Midland Memorial Hospital 2014 Employee Health Benefits

Medical Plan Changes Single plan offering: a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) Spouses excluded if eligible for employer- sponsored coverage, Medicare, or Tricare No office visit or pharmacy co-pays Employee pays all costs up to deductible ◦ 100% coverage for MMH services after deductible, excluding O/P Pharmacy and bariatrics

Why Big Changes? Logical progression to more employee responsibility. Projected cost increase of over $2M: ◦ ACA-related plan design and tax increase: $373k ◦ Stop-loss premium increase (large claims): $62k ◦ Increased Headcount:$564K Relative value of our plan and risk of adverse selection (spouses)

Spouses Working spouses who are eligible for coverage (medical and/or dental) under their employers’ plans will no longer be covered on the corresponding MMH plan. Spouses who are eligible for Medicare part A or B or Tricare will be ineligible for MMH medical plan. ◦ May be eligible for dental Employees with spouses that are eligible to stay on the plan, will complete an affidavit stating no other coverage.

Who is eligible to participate in an HSA? Because HSA’s have special tax advantages, the IRS defines specific rules on participation. To be eligible to contribute pre-tax funds toward a Health Savings Account, the IRS requires that individuals:  Must be enrolled in a qualified High Deductible Health Plan  Cannot have any other health coverage  Not covered by spouse’s medical or pharmacy plan  Not covered by Tricare  Not covered through Medicare Part A or Part B  Cannot be claimed as a dependent on another person’s tax return

Health Savings Account Health plan must have minimum $1,250 annual deductible. Able to contribute up to $7,550/year in pre-tax contributions ◦ $3,300 individual ◦ $6,550 family ◦ $1,000 over 55 catch-up Employer will no longer offer FSA for medical, dental and vision expenses. ◦ Dependent Care FSA remains available.

HSA - Employer Funding Employees with an hourly rate of pay of $0-$24.03 will receive $500 seed money into their HSA Employees with an hourly rate of pay of $ $48.07 will receive $250 seed money into their HSA Employees with an hourly rate of pay over $48.07 will receive $0 seed money Seed money will be placed into HSA account on behalf of employee at the beginning of the 2014 Plan Year

HSA Administered by ADP Employee is the holder of the account and a debit card will be attached to the account Welcome Package will be mailed to the account holder, which will include the debit card. Investment opportunities for ADP HSA account.

HSA – Tax Issues HSA Provider (Administered by ADP) ◦ Reporting for year-end taxes will be sent to the individual employee (account holder).  Form 1099-SA – Reporting all distributions from the HSA  Form 5498-SA – Reporting of contributions and transfers into the HSA Account Holder ◦ Individual responsibility:  Ensure total contributions do not exceed allowable maximums  Keep accurate records of contributions and withdrawals  Maintain receipts for all use of HSA dollars: purchases and bill payments  File form 8889 as part of income tax submission to the IRS

HSA – New Hires and Terminations New Hires (coming on board mid-year)  HSA seed money from MMH will be prorated.  Deductibles and out-of-pocket maximums are not prorated for new hires Leaving the plan:  Leave employment  Become covered through a spouse’s plan  HSA dollars are portable – they remain the account holder’s dollars to keep. The HSA is an individual account. The account holder may have different/additional account fees. The account holder can no longer contribute to the HSA (unless they are covered through an HSA qualified HDHP and remain eligible). The account holder can continue using HSA funds for qualified health care expenses of his/her qualified dependents. Additionally if age 65 or older funds can be used as retirement funds by paying income tax only with no penalties.

2014 Medical Plan (employee costs) MMHIn NetworkOut of Network Annual Limit Unlimited Deductible – Individual $1,250$1,750$3,250 Deductible – Family $2,500$3,500$6,500 Out of Pocket – Individual (Incl Ded) $6,350No Max Out of Pocket – Family (Incl Ded) $12,700No Max Office Visits n/a25% after ded45% after ded Preventive Office Visit n/a045% after ded Inpatient Hospital 0% after ded25% after ded45% after ded Outpatient Facility 0% after ded25% after ded45% after ded Emergency Room 0% after ded25% after ded Prescription Drugs MMHRetail Generic 10% after ded25% after dedn/a Brand 10% after ded25% after dedn/a Non-Formulary Brand 10% after ded25% after dedn/a Bariatric Coverage 50% of cost (excluded from deductable) n/a Aggregating family deductible: If you have family coverage, one or a group of members must meet the deductible before coinsurance applies.

