1. Board Meeting on 2005 Medical Plan East Baton Rouge Parish School System October 28, 2004 © 2004, Mercer Human Resource Consulting All rights reserved. This presentation and the materials presented herein contain confidential and proprietary information of Mercer Human Resource Consulting, Inc. The presentation and such materials have been prepared and are intended for the exclusive use of East Baton Rouge Parish School System. The presentation and such materials (including the format and the presentation thereof) may not be reproduced, modified, sold or otherwise transferred or provided, in whole or in part, to any other person or entity without the prior written permission of Mercer Human Resource Consulting.

2. 2 © 2004, Mercer Human Resource Consulting Executive Summary At Board workshop on October 20, the Board asked for: – More data on plan benchmarking, particularly for retirees – Less dramatic contribution changes for those retirees who may never be eligible for Medicare – Preventive care coverage details Proposed 2005 plan design changes are modest The 2006 plan year will require more robust changes to improve plan viability Requested Board actions: – Approve proposed 2005 plan designs – Approve proposed 2005 employee/retiree contributions – Authorize RFPs for disease management programs, outpatient mental health precertification

3. 3 © 2004, Mercer Human Resource Consulting Benchmarking Mercer used one of its actuarial tools, MedPrice, to value the State and area plans that were benchmarked – MedPrice values the key features of plan design—including copays, coinsurance, deductibles and out of pocket maximums MedPrice analysis provides a relative value of assessed plans versus the plan identified as the benchmark. – The EBRPSS core plan is used as the benchmark MedPrice analysis does not consider employee contributions

4. 4 © 2004, Mercer Human Resource Consulting Benchmarking Relative Value

5. 5 © 2004, Mercer Human Resource Consulting Benchmarking Employee Contributions

6. 6 © 2004, Mercer Human Resource Consulting Retiree Plan Structure The districts Mercer used for benchmarking the EBRPSS plans have the same plan design for retirees and actives, just as EBRPSS does There is a wide variation in what surrounding districts require their retirees to pay – Terrebonne Parish (Houma) uses a tiered approach, based on service – The contributions required for OGB state coverage is about 20% more, on average, than the proposed 2005 rates for EBRPSS

7. 7 © 2004, Mercer Human Resource Consulting 2005 Retiree Contributions Mercer analyzed two options for 2005 retiree contributions – Revising contributions for retirees without Medicare access – Determining if retirees can “buy into” Medicare, and at what cost The approximate cost for revising the costs for the “never Medicare” group (creating a fourth rate structure) is about $400,000 for 2005 Funding the payment required for this group to “buy in” to Medicare is a long-term commitment and much more costly – Would cost close to $1 million for 2005, with likely increasing costs each year going forward – In addition, EBRPSS would still be subsidizing this group through the “with Medicare” rate structure

8. 8 © 2004, Mercer Human Resource Consulting Retiree Structure Contributions

9. 9 © 2004, Mercer Human Resource Consulting Retiree Structure Contributions (cont’d)

10. 10 © 2004, Mercer Human Resource Consulting Preventive Care Benefits The Board expressed concern that the proposed 2005 structure for preventive care coverage might disincent participants from using this benefit Upon further investigation Mercer determined that the preventive benefit is currently adjudicated at 100% coverage after copayment It is recommended that this structure remain for 2005

11. 11 © 2004, Mercer Human Resource Consulting Plan Design Change Buy-up Plan

12. 12 © 2004, Mercer Human Resource Consulting Plan Design Change Core Plan

13. 13 © 2004, Mercer Human Resource Consulting 2005 Medical Plan Contributions (Includes Deficit Reduction) 1 Medicare eligible Retiree and Non-Medicare eligible spouse 2 Non-Medicare eligible Retiree and Medicare eligible spouse

14. 14 © 2004, Mercer Human Resource Consulting Contracts Benefits Management ServicesStarmount Southern NationalStandardSunLife* Louisiana Dental Plan United Behavioral Health**Medco Medical Plan AdministrationDental / Vision Flexible Spending Long-term DisabilityLifeEAPPharmacy Approved  Rejected Approve with revisions  * Based on plan administration revision **Revise termination language

15. Appendix

16. 16 © 2004, Mercer Human Resource Consulting 2005 Employee Rates 1 Medicare eligible Retiree and Non-Medicare eligible spouse 2 Non-Medicare eligible Retiree and Medicare eligible spouse

17. 17 © 2004, Mercer Human Resource Consulting 2005 Medical Plan Funding Rates (Includes Deficit Reduction) 1 Medicare eligible Retiree and Non-Medicare eligible spouse 2 Non-Medicare eligible Retiree and Medicare eligible spouse

18. 18 © 2004, Mercer Human Resource Consulting Medical Plan Enrollment 1 Medicare eligible Retiree and Non-Medicare eligible spouse 2 Non-Medicare eligible Retiree and Medicare eligible spouse

19. 19 © 2004, Mercer Human Resource Consulting Medical Plan Financial Projections (1000s)

20. 20 © 2004, Mercer Human Resource Consulting Medical Plan Financial Projections (1000s) Actual Projected 2003 2004 2005 Employee Contributions Current Year($12,677)($13,899)($15,314) Margin00(246) Deficit Recoup0(2,104)(2,057) Total Employee Contributions($12,677)($16,002)($17,617) Total Funding ($62,790)($71,354)($75,499) Medical Acct Deficit/(Surplus) (EOY) $13,037$8,229$4,115 EE Cost Share (Excl. Deficit Recoup) 20.2%21.6%21.8% Incurred Claim Cost PEPY$5,986$6,382$6,939

21. 21 © 2004, Mercer Human Resource Consulting Medical Insurance Fund Projected Deficit in 2005 Projected deficit at 12/31/2004$8.2 million Projected 2005 plan expense$71.3 million Total Funding($75.5 million) – From EBRPSS($57.9) million – From employees/retirees($17.6) million Projected deficit at 12/31/2005$4.1 million

22. 22 © 2004, Mercer Human Resource Consulting Benchmarking State Benefits * Family Unit Maximum: 3 individual deductibles

23. 23 © 2004, Mercer Human Resource Consulting Benchmarking State Benefits (cont’d)

24. 24 © 2004, Mercer Human Resource Consulting Benchmarking Independent Districts

25. 25 © 2004, Mercer Human Resource Consulting Benchmarking Independent Districts (cont’d)