. Commissioner Cook reported that the actuaries place Georgia’s 30- year OPEB liabilities at just under $62 billion. In order to keep pace with the incurring debt, it would take Annual Required Contributions to the State OPEB Fund and the School Personnel OPEB Fund totaling $1.32 billion.

5% of Budget Required for ARC Contribution to OPEB Annual Required Contribution for the Two OPEB Funds is $1.1 Billion STATE BUDGET

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Is Your School System Credible? CREDIBLE means an actuary can reasonably project your claims data forward In order to be 100% credible you will need to have 500 covered lives For every 100 lives you are 20% credible

Is Your RESA a Path to Credibility?

Possibly…….. Seek legal guidance Would require an oversight board Potentially need a 3 year commitment How many systems would participate? Some systems may already be credible Other unknowns

Steps required to evaluate a Non Certified Insurance Solution Initiate a written request to SHBP for claims information High cost claimants must be broken out SHBP will require a fee to provide the claims Provide non-certified employee census Provide SHBP plan designs

Steps required (cont.) Broker will take the previous information and bid it out with carriers An actuary should be utilized for claims and pension obligations related to OPEB’s Healthcare trend rates (medical inflation) Inclusion of Medicare Advantage premiums Rate of retiree’s from SHBP (under 65)

Steps required (cont.) Compare current SHBP rate to bid rate Is bid rate more or less than SHBP rate? Provided savings exist; is there enough savings to fund Medicare advantage premium? Is there any remaining savings for OPEB obligation?

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30 Questions