1. Board and Employee Insurance Advisory Committee Meeting 2015 - 2016 July 29, 2015

2. Health Plus Observations and Recommendations – Plan Cost 2016  Health Plus Observations  L PSS Medical Trend Less than 3% for 2015  LPSS RX Trend 20%+ for 2015  LPSS Total Medical Trend including RX 8.95% for 2016  Blue Cross administrative fee will remain the same for 2016  Health Plus Recommendations  Additional 4.2% in Premium or Benefit Reductions 2

3. LPSS Accrual Rate Development Through February 2015 Current Year Paid Claims $42,078,717 Annual Trend Assumption 8.95% Specific Threshold $500,000 PPO and TPA fees$2,199,671 Stop-Loss-Premium $8.99/employee$575,431 PCORI Fee ($2.08 pmpy)$18,949 PPACA Reinsurance Fee ($27 pmpy)$245,970 Total Expenses$3,040,021 Less Estimated RDS Recovery$915,758 Less Estimated Rx Rebates$697,314 Net Total Annual Expenses $1,426,949 3

4. LPSS Recommended 1-1-2016 Change in Medical Plan Accrual Rates Prior YearCurrent Year Indicated Meld of Indicated Health Plus Recommended Overall Weighting +5.5% 25% +3.7% 75% +4.2% Enrollment Average for 2008 Current Rate Recommended July 1, 2011 Rate Current Annual Premium Recommended Annual Premium Single Family Total Change in Premium Percentage Change 3,044 2,289 5,333 $568.58 $1,049.93 $592.26 $1,093.66 $49,608,241$51,674,382 $2,066,140 +4.2% 4

5. Health Plus Observations and Recommendations – Medical Plans  Health Plus Observations  Enhanced Plan and Basic Plan lack sufficient premium spread of 15% to 20%  No true low cost option for LPSS employees  Health Plus Recommendations  Increase deductible by $250, out of pocket max by $600 and copays for specialist by $10 on Enhanced Plan  No premium increase on Enhanced Plan  Eliminate the current Basic Plan and add a Basic Plan with a PCP copay as the new Basic Plan with reduced premium.  Increase deductible for employee/dependent for the High Deductible Health Plan. No premium increase on High Deductible Health Plan. 5

6. 2016 Enhanced PPO Alternate Benefit Option Enhanced PPOCurrentAlternate Deductible Individual Family In-Patient Hospital $800 $2,400 Deductible + 20% $1,050 $3,150 Deductible + 20% Coinsurance In-network Out-of-Network 80% 60% 80% 60% Physician Copay Quality Blue Primary Specialist Copay $40 N/A $40 $25 $50 Out-of-Pocket Max (Medical & RX Combined ) Individual Family $3,400 $4,500 $4,000 $9,000 *Differential from Current Plan: 0.9780 *$250 deductible credit for Wellness participation *Out of pocket maximum includes deductible 6

7. LPSS 2016 – Enhanced Plan Premium Enhanced Plan CurrentEffective January 1, 2016 Board Portion of Increase Employee Portion of Increase Employee Current Monthly Employee Total January 1, 2016 Active $738.00 $0.00 $211.00 Active + 1 $1198.00 $0.00 $496.00 Active + Family $1564.00 $0.00 $724.00 7

8. 2016 Basic Alternate Benefit Option BASIC – PCP Copay Current Basic Alternate PCP Copay Deductible Individual Family In-Patient Hospital $950 $2,850 Deductible + 20% $3,500 $7,000 Deductible + 30% Coinsurance In-network Out-of-Network 80% 60% 70% 50% Physician Copay Quality Blue Primary Specialist Copay Deductible + 20% N/A Deductible + 20% $40 $25 Deductible + 30% Out-of-Pocket Max (Medical & RX Combined) Individual Family $4,000 $4,500 $6,500 $13,000 *Differential from Current Plan: 0.8449 *$250 Deductible credit for Wellness participation *Out of pocket Maximum includes deductible 8