2014 HDHP Premium (Bi-Weekly Full Time Rates) 2013 Basic Premiums (Bi-Weekly Full Time Rates)

2014 HDHP Premiums (Bi-Weekly Full Time Rates) 2013 Premium Premiums (Bi-Weekly Full Time Rates)

2014 HDHP Premiums (Bi-Weekly Part Time Rates)

MMH Financial Assistance Policy Policy allows for offset of a portion of patient liability if the annual household income is up to 350% of federal poverty limits (FPL). Catastrophic plan allows for assistance up to 500% FPL is out of pocket costs exceed 25% of annual income.

2014 Financial Assistance Guidelines %FPIL up to 100%101%-150%151%-200%201%-250%251%-300% 301%-350% Discount % 100%90%80%70%60%50% Family Size 1 $11,490$17,235$22,980$28,725$34,470$40,215 2 $15,510$23,265$31,020$38,775$46,530$54,285 3 $19,530$29,295$39,060$48,825$58,590$68,355 4 $23,550$35,325$47,100$58,875$70,650$82,425 5 $27,570$41,355$55,140$68,925$82,710$96,495 6 $31,590$47,385$63,180$78,975$94,770$110,565 7 $35,610$53,415$71,220$89,025$106,830$124,635 8 $39,630$59,445$79,260$99,075$118,890$138,705

Claim Examples

MEET LAURA  She’s a single PCA making $10/hour ($20,800/year)  If Laura enrolls herself in the HDHP: − Midland would contribute $500 in her HSA − She elects to contribute $300 in her HSA  Her plan design options are below: Basic 2013 HDHP 2014 Employee Only$553$672 Basic 2013 HDHP 2014 Deductible$1,000/$1,500$1,250/$1,750 Out of Pocket Maximum$4,000/$4,500$6,350 Office Visit Copays$30/$45Ded and coin Pharmacy Copays$10/30%/50%Ded and coin Assumes 2013 full time basic plan rates including non-tobacco and wellness discount Assumes HDHP full time rates including non-tobacco and wellness discount

Laura’s comparison of a light usage year of medical expenses Expense Basic 2013 HDHP 2014 Midland funds $500 into HSA Preventive Annual Physical (1) Routine Office Visits (2 at $100) Brand Name Prescription Drugs (2 at $160) Total Medical Expenses $0 $60 $160 $220 $0 $200 $320 $520 HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA payments = Total Employee Out-of-Pocket $553 $0 $220 $0 $773 $672 $300 $520 ($520) $972 Contributions Expenses Balance $800 $520 $280 HSA funds carryover each year Assumes 2013 rates are full time basic plan including non-tobacco and wellness discount Assumes HDHP full time rates including non-tobacco and wellness discount Assumes deductible has not been met on either plan year HSA Account Contributions are from MMH funds and the employee’s contribution Assumes RX are brand non formulary for 2013

Expense Basic 2013 HDHP 2014 Preventive Annual Physical (1) Lab Test (1 at $180) ER Visit (1 at $800) MMH Brand Name Prescription $160) Routine Office Visits (6 at $100) Total Medical Expenses $0 $180 $200 $240 $180 $800 $0 $180 **$800 *$291 $150 $1,421 Midland funds $500 into HSA HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA Payments = Total Employee Out-of-Pocket $553 $0 $800 $0 $1,353 $672 $300 $1,421 ($800) $1,593 Contributions Expenses Balance $800 $1,421 $0 Laura’s comparison of a medium usage year of medical expenses Assumes 2013 rates are full time basic plan including non-tobacco and wellness discount Assumes HDHP full time rates including non-tobacco and wellness discount Assumes deductible has not been met on 2013 plan year *Assumes RX claim hits deductible for 2014 Assumes RX are brand non formulary for 2013 **If Laura applies for Financial Assistance under the new MMH policy, her income level would qualify her for 90% discount on services at MMH, reducing this $980 total to $98 out of pocket.

