Our Goals: Quality Affordability Choice Meets adopted target—slightly above market Compliance Sustainability

Medical Plan Options for 16-17 Consumer Driven Health Plan with Health Savings Account (CD/HSA): Albemarle Choice “Traditional” Plan: Albemarle Select Blends current Basic/Plus plans Monthly Premiums $86 - $330 Deductibles remain at $500/$1000 80/20 Co-insurance; co-pays for Rx, PCP/Specialist 100% coverage for preventive services NEW Consumer Driven plan offering Monthly premiums $15-$179 Max $4k/$8k deductible 100% coinsurance after deductible 100% coverage for preventive services $1,104 employer HSA contribution

CD/HSA: A different model…. CD: Consumer Driven plan HSA: Health Savings account higher deductibles = lower premiums all covered expenses paid out of pocket until deductible is met negotiated network discount, like traditional plan Preventive care covered 100% tax-favored savings account helps pay the deductible/other expenses employee & employer contributions allowed all funds belong to employee & portable; save for future retiree health expenses unlimited carryover (no “use it or lose it”) contributions, interest, and earnings never taxed if used for qualifying expenses

CD/HSA: how they work together Use funds in HSA to pay for expenses Once deductible is met, CD plan pays at 100% Use HSA for qualifying expenses of yourself, spouse, and children

EMPLOYER CONTRIBUTION: Full time employee $776/month Traditional CD/HSA $776 to medical reserve fund $92 to HSA $684 to medical reserve fund

The take aways…… A high deductible plan offers real choice as to how/when healthcare dollars are spent – CONSUMER driven Monthly premium savings can be used to build the HSA—you get to keep your money or use it when necessary Building the HSA (employer/employee contributions) helps prepare for future health care costs HSA funds are portable and tax advantaged

Potential Disadvantages of CD/HSA plan illness can be unpredictable; hard to accurately budget for expenses information about cost/quality of medical care can be difficult to find some may find it challenging to build their HSAs due to higher plan use some may not seek medical care (or take prescription drugs) as needed in order to save money If HSA funds used for nonmedical expenses, taxes/possible penalties apply NEW – many unfamiliar with this model HSA funds used for dependent children limited to IRS-qualified minors Cannot be enrolled in Medicare and an HSA

One size does not fit all: which plan fits which employees best? Consumer Driven Plan with HSA Traditional Prefers to pay higher known costs in order to pay lower unknown costs Likes traditional insurance model Prefers to pay higher unknown costs in order to pay lower known costs Wants to manage healthcare expenses Willing to invest premium savings to build the HSA – especially in initial years (or has “in case” funds if needed to meet deductible)

Comparing Out of Pocket Costs  PROPOSED PLANS EFFECTIVE 10/1/16   Traditional CD with HSA Plan year deductible $500/$1,000 $3,000/$6,000 Plan pays (after deductible) 80% 100% Plan year maximum out-of-pocket $4,000/$8,000 (includes possible Rx copays after deductible is met) Tests, procedures, etc. 20% coinsurance $0 after deductible is met Physician Services PCP office visit $25 100% before deductible is met Specialist visit $40

Example #1 Soraya is a new teacher with no dependents on the health plan. She only used preventative services during the year, so no deductible for her this year   Soraya: Traditional vs CD/HSA Plan Annual Medical Premium Out of Pocket Medical Costs Annual Employer HSA Contribution Annual Out of Pocket Cost Annual Savings Traditional Plan ($1,032) $0   CD/HSA Plan ($180) +$1,104 $1,956 * *By choosing the CD/HSA Plan, Soraya would have saved $852 on premiums AND received a $1,104 contribution into her personal HSA account. If she put that $852 of premium savings into her HSA, she’d have a balance $1,946 for the next plan year. If the employer contribution that year was equivalent to the prior year’s, she’d have enough in her HSA to meet a $3,000 deductible.

Example #2 Mike is a social worker with no dependents on the health plan. He needed a moderate amount of medical services/prescription drugs during the year. Mike: Traditional vs CD/HSA Plan Annual Medical Premium Out of Pocket Medical Costs Annual Employer HSA Contribution Annual Out of Pocket Cost Annual Savings Traditional Plan ($1,032) ($1,855) n/a ($2,887)  $100 CD/HSA Plan ($180) ($3,911) +$1,104 ($2,987) Because Mike chose the traditional plan, he saved $100 during the year. Mike likes the fixed copayment structure of the traditional plan, even though it costs him more money in medical premiums, and he does not receive the employer HSA contribution.

Example #3 Michele is an office associate who covers her spouse. He’s had a bad year, with one hospitalization, multiple provider visits, and several maintenance prescriptions. He’s reached the individual out of pocket maximum for both plans   Michelle: Traditional vs CD/HSA Plan Annual Medical Premium Out of Pocket Medical Costs Annual Out of Pocket Maximum Annual Employer HSA Contribution Annual Out of Pocket Cost Annual Savings Traditional Plan ($3,120) ($3,125) $3,000 $0 ($6,120) CD/HSA Plan ($1,608) ($10,120) $4,000 +$1,104 ($4,504) $1,616 *By choosing the CD/HSA Plan, Michele would have saved $1,512 on premiums, which more than covered the higher out of pocket maximum on that plan. She also received a $1,104 contribution into her personal HSA account.

Example #4 Steve is a Police Officer with family coverage. His wife and child were in a serious car accident; both are fine now, but their medical expenses hit the family medical out of pocket maximum for the year   Steve: Traditional vs CD/HSA Plan Annual Medical Premium Annual Out of Pocket Maximum Annual Employer HSA Contribution Annual Out of Pocket Cost Annual Savings Traditional Plan ($3,960) $6,000 $0 ($9,960) CD/HSA Plan ($2,148) $8,000 +$1,104 ($9,044) $916 *By choosing the CD/HSA Plan, Steve saved $1,812 on premiums and he also received a $1,104 contribution into his personal HSA account.

Monthly Comparison – Employee Premium Rates   Monthly Premium: Traditional Plan 2016-17 Monthly Premium: CD/HSA Plan Premium Difference (CD vs. Traditional) Monthly employer HSA contribution Total Monthly Impact Employee $86 $15 $71 +$92 $163 Employee + Child $129 $50 $79 $171 Employee + Children or Spouse $260 $134 $126 $218 Family $330 $179 $151 $242

Things to remember….. If you select the Consumer Driven plan, you can only do a limited purpose FSA (dental/vision only) If you do nothing during Open Enrollment, you will automatically be enrolled in the traditional plan option next year If you want to participate in the Consumer Driven plan next year, you MUST enroll during Open Enrollment BE SURE you understand your options!

In Summary……. Next steps……………. SELECT: traditional plan (blend of current Plus/Basic plans) CHOICE: Consumer Driven Health Plan with Health Savings Account Contribute $1,104 into Health Savings Account for 16-17 Next steps…………….

Prepare for Open Enrollment and after! KNOW when: runs 8/1 through 8/19 READ your benefitsFOCUS newsletters as they arrive over the summer ATTEND an information session VISIT www.albemarle.org/openenrollmentinfo ASK HR if you have questions! Transition to Anthem medical/dental as of 10/1/16