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Robert Heller
Presenting:
Please silence your
cell phone.
Alpha Benefits Group
Health Market Review
Full Service Employee Benefit Firm
Locations
Brokerage & Consulting
Voluntary Benefits
Human Resource Support
Services
Retirement Plans
Executive Benefits
Property & Casualty
Plymouth Meeting
Locations
Plymouth Meeting
Camp Hill
Bethlehem
New Camp Hill Office – Moving May 1, 2006!
COBRA Administration
Section 125 Cafeteria Plan
Premium Only Plans (POP)
Flexible Spending Accounts
Full Flex Credit Based Plans
High Deductible Plan Design & Administration
Medical Expense Reimbursement Plans (MERPTM Plan)
Health Reimbursement Arrangements (HRA)
Health Savings Accounts (HSA)
Retirement Plan Services
401(k)
Roth 401(k)
Profit Sharing
403(b)
New Comparability
Executive Benefits
Key Person Coverage
Deferred Compensation
Split Dollar Plan
Estate Planning
Long Term Care
Welfare Plan Documents
5500 Filing
Wrap Plan Documents
Starting Point in Process
“Good Ole’ Boy Network” Changing
Trust and Confidence
What You Should Expect From a Broker:
Knowledge of the Marketplace
Customer Service and Support
Clout With Carriers
Gets a Head Start on the Renewal Process
Value Added Services
Human Resource
Services
Personalized Claims
Administration
COBRA Administration
Employee Benefit
Communication
Wellness Support
SHRM
Membership
Many options are rate neutral regardless
of whether you are working directly with a carrier
or working through a broker.
Demand
From Your Broker!
Year In Review…
Single Digit Increases
Some Rate Decreases
Alpha’s average starting renewal in
the past six months is 11%, after
going to market, it drops to 2%
Looks Good for Rest of 2006 & 2007
Still too Expensive
Percent vs. Dollar Increases
Year
Single Cost
% Increase
Dollar Increase
2002
$250
N/A
N/A
2003
$300
25%
$50
2004
$360
20%
$60
2005
$450
25%
$90
2006
$490
9%
$40
Why Good News?
Credible Data
Competition
Catch Up to Rest of the Country
Wellness Initiatives
Concerns
Aging Population
Pharmacy Component
Technology
Todd Hons
Presenting:
Medical Carrier Updates
Healthcare Survey Results
Carrier Updates
New Participation Guidelines
75% participation required after spousal waivers
Spousal waivers from any carrier are valid (must provide photocopy!)
No more than 50% of the group may waive coverage
New Prescription Drug Plans – Effective 4/1/2006 or Upon Renewal
For groups 2-99 – new business or upon renewal must take one of the
new options
New 3-tier co-pays and deductible options
Curascripts
New specialty drug vendor for self-injectable drugs
KHP Prescription Drug Coverage Will Be Terminated
Effective at the first renewal on or after June 1, 2006
A Capital BlueCross prescription plan will replace the existing plan
Medical Underwriting for Groups 2-19 – Effective March 1, 2006
Groups will receive discounted illustrative rates
Must submit application and HIPAA authorization form 30 days in advance
Final rates will be based on medical information received and final
enrollment
Keystone Health Plan Central Works Through the CBC Broker
Program – Effective January 1, 2006
Major advantage for groups 2 to 99
Groups may work with a broker at
no additional cost (up to 99)
Important Rx Change
If a brand is prescribed and a generic is available and the
member chooses the brand, he or she will be required to pay
the brand co-pay plus the cost difference between the brand
and generic
First Health
Replaces PHCS as HealthAmerica’s National Network
Gettysburg Hospital
Tentatively Rejoining Network This Year
Individual Applications Required For Groups 51-99
Individual applications with medical questions required for each employee
to get final rates in all counties except Lehigh, Northampton, and 5 county
Philadelphia area
Average rate increase 3.5%
95% of companies completing applications enroll
Rx Select
For Groups > 50 Employees
Standard Option for PPO Plans
Available as Rider for POS Plans
Removes Prior Authorization for Most Drugs
Proton Pump Inhibitors, Nexium, etc.
3-tier Prescription Incentive Change – Effective May 1, 2006
Currently, when a brand name drug is purchased instead of the available
generic medication, the member must pay the brand co-payment, plus an
ancillary charge. Upon renewal, HA is updating
the Rx coverage to remove the ancillary
charge. Therefore, members will only be
billed the third tier co-payment.
