Services provided by Mercer Health & Benefits LLC Public Safety Employees Association Health and Welfare Trust April 2009 Wes Yoder, Trust Consultant

1 Mercer General Information  Sponsored by the Public Safety Employees Association of Alaska (PSEA)  Governed by a Board of Trustees elected by PSEA members participating in the Trust  Current participants include: – Alaska State Troopers – Airport Police and Fire Officers – Juneau Police Department – Fairbanks Police and Fire Departments  Trust website:  Health benefits purchased through Premera Blue Cross Blue Shield of Alaska  Trust administered by Labor Trust Services, Anchorage, AK

2 Mercer Eligibility and Benefits  To be eligible for benefits, an employee must: – Be a regular and active employee of an employer participating in the Trust – Regularly work a minimum of 25 hours per week if salaried or 20 hours per week if part-time – Have the required contribution made by their employer and received by the Trust  Eligibility is on a family basis. All eligible dependents are covered when the employee becomes eligible  Eligible dependents include: – Legal spouse or same-sex domestic partner – Natural or adopted children under age 25 who are unmarried and primarily dependent upon the employee for support

3 Mercer Eligibility and Benefits  Medical, prescription drug, dental and vision benefits provided by Premera Blue Cross Blue Shield of Alaska  Business travel accident insurance provided through CIGNA  Death benefit provided by the Trust

4 Mercer Benefit Summary

5 Mercer Benefit Summary

6 Mercer Benefit Summary

7 Mercer Trust Funding and Administration  Trust is funded by employer and member (participant) contributions.  Total required contribution rate established each July by the Board of Trustees.  Current required monthly contribution rate (effective July 1, 2008) is $1,117 per participant per month.  Total contributions remitted monthly by each employer to the Trust administrator, Labor Trust Services, Inc. (LTS).  LTS forwards eligibility and premiums to insurers and provides COBRA administration for the Trust.

8 Mercer Historical Expenses  Over the last five years, Trust expenses have increased 10% annually.  Currently over 97% of expenses are used for purchasing benefits, with less than 3% of expenses attributed to Trust operations.

9 Mercer Historical Income vs. Expenses  Over the last several years, expenses have outpaced income.  For the current policy period (July 2008 – June 2009) the Trust is expected to deficit spend approximately $350,000 ($47 per participant per month).

10 Mercer Historical Assets  Net assets available for benefits have declined. As of November 30, 2008, the Trust had approximately $2.4 million in net assets. This represents approximately 3.4 months of current projected expenses.

11 Mercer Historical Claims Utilization  Claims have increased significantly during the current contract period.  The Trust is 100% experience rated. Each year Premera sets the Trust’s premium rates based on the Trust’s own historical utilization hc&gb\pseawa\reports\2009\trust report

12 Mercer Projection for July 2009 – June 2010 Contract Period  Based on projected premium increases at July 1, 2009, a significant deficit is projected for the upcoming contract period (approximately $217 PPPM).  The projected deficit will need to be offset by the following: – Increases in employer contributions (varies by employer) – Increases in participant contributions – Benefit changes to reduce premium costs

13 Mercer Options  The Trustees value your input  Each year the Trustees have to balance the cost of benefits with the available contributions.  If benefits remain at current levels, significant increases in participant contributions will be required.  Increases in participant contributions can be lessened with benefit changes. Examples include: – $300 deductible/80% coverage/$2000 OOP max ~ $40 per month – $500 deductible/70% coverage/$3000 OOP max ~ $100 per month – Rx - $8 generic copay/20% brand copay ~ $6.50 per month  The Trustees will continue to review strategies to control costs over the long term.

14 Mercer What Can You Do?  Being a smart health care consumer can help lower costs.  Use generic prescriptions when possible – Currently 65% of prescriptions received by Trust participants are generic. – On average, brand name drugs can cost three to five times more than generic drugs. – If you are currently taking a brand name drug, ask your doctor or pharmacist if there is a generic drug that would work.  Use a Premera preferred provider when available – Preferred providers have agreed to discounted fees as payment in full for their services. – Preferred providers cannot balance bill you for amounts above the agreed upon fee. – During 2008, medical preferred provider discounts for the Trust totaled $1.3 million (approximately $174 per participant per month).  Remember to update your enrollment data with the Trust office (LTS) whenever you have a change in dependent status (i.e. marriage, divorce, birth, child attaining age 25).

15 Mercer Other Information  Current PSEA Health and Welfare Trustees – Rob Cox – Alaska State Troopers, PSEA President – Chip Gallagher – Airport Police and Fire – Mo Hughes – Alaska State Troopers – Tim Schoenberg – Alaska State Troopers – David Wrightson – Juneau Police Department – Robert Thompson – Fairbanks Police Department  PSEA Trust Administrative Office (LTS) Contact Information P.O. Box Anchorage, AK C Street, Suite 107 Anchorage, AK Local: (907) Toll Free:  Premera Customer Service (Claims Questions)

16 Mercer Questions?

Services provided by Mercer Health & Benefits LLC