Expense Basic 2013 HDHP 2014 Preventive Annual Physical (1) Routine Office Visits (4 at $100) Specialist Visits (4 at $200) Physical Therapy ($800) Lab Test (1 at $180) Hospital & Surgery ($10,000) MMH Brand Name Prescription Drugs $160) Total Medical Expense $0 $120 $180 $800 $180 *$20 $400 $1,700 $0 ^$400 ^$800 ^*$50 $0 $80 $1,330 Midland funds $500 into HSA HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA Payments = Total Employee Out-of-Pocket $553 $0 $1,700 $0 $2,253 $672 $300 $1,330 ($800) $1,502 Contributions Expenses Balance $800 $1,330 $0 Laura’s comparison of a high usage year of medical expenses Assumes 2013 rates are full time basic plan including non-tobacco and wellness discount Assumes HDHP full time rates including non-tobacco and wellness discount Assumes RX are brand non formulary for 2013 *Met 2013 deductable with Hospital & Surgery *Met 2014 deductable with PT ^ Balance of annual deductable. Financial assistance would reduce this to $85 out of pocket, and annual deductible would still be satisfied.

MEET THE MICHAEL SMITH FAMILY  He’s a nurse with a wife and 2 kids. He makes $30/hour ($62,400/year). His wife is self-employed and makes $15,000/year  If Michael enrolls his family in the HDHP: − Midland would contribute $250 in his HSA − He elects to contribute $600 in his HSA  His plan design options are below: Premium 2013 HDHP Family$4,527$2,315 Premium 2013 HDHP Family Deductible$1,000/$1,500$2,500/$3,500 Out of Pocket Maximum$4,000/$4,500$12,700 Office Visit Copays$20/$35Ded and coin Pharmacy Copays$8/20%/40%Ded and coin

Expense Premium 2013 HDHP 2014 Preventive Annual Physicals (2) Routine Office Visits (2 at $100) Brand Name Prescription Drugs $160) Total Medical Expenses $0 $40 $128 $168 $0 $200 $320 $520 Midland funds $250 into HSA HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA Payments = Total Employee Out-of-Pocket $4,527 $0 $168 $0 $4,695 $2,315 $600 $520 ($520) $2,915 Contributions Expenses Balance $850 $520 $330 Michael’s comparison of a light usage year of medical expenses HSA funds carryover each year Assumes 2013 rates are full time premium plan including non-tobacco and wellness discount Assumes HDHP full time rates including non-tobacco and wellness discount Assumes deductible has not been met on either plan year

Expense Premium 2013 HDHP 2014 Preventive Annual Physicals (2) Lab Test (1 at $180) ER Visit (1 at $800) Routine Office Visits (6 at $100) Brand Name Prescription Drugs $160) Total Medical Expenses $0 $180 $150 $120 $192 $642 $0 **$180 **$800 $600 $480 $2,060 Midland funds $250 into HSA HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA Payments = Total Employee Out-of-Pocket $4,527 $0 $642 $0 $5,169 $2,315 $600 $2,060 ($850) $4,125 Contributions Expenses Balance $850 $2,060 $0 Michael’s comparison of medium usage year of medical expenses Assumes 2013 rates are full time premium plan including non-tobacco and wellness discount Assumes HDHP rates including non-tobacco and wellness discount Assumes deductible has not been met on either plan year **If Michael applies for the Financial Assistance under the new MMH policy, his family income level would qualify him for 60% discount on services at MMH, reducing this $980 total to $392 out of pocket

Expense Premium 2013 HDHP 2014 Preventive Annual Physicals (2) Routine Office Visits (4 at $100) Specialist Visits (4 at $200) Physical Therapy ($800) Lab Test (1 at $180) Hospital & Surgery ($10,000) MMH Brand Name Prescription Drugs Total Medical Expense $0 $80 $140 *$545 *$27 *$0 $320 $1,112 $0 $400 $800 **$800 **$180 ** ^ $320 ^ $80 $2,580 Midland funds $250 into HSA HSA Account Employee Premiums + Employee HSA Contributions + Medical Expenses - HSA Payments = Total Employee Out-of-Pocket $4,527 $0 $1,112 $0 $5,639 $2,315 $600 $2,580 ($850) 4,645 Contributions Expenses Balance $850 $2,580 $0 Michael’s comparison of a high usage year of medical expenses *met 2013 deductible after PT ^Assumes $2500 MMH deductible is met ** If Michael applied for financial assistance, his financial responsibility would only be 40% of the $1,300. He would only pay $520. Assumes 2013 rates are full time premium plan including non-tobacco and wellness discount Assumes HDHP rates including non-tobacco and wellness discount Assumes deductible has not been met on either plan year

HANDOUTS List of Preventive RX Covered at 100% Q and A