Lifestyle Returns
Integrated health-enhancing incentives into your company’s benefit
coverage
Highmark Radiology Management Program
Partnered with National Imaging Associates (NIA)
Introduced New Programs With Co-pay or Co-insurance on Diagnostic
Services
CAT, PET, MRI Scans
Medmark
New specialty pharmacy for specialty medications such as injectables,
biological agents, etc.
ePlatform
Program to manage coverage through online services
If qualified, group gets 2% discount!
For Groups > 50 Employees
Will accept spousal waivers from any carrier
After spousal waivers, 75% participation required
Does not apply to groups under 50 employees
Highmark Blue Shield must be the sole carrier
A minimum of 50% of the group must enroll
New plans coming out July 2006 for groups 2 – 50
High deductible plans with office visit co-pays
United Healthcare/Oxford/MAMSI
Aetna
Third Party Administrator (TPA) located in
Lancaster
Provides self-funded and fully insured plans
100% owned by BlueCross of Northeastern PA
Large statewide doctor and hospital network
High deductible with no other features
Health Savings Account (HSAs)
Health Reimbursement Arrangement (HRAs)
Medical Expense Reimbursement Plans (MERPTM Plan)
The Concept Makes Sense
Larger out of pocket cost reduces employer/employee
premium
Turns employee into consumer
Employees utilize medical plan pay more
Isn’t insurance designed to pay for catastrophic?
Major insurance carriers slow to adopt plan design
Not enough discount in rates
Employee communication issues
Confusion over regulations
Employers view this as just a “cost shifting” method as
opposed to a way to reduce overall costs
Medical Expense Reimbursement
Plans (MERP Plan)
TM
Stepping stone to HSAs?
Governed by IRC Section 105
Utilized with an insurance carrier’s high deductible plan
Permits employers to self-insure certain medical expense
costs
78% have claims of less than $1,000
35% have no claims!
5% have 50% of the total claims
BUY LESS
COVERAGE
To Reduce Premiums, Buy Less Coverage
Employer secures high deductible plan (i.e. $2,000) for
major expenses (in/out patient surgery) from carrier
Generally less than 20% of employees utilize these types
of expenses
Communicate lower deductible (i.e. $250) to employees
Employer self insures from $250 to $2,000 ($1,750
maximum exposure), only if actually incurred
Employer utilizes premium discount savings to fund the
self insured portion
Typically part of PPO plan with office visit co-pay and
drug card
Alpha Benefit Administrators administers the self funded
portion for the employer
Advantage over HSA in that the employee can retain the
doctor visit co-pays and Rx co-pay card while still having
PPO arrangement for service
All expenses over $2,000 are the responsibility of the
insurance carrier
Cash flow advantage – Employer only pays if expenses
are incurred
Serves as a starting point for getting into high deductible
plans without having to communicate a complicated
process to employees
Alpha Benefit Administrators can provide proposal on
savings and costs
Example 1: 223 Employees
Received a 25% Medical Increase = $353,500
Implemented MERPTM Plan 1-1-05 to 12-31-05
Group made no changes to employees’ benefits
Final increase was 11% or $157,000
Savings of 14% or $196,500
1-1-06 group received 9% increase
Increased MERPTM Plan deductible
A decrease in cost is projected
Example 2: 99 Employees
Received an increase from an association
Implemented MERPTM Plan 7-1-04 to 6-30-05
Provided three options to employees
End result was 19% less than the previous year’s cost
Savings of $73,000
7-1-05 group received 14% increase = $65,000
Increased MERPTM Plan deductible
A 3% increase is projected
Example 3: 53 Employees
Received a 40% increase = $119,500
Implemented MERPTM Plan 8-1-04 to 7-31-05
Group made no change in benefits to employees
Final increase was 14% or $42,000
Savings of 26% or $77,500
8-1-05 group received 5% increase
Increased MERPTM Plan deductible
A 6% decrease is projected
High Deductible Plans In-Force
MERP Plans 90
HSA
8
TM
High Deductible Plans In-Force
TM
MERP Plans 90
HSA
8
Alpha Experienced With
MERP Plans
TM
Leader in Central/Eastern PA
with this concept
More plans in-force than other
providers
Not one employer has gone
back to the traditional approach
Issues to Consider With Your MERP Plan
Administrator
TM
Independent from carrier
Not as seamless as appears
HRA vs. MERP TMPlan contractual differences
Why Are HSA’s Now Making More Sense?
Carriers offering more plan designs
Better pricing
Greater employee/employer acceptance
Employers desperate to control costs
MERP Plan/HSA concept
TM
What Makes Alpha’s “HSA Today” Different?
