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

2. Legislative Updates 2

3. 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. 4 ERS Retirement Trust Fund Projections FY14 to FY63

5. 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

6. 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

7. 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

8. Federal Mandates 8

9. 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

10. Other Updates 10

11. 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

12. 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

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