1. OPERS Health Care Plan

2. OPERS serves more than ½ million Ohio public employees and benefit recipients OPERS serves more than ½ million Ohio public employees and benefit recipients 10 th largest state pension system in the U.S., 17 th largest in the world 10 th largest state pension system in the U.S., 17 th largest in the world We strive to minimize cost increases for members, retirees and employers We strive to minimize cost increases for members, retirees and employers Our health care plan allows for maximum flexibility for adjustment if conditions become more favorable Our health care plan allows for maximum flexibility for adjustment if conditions become more favorable OPERS

3. The Health Care Challenge Double digit health care inflation Baby Boomers – retiree population will double in 20 years Workers are retiring younger and living longer

4. Dual-vendor PPO, HMOsDual-vendor PPO, HMOs Co-pays that encourage use of network providersCo-pays that encourage use of network providers Exclude or limit services based on necessityExclude or limit services based on necessity Plan design encourages generics, use of mail order pharmacyPlan design encourages generics, use of mail order pharmacy Prior authorization as appropriatePrior authorization as appropriate Formulary incentivesFormulary incentives Actively managing costs Medical Rx

5. Key Points Key Points Employees with less service will pay more for health care than those with more serviceEmployees with less service will pay more for health care than those with more service Those who are retired or near retirement will be less affectedThose who are retired or near retirement will be less affected by plan changes because they have fewer years to plan and save by plan changes because they have fewer years to plan and save Changes will be phased in over 5 yearsChanges will be phased in over 5 years Plan participants may share cost of health care inflationPlan participants may share cost of health care inflation OPERS Health Care Plan will be offering various levels of coverage and cost to retirees and benefit recipients beginning January 2007OPERS Health Care Plan will be offering various levels of coverage and cost to retirees and benefit recipients beginning January 2007

6. Health Care Plan Options Coming in 2007 A monthly health care allowance from OPERS based on a retiree’s length of service from 10 to 30 years A monthly health care allowance from OPERS based on a retiree’s length of service from 10 to 30 years Benefit recipient is able to use the allowance to select health plan coverage, choosing from a cafeteria- style plan Benefit recipient is able to use the allowance to select health plan coverage, choosing from a cafeteria- style plan

7. Group One Current retirees and those near retirement (eligible to retire with health care coverage by January 1, 2007) Group Two Future retirees (eligible to retire after January 1, 2007) Group Three Future/Recent Hires (Hired after January 1, 2003) The Groups

8. Group One Current retirees and those near retirement Current retirees and those near retirement (eligible to retire with health care coverage by January 1, 2007) Receive 100% allowance Receive 100% allowance Spouse receive 75 – 90% of retiree allowance Spouse receive 75 – 90% of retiree allowance Spouse premium increase is phased in over 5 years (20% per year) Spouse premium increase is phased in over 5 years (20% per year) Effective January 1, 2007 Effective January 1, 2007

9. Group Two Future retirees (eligible to retire with health care coverage after January 1, 2007) receive graded allowance based on years of service: 50% allowance with 10 to 15 years of service 50% allowance with 10 to 15 years of service 100% allowance with 30 years of service 100% allowance with 30 years of service Spouse receive 50 – 90% of retiree allowance depending on years of service Spouse receive 50 – 90% of retiree allowance depending on years of service Effective January 1, 2007 Effective January 1, 2007

10. Group Two Graduated effective dates Graduated approach applies: If first eligible for retirement with health care between 01/01/2007 and 12/31/2010. This calculation basis locks in, e.g., if you are first eligible in 2008, your allowance is based on the 2008 chart regardless of when you actually retire!

11. Groups One & Two! It makes NO difference when you actually retire! What matters is… “When are you first eligible to retire?” “When are you first eligible to retire?”

12. Group Three Recent/Future Hires (Hired January 1, 2003 and after) (Hired January 1, 2003 and after) 25% allowance with 10 to 15 years 25% allowance with 10 to 15 years 100% allowance with 30 years 100% allowance with 30 years Spouse receives 50-65% of retiree allowance depending on years of service Spouse receives 50-65% of retiree allowance depending on years of service Effective January 1, 2007 Effective January 1, 2007

13. Health Care Plan Structure Our Enhanced plan, same as the current health care plan The Intermediate plan, priced at 80% of the Enhanced plan The Basic plan, priced at 60% of the Enhanced plan

14. Health Care Plan Features Any excess goes into a Retiree Medical Account (RMA)Any excess goes into a Retiree Medical Account (RMA) - Can be used for additional/future health care expenditures - Can be rolled over from year to year If the selected options exceed the monthly allowance, the benefit recipient pays the differenceIf the selected options exceed the monthly allowance, the benefit recipient pays the difference In subsequent years, monthly allowance will increase by wage inflation. Excess health care inflation up to 5% may be the member’s responsibilityIn subsequent years, monthly allowance will increase by wage inflation. Excess health care inflation up to 5% may be the member’s responsibility

