FUTURE HEALTH CARE LIABILTY AND CITY BENEFITS

STAYWELL FUND RESOURCES

The City spends approximately $18 The City spends approximately $18.8 million annually on health benefits 39% is directed to retiree premiums (Pre-65 and Medicare Eligible) 37% of members are Medicare eligible (856) BUDGET IMPACT

UNDERSTANDING FUTURE HEALTH INSURANCE LIABILITY

WHAT THE CITY OWES IN FUTURE HEALTH CARE COSTS

FUTURE HEALTH CARE LIABILTY AS PERCENT OF PAYROLL

PER CAPITA HEALTH CARE LIABILITY OWED Population would need to grow to 2M to be comparable to metro cities

WHAT DOES THIS LOOK LIKE IN REAL WORLD TERMS Employee making $85,000 annually Independence will owe $391,000 in future health care costs

WHAT’S NOT CHANGING-CURRENT EMPLOYEES AND PRE-65 RETIREES Plan Design and Carrier OAP 1 Deductible-$800 individual/$2,000 family (in network) Copays for many services Out of Pocket - $3,000 individual/$7,500 family (in network) Current premium split (City/employee) OAP 2 Deductible - $1,500 employee only coverage / $3,000 if any dependents enrolled All costs go towards deductible except preventive

MEDICAL PLAN SUMMARIES

RECOMMENDATION-CURRENT ACTIVE EMPLOYEES AND PRE-65 RETIREES Request Stay Well Committee evaluate and recommend strategies to incent enrollment in Qualified High Deductible Health Plan (QHDHP) Rationale QHDHPs incent consumerism from participants, which over time bends the claim cost trend line QHDHPs offer participants the opportunity to save tax–free for current or future health expenses Methodology Add HSA seed for QHDHP participants

RECOMMENDATION-NEW EMPLOYEES STARTING WITH 2020 PLAN YEAR Request Stay Well Committee evaluate and recommend strategies to encourage enrollment in OAP2 Rationale: QHDHPs incent consumerism from participants, which over time bends the claim cost trend line QHDHPs offer participants the opportunity to save tax–free for current or future health expenses Methodology: Add HSA seed for QHDHP participants Move to defined contribution approach for OAP1 ~70/30 split based on OAP1 for new employees City pays the same amount for OAP 1 and OAP 2 employees

WHAT IS A HEALTH SAVINGS ACCOUNT? A Health Savings Account (HSA) that can help you manage your expenses today and in the future. It’s yours to: Own. The HSA is always yours, even if you change jobs, become unemployed or retire. Grow. Your unused balance rolls over from year to year. Save. HSA’s provide tax-free contributions and tax-free withdrawals and tax- free earnings from investment options. Choose. Use for current expenses, save for the future or explore investment options.

HOW MUCH CAN I CONTRIBUTE?

RECOMMENDATION-MEDICARE ELIGIBLE RETIREES Work with Special Health Insurance Review Committee (SHIRC) to develop coverage recommendations for Medicare eligible retirees and dependents Rationale 856 Medicare eligible retirees, representing 37% of all members enrolled Potential for lower monthly costs for retirees with similar coverage Methodology Work with SHIRC to develop financially sustainable recommendations that address the City’s financial challenges and mitigate long-term health care liability Recommendations presented to City Council by October 14, 2019 Changes effective for 2020 Plan Year

CURRENT PREMIUM STRUCTURE