The only complete focused HSA administrative
system in the country
Why would I choose Alpha for my HSA provider?
Value Added Services that we provide:
Don’t have to switch HSA providers every time you change medical
insurance carriers
Coordinate the HSA with the cafeteria plan
Insurance premiums & Limited Purpose FSA
Online access to Claims Vault
An electronic storage facility for medical claims & receipts
Available for EOB import when provided by carrier or TPA
“Certification” of qualified medical expenses
Contribution management to eliminate over-contributions
Toll free phone support
Tax form assistance
1099, 5498, 1040, and 8889 preparation
Online Access to Your HSA
More than just an account balance
Revolutionary Claims VaultSM Technology (Patent-Pending)
Claims certification service
Online claims entry
Online withdrawal requests
Interest earned summary (currently paying 4.6%)
Ability to update your HDHP or personal information
Group of 102 Employees
Renewal premium $763,657 (+$134,853)
Changed carriers to TM$567,573 annual premium
Savings from original renewal $196,084
Employer funded HSA account $34,500
Employee funded HSA account $43,851
Claims estimate $42,600
TM
Overall increase from
prior year $15,873, however, we also got
$78,351 in HSA funding for the year!
Developer and leading national provider of workplace wellness
paradigm:
“People Powered Wellness”
Brings workplace wellness to life by humanizing and personalizing the
wellness process
Enhances or replaces the traditional wellness delivery technology with
persuasive power of personal, face-to-face, human interaction – LIVE,
not over the phone or internet
Average participation is over
90% of employees
Dates for providing Disclosure Notice to CMS
Plan years ending in 2006: March 31, 2006
Plan years ending in 2007 and beyond: Within 60 days after
the beginning of the plan year (ex. Plan begins 1/1/2007,
deadline is 3/2/2007)
Within 30 days of terminating a plan that provides prescription
drug benefits
Within 30 days of a change in the creditable coverage status
of a plan that provides prescription drug coverage
Dates for providing a creditable coverage notice to
employees/retirees:
By November 15th of each year, starting in 2005
Prior to an individual’s initial enrollment period
Prior to the effective date of coverage for any Medicareeligible individual that joins your group’s plan
When the plan you sponsor terminates
When the plan you sponsor changes its prescription drug
coverage so that it is no longer creditable or becomes
creditable
Upon an individual’s request
Zocor
Comes off patent 6/23/2006
Zoloft
Comes off patent 6/30/2006
Once generics are available, these drugs will be moved to nonformulary for most carriers
Alpha is often asked what plans and contributions are most
common. We surveyed our clients to get a representation
of:
 Employer/Employee Contributions
 Average plan designs
Here are the results
35
% of Companies
30
25
20
2004
2005
2006
15
10
5
0
100 90 85 80 75 70 60 55 50
0
Percentage of Employer Contribution to Cost
30
% of companies
25
20
2004
2005
2006
15
10
5
0
100 90 70 50 45 40 30 25 20 15 10
0
Percentage of Employer Contribution to Cost
76% of companies surveyed pay 75% or more of the
single contribution
66% of companies surveyed pay 20-25% of dependent
costs, down from 73% in 2005
26% pay nothing toward dependent costs, up from 21%
in 2005
40% of those surveyed said they envision increasing the
employees cost next year, down from 60% in 2005
% of Companies
50%
40%
2004
2005
2006
30%
20%
10%
0%
$10
$15
$20
$25
Plan Copay Amount
> $25
45%
% oCompanies
40%
35%
30%
2004
2005
2006
25%
20%
15%
10%
5%
0%
$0
$1 - $249
$250
$251 $499
$500
> $500
Traditional
Indemnity 8%
HMO 16%
2006
POS 7%
2005
PPO 69%
HMO 15%
Traditional
Indemnity 5%
HMO 12%
Traditional
Indemnity 8%
POS 15%
POS 14%
2004
PPO 70%
PPO 66%
What is the likelihood of your company implementing
an HSA?
Have already
High probability
Possible
Not Likely
2%
16%
40%
42%
79% have a 3-tiered formulary plan as opposed to 78% in
2005 and 70% in 2004
9% have deductibles then coinsurance as opposed to
12% in 2004 and 15% in 2004
10% have a 2-tiered co-pay (usually 10/20) as opposed
to 6% in 2005 and 12% in 2004
2% have straight coinsurance as opposed to 4% in 2004
and 3% in 2004
Results point to two major trends in the industry:
Renewal increase are lower than the previous years
High deductible plans are continuing to become more
popular
Thank you for attending!
This presentation will be available for
download at:
www.alphabenefits.com