9. LPSS 2016 – Basic PPO-PCP Copay Premium Basic PPO-PCP Copay Plan Current Basic Plan Effective January 1, 2016 Board Portion of Decrease Employee Portion of Decrease Employee Current Monthly Employee Total January 1, 2016 Active $651.00$553.00-$47.00-$51.00$149.00$98.00 Active + 1 $1087.00$923.00-$82.00 $409.00$327.00 Active + Family $1425.00$1211.00-$107.00 $608.00$501.00 9

10. 2016 Blue Saver (HDHP) Benefit Option Blue Saver High Deductible CurrentAlternate Deductible Individual Family In-Patient Hospital $2,500 $5,050 Deductible + 20% $3,000 $6,000 Deductible + 20% Coinsurance In-network Out-of-Network 80% 60% 80% 60% Physician Copay Specialist Copay Deductible + 20% Out-of-Pocket Max (Medical & RX Combined) Individual Family $5,000 $10,050 $6,000 $12,000 *Differential from Current Plan: 0.980 *$250 Deductible credit for Wellness participation *ACA requires Embedded deductible for 2016 10

11. LPSS 2016 – High Deductible Premium High Deductible Health Plan CurrentEffective January 1, 2016 Board Portion of Increase Employee Portion of Increase Employee Current Monthly Employee Total January 1, 2016 Active$353.00 $0 $9.00 Active + 1$590.00 $0 $124.00 Active + Family $722.00 $0 $213.00 11

12. Health Plus Observations and Recommendations - RX  Health Plus Observations  RX Trending at 20% + for 2016  RX Specialty Trend 30%+ for 2016  RX Plan design lacks percentage of cost copay on specialty medications – Tier 4  PBM repricing – CVS and ESI/BC repriced 94,558 claims resulting in a savings with ESI/BC of $946,840 annually  Health Plus Recommendations  Move PBM claims processing to ESI/BC effective January 1, 2016  Increase copay for Tier 2 and Tier 3 prescriptions  Add percentage of cost copay for Tier 4 specialty medications  All plans will have common out of pocket for medical and RX 12

13. LPSS PBM Repricing  CVS and ESI/BC Repriced 94,558 LPSS RX claims from 7/1/2014 through 12/31/2014 CVS ProposedESI Proposed RX Count$94,517$94,558 Ingredient Cost$7,055,307$6,724,664 Dispensing Fee$76,199$108,344 Current Gross Cost$8,436,340N/A Gross Cost$7,131,506$6,833,008 Rebates$783,427$958,349 Net Plan Cost$6,348,079$5,874,659 Semi-Annual Difference$473,420 Annual Difference$946,840 13

14. LPSS 2016 – RX Benefit Changes Enhanced and Basic Plans 2015 Current RX Benefits2016 Proposed RX Benefits Tier 1$10Tier 1$10 Tier 2$25Tier 2$30 Tier 3$50Tier 3$60 Tier 4N/ATier 410% Coinsurance Out of Pocket RX Max N/AOut of Pocket Max Same as medical plan 14

15. Health Plus Observations and Recommendations - Retirees  Medicare Eligible Individuals (MEIs)  Health Plus Observations  LPSS current MEI total premium $367.01. Anticipated 2016 MEI total cost $524.28.  LPSS subsidizes each Blue Cross MEI $237.44 per person compared to the current Humana Medicare Advantage Plan  Current Blue Cross ASO Plan coordinates with MEIs to $0 copay, $0 deductible and $0 out of pocket maximum. RX copays apply  Health Plus Recommendations  Increase Premium on Blue Cross ASO plan for MEIs  Blue Cross ASO plan – keep current coordination at $0 copay and $0 deductible  Humana Advantage plan (Passive PPO) – $0 physician copay and $0 hospital inpatient copay  Add third offering to all MEIs - Humana Advantage HMO with $0 Physician copay and $0 hospital inpatient copay. 15

