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Guilderland Central School District Fringe Benefits & Health Insurance Citizens’ Budget Advisory Committee March 2010 1 Fringe Benefits Category 2009-10 Budget 2010-11 Budget Increase/ Decrease ERS $772,000 $1,361,800 $589,800 TRS $2,584,000 $3,145,000 $561,000 Social Security $3,599,131 $3,520,414 ($78,717) $250,000 $250,000 -0- Life Insurance $93,500 $93,700 $200 Unemployment $40,000 $70,000 $30,000 $9,687,000 $10,042,000 $355,000 Workers’ Comp. Health Insurance Total $17,025,631 $18,482,914 $1,457,283 2 Employer Retirement Contributions Contribution rates and benefits are determined by the retirement systems, not negotiated by school districts Employer contributions are mandatory Yearly rate fluctuations reflect the stock market Stock market losses significantly raised rates for 2010-11 and large increases are likely for successive years 3 Employer Retirement Contributions 2009 Pension Fund Performance TRS loss of $23.3 billion (-20.5%) 5-Year Smoothing of Contribution Rate Rate Increase from 6.2% to 8.6% (+2.4%) 1% Rate Increase for GCSD = $365,000 ERS loss of $44 billion (-26%) Rate Increase from 7.2% to 11.6% (+4.4%) 1% Rate increase for GCSD = $105,000 Minimum Contribution Rate of 4.5% Budget for 2010-11 (75%) and 2011-12 (25%) 4 NYS Pension System Reform New Tier 5 Benefits Minimum Retirement Age Employee Contribution Maximum Benefit Years of Service Minimum Years For Vesting Overtime Cap for Pension Benefits Prior TRS ERS 55 57 62 3% for ten yrs 3.5% career 3% career 20 25 5 10 None $15,000 5 Health Insurance Benefit Eligibility Medical, dental and drug coverage available to all eligible employees Active employees: Hourly employees working minimum of twenty hours per week Salaried employees at .5 FTE or greater Retirees Minimum of 10 years of district service Minimum number of accumulated sick days 6 Plan Offerings and Cost Sharing Four plans available: Blue Shield Preferred Provider Organization (PPO)* Blue Shield Health Plus POS Capital District Physicians Health Plan (CDPHP) MVP Cost sharing of premiums Employer pays 80%; Employee pays 20% GCSD ratio established during the early 1970’s Employees/Retirees contribute in excess of $2 million annually toward premiums * Note: BS PPO only plan with nationwide coverage. 7 2009-10 Plan Enrollment Distribution Active Members 419 254 110 39 Plan CDPHP BS PPO BS POS MVP Medicare Advantage Total 822 Retirees 36 198 16 5 Total (%) 455 (39%) 452 (39%) 126 (11%) 44 (4%) 77 77 (7%) 332 1,154 (100%) Note: 75.3% of all active eligible employees participate. 8 Plan Enrollment Distribution Single Two Person Family Medicare CDPHP 158 108 180 9 Blue Shield PPO 147 82 87 136 Blue Shield POS 46 30 41 9 MVP 16 6 20 2 Plan CDPHP Medicare Choice 15 Blue Shield Medicare Advantage 62 Total 367 (32%) 226 (20%) 328 (28%) 233 (20%) 9 2009-10 Premium Rates including Dental and Rx Premiums Single 80% 20% Family 80% 20% BS PPO $6,796 $5,437 $1,359 BS POS $5,452 $4,362 $1,090 CDPHP $5,669 $4,535 $1,134 MVP $5,861 $4,689 $1,172 $18,472 $15,941 $15,280 $15,786 $14,778 $12,753 $12,224 $12,629 $3,694 $3,188 $3,056 $3,157 10 2009-10 Medicare Premium Rates including Dental and Rx Blue Shield Medicare Group Plan Medicare Advantage Savings Premium District (80%) Employee (20%) $5,765 $4,612 $1,153 $3,685 $2,948 $737 $2,080 $1,664 $416 Note: Must establish a permanent residence in NYS to enroll in the Blue Shield Medicare Advantage program. 11 Suburban Council Employer Contribution Rate Comparison GCSD District Individual Family A 89% 89% B 90% 90% C 89% 89% D 85% 85% E 89% 87% F 85% 85% Individual: 90% G 90% 80% Dependent: 75% H 85% 85% Family (est.): 80% I 90% 80% J 81% 81% K 90% 80% L 90% 80% M 80% 80% Average 87% 84% NYS Employees 12 Health Insurance Trend Trend is a forecast of per person claims cost that takes into account various factors, such as price inflation, utilization, government-mandated benefits, and new treatments, therapies, and technologies. 13 2010 Segal Health Plan Cost Trend Survey Components of 2010 Projected Trends Trend Component Hospitals Physicians’ RX Price Inflation 8.3% 3.7% 6.4% Utilization 2.9% 4.6% 2.4% Other 0.3% 0.1% 0.3% Total Trend 11.5% 8.4% 9.1% 2009 Total Trend 10.9% 8.9% 9.8% 14 Managing Trend Education: become consumers of health care not users of health care Managed Care Referrals (HMO) In-Network vs Out-of-Network Services (BS) Generic Drugs Wellness and Prevention 15 District Health Insurance Committee Model in existence for 35+ years Changes to plan benefit structure occur outside of collective bargaining process Collaborative approach to providing a health care benefit for employees Recommends and approves changes that impact all employees, not just one bargaining unit Control health care costs for district and employees (cost sharing) 16 Guilderland Benefit Changes 1997 1998 2000 2002 2004 2005 Introduced Point-of-Service Plan Self-fund Prescription Drugs (BS) Self-fund Prescription Drugs (HMO) Two-Tier Drug Plan Three-Tier Drug Plan; $20 Office Visit Co-pay (HM0’s) Replace Indemnity Plan with PPO Plan; $20 Office Visit Co-pay (BS POS) 2006 CDPHP - $25 office visit co-pay; CanaRx Prescription Drug Plan 2007 Eliminate 100 Pill/One Retail Pharmacy Co-pay; Implement Step Therapy; Offer Medicare Advantage Plan Option (HMO) 2008 Offer Medicare Choice Plan Option (BS) 2009 MVP - $25 office visit co-pay; $240 in-patient hospital co-pay; $75 outpatient surgery co-pay ESI - Zero Dollar Co-pay Incentive Program 17 Guilderland Health Care Costs Managing Trend Year % Segal Total Expenditures Increase Increase Trend 2004-05 $7,121,135 2005-06 $7,372,580 $251,445 3.5% 12.2% 2006-07 $7,687,323 $314,743 4.3% 12.0% 2007-08 $7,977,781 $290,458 3.8% 11.4% 2008-09 $8,765,655 $787,874 9.9% 10.9% $411,130 5.4% 11.6% Average 18 Managing Trend vs. Increased Contributions $13,000,000 $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 09- 08- 07- 06- 05- 04- 10 09 08 07 06 05 70% Contribution Rate 20 20 20 20 20 20 GCSD Expense Trend 19 2006 Consultant Study Recommendations 9 9 9 9 Increase mail order utilization Explore step therapy Continue to review potential alternatives for providing health coverage Conduct a risk analysis of population 20 Summary Plan design changes have been implemented to control costs and manage trend Health benefits offered to employees are comparable to other districts Highest employee contribution rate for health insurance out of the 13 schools in the suburban council and higher than NYS employees Rising health care costs are a national problem requiring legislative efforts needed to curb health costs and provide options to employers 21