Association January 7, 2016 What’s on the Horizon for State Employee Benefits?

Legislative Updates 2

HB 1 State contribution: 9.5%, up from 7.5%; continued agency contribution: 0.5% HB 9 Employee contribution: 9.5%, up from 6.9%  Offset by 2.5% pay increase Elimination of 90-day waiting period for new employees Retirement Contribution increases for better financial health Changes achieve near actuarial soundness with no additional reduction in benefits. 3

4 ERS Retirement Trust Fund Projections FY14 to FY63

HB 1 Full funding for insurance programs in FY16-17  Increase in Plan Year 2016 premiums, to offset rising health costs  No plan design changes Health Insurance Full funding 5

HB 3307 TRICARE supplemental plan, available now through Discount Purchase Program  Not administered by ERS HB 966 Consumer-directed health plan, available Sept. 1, 2016  Optional alternative to HealthSelect of Texas and HMOs  Lower premium  Much higher deductibles  Education campaign on the way Health Insurance More choice 6

Consumer-Directed Health Plan (CDHP) Two Components Consumer-Directed Health Plan More member responsibility 7 High-deductible Health Plan (HDHP) High deductible Possibly lower premium contributions  Still paid 100% / 50% by the state Preventive services paid at 100%  Not including Rx PPO plan administered by UnitedHealthcare in PY17 In-network benefits Health Savings Account (HSA) Funds for eligible health expenses only  Including dental and vision Tax benefits Investment options for some Contribute only when enrolled in HDHP Portable State contribution Administrator TBD

Federal Mandates 8

ACA Health Coverage Reporting Forms 1095-B and 1095-C 9 Form 1095-B: verification of member’s medical coverage ERS communicating with members about form and reporting Non-MA health plans mailing forms by January 31 Members report information on 2015 tax filings Form 1095-C: verification of employer’s offer of medical coverage Employers are responsible for Form 1095-C Employers can designate ERS as Designated Governmental Entity (DGE) for reporting one part; ERS reports this part on Form 1095-B, Part IV

Other Updates 10

Qualified transportation fringe benefit, regulated by IRS Two types of pre-tax accounts  Parking, at/near work/transit for qualified transit or vanpool ­ $15 - $250 monthly, debit card or claims filing  Transit, for eligible mass transit (bus, train, subway) or vanpool expenses ­ $15 - $130 monthly, debit card only Enrollment began January 1, 2016 Month-to-month benefit Administered by ADP Commuter Spending Accounts (CSAs) Tax savings on qualified commuting expenses 11

Bid for providers underway Expect to offer it Sept. 1, 2016 (enrollment this summer)  Until then, discounts available through HealthSelect of Texas and HumanaDental plans Vision Insurance Frequently requested by members 12

ERS supports the state workforce by offering competitive benefits at a reasonable cost. 13