CITY OF HOMER COUNCIL MEETING August 4, 2014 Presented by: Jeff Paxton Principal & Senior Consultant

MERCER City of Homer Discussion Topics Benefit Plan Financial Performance Effect of January 2014 Plan Changes ACA Excise Tax Benefit Plan Benchmark Comparison Fully Insured Marketing Status

MERCER Benefit Plan Financial Performance

MERCER Benefit Plan Financial Performance

MERCER Benefit Plan Financial Performance Expenses through June Expenses through May

MERCER Benefit Plan Financial Performance

MERCER Effect of January 2014 Plan Changes Enrollment Migration Analysis As of December 2013As of May 2014 Change in Distribution Total Employee Only23Employee Only31 8 EE + Spouse24EE + Spouse16 (8) EE + Child2 2 0 EE + Children2 6 4 EE + Sp + Child13EE + Sp + Child7 (6) EE + Sp + Children33EE + Sp + Children22 (11) Total97Total84 (13)

MERCER Effect of January 2014 Plan Changes FINANCIAL CHANGES through June 2014  7.3% reduction in Stop Loss premium payments.  16.6% reduction in Health Plan administration costs.  3.4% increase in total fixed costs (employees waiving coverage).  16.7% reduction in claim costs.  12.7% reduction in total expenses.  4.7% increase cost per employee per month.

MERCER 2018 ACA Excise Tax

2013 NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS CITY OF HOMER August 2014

MERCER About the Survey Employers Number of participants City of Homer1 City < Employees315 National All2842 The employer groups shown in this presentation are:

MERCER Demographics City of HomerCity < EmployeesNational All Average employee age % of female employees33%31%47%43%

MERCER *Total health cost includes medical, dental, Rx and specialty benefits Average total health benefit cost* per employee

MERCER Employee contribution for individual coverage Average monthly contribution ($) City of HomerCity < EmployeesNational All PPO / POS Buy-up - $89.53 Core - $79.99 $120$124$143 HMO$0$111$151$169 HSA-eligible CDHP$0$43$72$76 HRA-based CDHP$0$45ID Dental$5.01$22$23$30

MERCER Employee contribution for individual coverage Average contribution as a % of premium City of HomerCity < EmployeesNational All PPO / POS Buy-up - 11% Core - 12% 14%24%30% HMO0%23%32%33% HSA-eligible CDHP0%25%21%23% HRA-based CDHP0%8%ID Dental15%55%64%68%

MERCER Employee contribution for family coverage* Average monthly contribution ($) *Family coverage is defined as coverage for employee, spouse and two children City of HomerCity < EmployeesNational All PPO / POS Buy-up - $ Core - $ $340$545$540 HMO$0$352$549$584 HSA-eligible CDHP$0$171$318$422 HRA-based CDHP$0$217ID Dental$25$58$68$72

MERCER Employee contribution for family coverage* Average contribution as a % of premium *Family coverage is defined as coverage for employee, spouse and two children City of HomerCity < EmployeesNational All PPO / POS Buy-up - 18% Core - 10% 33%52%56% HMO0%28%48%49% HSA-eligible CDHP0%19%34%42% HRA-based CDHP0%19%ID Dental21%60%70%73%

MERCER City of Homer 2013 City of Homer 2014City < EmployeesNational All Average % of employees waiving own coverage 0%20%8%20%22% % of employers offering incentive to waive coverage NoYes42%11% Coverage waivers

MERCER City of Homer 2013 City of Homer 2014City < EmployeesNational All % of employees electing dependent coverage 73%62%58%45%53% Make spouses ineligible for coverage if other coverage is available No 6%9%4% Surcharge applies for spouses with other coverage available NoYes0%2%1% Dependent coverage

MERCER In-networkCity of HomerCity < EmployeesNational All Deductible required (% of employers) Yes87%93%91% Median individual deductible amount Buy-up - $400 Core - $1,500 $750$1,000$1,500 Median family deductible amount Buy-up - $1,200 Core - $4,500 $1,500$3,000 PPO / POS deductibles

MERCER City of HomerCity < EmployeesNational All Median copay amount Buy-up - $30 Core - $35 $20$25 PPO / POS in-network primary care physician (PCP) visit cost-sharing PPO / POS emergency room visit cost-sharing City of HomerCity < EmployeesNational All Median emergency room copay amount Buy-up - $100 Core - $150 $100$150$100

MERCER Individual OOP maximumCity of HomerCity < EmployeesNational All Median for in-network services Buy-up - $2,400 Core - $4,500 $2,000$3,000 PPO / POS out-of-pocket (OOP) maximums* Family OOP maximum Median for in-network services Buy-up - $7,200 Core - $12,500 $4,000$6,000 *Includes deductible

MERCER RetailCity of HomerCity < EmployeesNational All Generic Buy-up - $10 Core -$25 $9$12 Brand-name formulary Buy-up - $20 Core -$50 $24$33$32 Brand-name non-formulary Buy-up - $30 Core -$75 $47$56$54 Copayments in prescription drug plans Average copayment among employers with three payment levels

MERCER Average cost of dental coverage, per employee

MERCER 2015 Fully Insured Marketing Status