16. LPSS 2014-2016 MEI Medical and RX Cost Analysis 2014 Avg. MEI Monthly Cost 2015 Estimated MEI Cost Monthly Cost 2016 Estimated MEI Monthly Cost Administration$33.05 Stop Loss$8.99$9.71$10.49 Medical Claims$193.43$201.17$209.21 Rx Claims$228.04$262.25$301.59 PCORI and PPACA Reinsurance Fees$4.83 Total Cost$468.34$511.01$559.17 Less RDS$34.89 Net Total Cost$433.45$476.12$524.28 Humana MA Premium$285.84$286.84$333.84 Net Monthly Savings PMPM$147.61$189.28$190.44 Net Annual Savings PMPM$1,771.38$2,271.34$3,201.23 16

17. LPSS – 2016 Retiree Savings Estimate Blue Cross vs. Humana HMO Avg. # of MEI in 2014 – 1638 Monthly Savings per MEI - $231.88 % Migrating to HMA Total Annual SavingsLPSS Annual SavingsMembers Annual Savings 20%328$912,680$638,876$273,804 30%491$1,366,237$956,366$409,871 40%655$1,822,577$1,275,804$546,773 50%819$2,278,917$1,595,242$683,675 60%983$2,735,256$1,914,680$820,577 70%1147$3,191,596$2,234,117$957,479 80%1310$3,645,154$2,551,608$1,093,546 90%1474$4,101,493$2,871,045$1,230,448 100%1638$4,557,833$3,190,483$1,367,350 17

18. LPSS – 2016 Retiree Savings Estimate Blue Cross vs. Humana PPO Avg. # of MEI in 2014 – 1638 Monthly Savings per MEI - $190.44 % Migrating to HMA Total Annual SavingsLPSS Annual SavingsMembers Annual Savings 20%328$749,572$524,700$224,812 30%491$1,122,072$785,451$336,622 40%655$1,496,858$1,047,801$449,058 50%819$1,871,644$1,310,151$561,493 60%983$2,246,430$1,572,501$673,929 70%1147$2,621,216$1,834,851$786,365 80%1310$2,993,717$2,095,602$898,115 90%1474$3,368,503$2,357,952$1,010,551 100%1638$3,743,289$2,620,302$1,122,987 18

19. 2016 MEI Retiree Benefit Option Blue Cross ASO – MEIs Deductible – Individual$0 Maximum Out of Pocket$2,500 combined Physician Services PCP$0 copayment Specialist$0 copayment Hospital Services Inpatient Acute Hospital$0 per admission Emergency Room$0 copayment Urgent Care$0 copayment Ambulance Service$0 copayment Other Services DME0% Pharmacy$10/$30/$60/10% 19

20. 2016 MEI Retiree Benefit Option Humana Advantage Passive PPO - $333.84 CurrentRenewal Deductible – Individual$0 Maximum Out of Pocket$1,000 combined Physician Services PCP$0 copayment Specialist$0 copayment Hospital Services Inpatient Acute Hospital$0 per admission Emergency Room$0 copayment Urgent Care$0 copayment Ambulance Service$0 copayment Other Services DME0% Pharmacy$10/$20/$40/$50 from $0 to catastrophic, 5% with max of $50 in catastrophic Custom RX $2,500 MOOP $10/$30/$60/$10% from $0 to catastrophic 20

21. 2016 MEI Retiree Benefit Option Humana Advantage HMO - $292.40 In-Network Deductible – Individual$0 Maximum Out of Pocket$1,000 combined Physician Services PCP$0 copayment Specialist$0 copayment Hospital Services Inpatient Acute Hospital$0 per admission Emergency Room$0 copayment Urgent Care$0 copayment Ambulance Service$0 copayment Other Services DME0% Pharmacy$10/$20/$40/$50 from $0 to catastrophic, 5% with max of $50 in catastrophic 21

22. LPSS 2016 – MEI Retiree Premium Current Effective January 1, 2016 Board Portion of Increase Retiree Portion of Increase Retiree Current Monthly Employee Total January 1, 2016 BC ASO Basic $367.00$524.28$78.00 $87.00$165.00 Humana PPO Passive $268.00$333.84$16.84$49.00$0$49.00 Humana HMO N/A$292.40N/A $0 22