Archdiocese of Saint Paul and Minneapolis Medical Benefit

Archdiocese of Saint Paul and Minneapolis Medical Benefit Plan (AMBP) Plan Overview and 2017 Plan Options Mary Ellen Moe Director of HR and Benefits Archdiocese of Saint Paul and Minneapolis November 2016

Open Enrollment Information Session • Archdiocesan Medical Benefit Plan (AMBP): Background • Health Care Today: The Forces Driving Change • Open Enrollment: Your Role • 2017: AMBP Plan Year Changes • Health Spending Accounts (HSA): How They Work and How They Can Benefit You

AMBP Background • Formed in 1991 to provide health and dental benefits to eligible employees throughout the Archdiocese • Currently nearly 3, 500 members • AMBP is one plan, with one set of rules and rates – however, cost sharing is determined at the entity level (parish / Catholic School / etc. )

AMBP Background • AMBP Board of Trustees – Works in the interest of AMBP participants to provide reasonable, affordable, accessible benefits representative of Catholic values – Trustees include: Karl Kornowski - Coalition of Ministries Rep. James Noon - Parish Business Admin. Rep. Brian Ragatz - Catholic School Principal Rep. Patrice Zangs - At Large – Ex-Officio: Archbishop Bernard Hebda; Fr. Charles Lachowitzer; Thomas Mertens, CFO

AMBP Background • To ensure accurate and consistent administration of plan rules, a standardized payroll system (Paycor) is in the process of being implemented throughout the Archdiocese • Benefits have been and will continue to be administered through One. Digital (formerly known as Corporate Health Systems – CHS)

Health Care Today: Forces Driving Change • Driven by rising medical costs over the past decade, the healthcare industry is in the midst of a shift toward consumerism • Employee impact: higher deductibles, out-ofpocket costs

Health Care Today: Forces Driving Change • Represents a new mindset for employees who, as consumers of health care services, must now take a more active role in managing their healthcare expenses • Health Savings Accounts (HSAs) have evolved from an interesting idea to a central component of U. S. business efforts to combat escalating health benefit costs and promote employee savings

Affordable Care Act (ACA) • Affordable Care Act (ACA) heightened employer’s focus on cost and cost control, driven primarily by two of the law’s requirements: – Excise tax on higher-cost plans taking effect in 2020 (originally 2018) – Expansion of mandatory benefits and benefit eligibility of greater numbers of employees and dependents

Affordable Care Act (ACA) • Employers no longer consider just health benefits, but also: – Broader benefit package – The need to modernize the benefit experience

AMBP Changes Resulting from ACA • Full-time eligibility for group welfare plans now defined as 30 hours per week (130 hours per month), effective July 1, 2016 – Hours worked between dual locations is aggregated for purposes of meeting this eligibility requirement • Changed from a fiscal year plan to a calendar year plan, beginning January 1, 2017

AMBP Changes Resulting from ACA • Employees who are eligible for participation in the AMBP receive a 1095 B or C tax form every year that confirms their enrollment status in the AMBP • This form does not need to be filed with your taxes – however, it should be retained with your tax records

Health Care Today: Forces Driving Change • A massive generational shift in the workforce – Rapidly retiring Baby Boomer generation – Supplanted by the smaller Generation X – Millennial generation whose size exceeds Baby Boomers

Health Care Today: Forces Driving Change • A major employer trend to better align organizational mission and the employee value proposition* within the unique social, economic and competitive demands of the current business environment *Employee value proposition: Creating a balance of rewards and recognition in return for an employee’s performance at workplace

Health Care Today: Forces Driving Change • Transformation of the health care marketplace – Surge of new benefit service providers – Many are serving aspects of the benefit program outside the “traditional” benefits package – Examples: Wellness vendors, identity theft providers, voluntary benefits, and entities supporting student loan assistance programs

Health Care Today: Forces Driving Change • Transformation of the health care marketplace – New benefit providers yield new opportunities – Along with that comes a more complex decisionmaking process regarding the selection, implementation and management of vendors / partners

2017 Annual Enrollment: Your Role • Read the enrollment packet materials – especially the Summary of Benefits and Coverage (SBC) for each plan option • Consider your family’s health expenses – historical, anticipated and ongoing – to determine which plan option best fits your situation • Talk to your healthcare providers to confirm their participation in the plan network in which you intend to enroll

2017 Annual Enrollment: Your Role • Attend an enrollment meeting – Dates and time listed in enrollment packet • Complete and return your enrollment form by November 23 even if waiving coverage or remaining on current plan • Watch for resources online: www. Arch. SPM. org/Enrollment 2017 – Offices -> Human Resources and Benefits (see category Administration and Finance)