15. $3,000 / $6,000$2,000 / $4,000$1,500 Out-of-Pocket Max 65%-Generic/Form Brand 50% - Non-Form Brand N/A Coinsurance $500 / $1,000N/A Deductible N/A$30 / $70 / $100$10 / $20 / $50 Mail Order Copay N/A$15 / $35 / $50$5 / $10 / $25 Retail Copay Prescription Drug In - $5,000 / $10,000 Out - $10,000 / $20,000 In - $3,000 / $6,000 Out - $6,000 / $12,000 In - $750 / $1,500 Out - $1,500 / $3,000 Out-of-Pocket Max In – 70% (after deductible) Out – 50%(after deductible) In – 80% (after deductible) Out – 60% (after deductible ) In – 80% (after deductible) Out – 60% (after deductible) Coinsurance N/AOV - $25OV - $15; ER - $75 Copay In - $2,000 / $4,000 Out - $4,000 / $8,000 In - $750 / $1,500 Out - $1,500 / $3,000 In - $150 / $300 Out - $200 / $400 Deductible Medical Enhanced Plan (same as current plan) Intermediate PlanBasic Plan Enhanced Plan (same as current plan) Intermediate PlanBasic Plan Plan Design Non-Medicare

16. Plan Design with Medicare N/A $1,500 / $3,000$1,000 / $2,000$750 / $1,500Out-of-Pocket Max 80% (after deductible) 80% (after deductible) 80% (after deductible ) Coinsurance N/A Copay $900 / $1,800$400 / $800$150 / $300Deductible Medical Enhanced Plan (same as current plan) Intermediate PlanBasic Plan $3,000 / $6,000$2,000 / $4,000$1,500Out-of-Pocket Max 65% - Generic/Form Brand 50% - Non-Form Brand N/A Coinsurance $500 / $1,000 N/A Deductible N/A $30 / $70 / $100$10 / $20 / $50Mail Order Copay $15 / $35 / $50$5 / $10 / $25Retail Copay Prescription Drug Enhanced Plan (same as current plan) Intermediate PlanBasic Plan

17. Example Assuming - Group One Under 65, assumed plan cost is $800/month, 10 years service Benefit recipient – 100% of the cost of the enhanced plan in 2007 (or the year you actually retire after 2007) With $800 allowance, can choose from: With $800 allowance, can choose from: Enhanced Plan - $800 Enhanced Plan - $800 Intermediate Plan - $640 Intermediate Plan - $640 Basic Plan - $480 Basic Plan - $480

18. Dependent’s allowance - Based on length of service, 75% of the benefit recipient’s amount Assuming allowance is $600: ( $800 x 75%) Enhanced Plan - $800 Enhanced Plan - $800 Intermediate Plan - $640 Intermediate Plan - $640 Basic Plan - $480 Basic Plan - $480 Example Assuming - Group One Under 65, assumed plan cost is $800/month, 10 years service

19. Calculating your benefit - Group One Assuming Intermediate Plan Selected Health Care Allowance for Member $800.00 Cost to Member for Intermediate Plan $640.00 Excess $160.00 Health Care Allowance Spouse $600.00 Cost for Spouse in Intermediate Plan $640.00 Monthly Cost to member -$ 40.00 Monthly Cost to member -$ 40.00 Balance to RMA $120.00

20. Additional Considerations Income-based Discount Program (30% premium reduction)Income-based Discount Program (30% premium reduction) Treatment of dual OPERS householdsTreatment of dual OPERS households Purchasable service creditPurchasable service credit Disability & Survivor recipients will receive monthly allowance based on years of service, with 10 year level as a “floor”Disability & Survivor recipients will receive monthly allowance based on years of service, with 10 year level as a “floor” Dependent(s) allowance/premiums determined by number of eligible childrenDependent(s) allowance/premiums determined by number of eligible children

21. Points to Remember Changes will be phased in over 5 yearsChanges will be phased in over 5 years Both the allowance and the cost of the medical plans change proportionately when the retiree becomes Medicare eligibleBoth the allowance and the cost of the medical plans change proportionately when the retiree becomes Medicare eligible Group is determined by the year in which one is first eligible to retire with health careGroup is determined by the year in which one is first eligible to retire with health care It does not matter when you actually retire! It does not matter when you actually retire!

23. OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM Office Hours 7:30 – 4:30 Weekdays 277 E. Town Street Member Services Center 7:30 – 5:00 Weekdays 1-800-222-7377 Columbus, Ohio 43215 www.opers.org healthcare@opers.org