2017 AMBP Changes • Three health plan options • All offered through Blue. Cross and Blue. Shield of Minnesota (BCBS) • There are no changes to other group welfare plans: – Dental – Vision – Life / Long-Term Disability

2017 AMBP Changes • Option 1 – Same plan design as the current plan but with a narrower network: Group Value Network

2017 AMBP Changes • Option 2 – High Deductible Plan (HDHP) plus HSA • Deductible $2, 600 person / $5, 200 per family • Preventative care covered 100%; all other care and prescriptions subject to deductible • Medical Out of Pocket Max $2, 600 person / $5, 200 per family – Group Value Network – Originally communicated as HSA compatible – now HDHP plus HSA (through One. Digital) to offer employees a better option

2017 AMBP Changes • Employees who enroll in the HDHP and meet the eligibility requirements can set up an HSA account and contribute to it with pre-tax payroll deductions • Eligibility Requirements – Be enrolled in a high-deductible health plan (HDHP) – Not be covered under other health insurance plan – Not be enrolled in Medicare – Not claimed as a dependent on another person’s tax return

2017 AMBP Changes • Option 3 – This is our current plan – Aware Network (98% all doctors and 100% of all hospitals are in the Aware Network) *Options 1 and 3 are the same plan design; only difference is the network

BCBS Options 1 and 3 • Deductible $500 person / $1, 500 per family – Preventative care covered 100% • Medical Out of Pocket Max $1, 500 person / $4, 500 per family • Emergency Room co-pay $70

BCBS Options 1 and 3 • Prescription drugs: $10 copay or 20% whichever is greater to $25 max • Prescription drug Out of Pocket Max $750 person / $1, 000 per family

Group Value Network: Providers Selected care providers* in Group Value Network: – Fairview Health Services – Health East Care System – Health. Partners – North Memorial Health Care – Park Nicollet – Sanford Health – St. Luke’s Health Care System – University of Minnesota Physicians *Doctors may not be in the same network as providers

Group Value Network: Find a Doctor 1. Go online: www. bluecrossmnonline. com 2. Under “Find a Doctor, ” type in the zip code and last name of the physician 3. Under the drop down menu, select “Group Value Network, ” click “ 2017” to indicate the plan year, and then click “Search” Or: • Call BCBS at 866 -873 -5943 to confirm that your physician is in the network

5 Stages of Health Spending & Saving Decide, Open, Use, Manage, and Optimize • In the first stage, employees need to decide to pursue or not to pursue an HSA – Some may feel anticipation and enthusiasm about finding a tool to better manage their health care finances – Others may feel confused or intimidated

5 Stages of Health Spending & Saving • During the “Decide” stage, you may have many questions such as: – How does an HSA work? – How can it help me? – What are the benefits? – What are the tax implications?

HSA: How it Works • HSAs pair with qualified high-deductible health plans (HDHP) to help individuals / families save money to pay for out-of-pocket medical expenses that are not covered by the health plan • HSAs put individuals and families in charge of their own health care spending • Details of how an HSA works and the benefits it can provide, explained in 4 words: deposit, grow, save, pay

HSA: How it Benefits You • Deposit health care dollars: Contributions made to an HSA are tax-deductible when used for qualified health expenses – HSAs can be funded by anyone – the account holder, an employer, family members or any other individual

HSA: How it Benefits You • Grow health care savings: There is no “use-it or lose-it” rule; deposits can earn interest and funds grow over time – If you maintain a minimum balance of $2, 000, your additional funds may be invested in mutual funds yielding tax-free earnings

HSA: How it Benefits You • Save on taxes – Deposits are exempt from income tax, savings grow tax-free and money spent on qualified medical expenses is tax-free

HSA: How it Benefits You • Pay for health care, now or later – HSA funds can be used to pay for medical expenses for the account holder, and his or her spouse and dependents – You can also save for future medical and retiree expenses on a tax-favored basis

HSA: How it Benefits You • The HSA is yours – Funds remain in your HSA, even if you change jobs – If you leave the HDHP, you can still use the existing funds in your HSA to pay for qualified medical expenses

HSA: Tax Implications • It’s up to you, the employee, to maintain records to verify that funds were used for qualified medical expenses • Funds used for nonqualified expenses will be taxed as income and subject to a 20% penalty – If you are 65 and older, the penalty does not apply

2017 HSA Contribution Limits • Single HSA account: self-only contribution limit is $3, 400 • If each spouse has an individual HSA account, each spouse can contribute toward his or her respective account up to the combined family contribution limit of $6, 750 • Individuals age 55 and older are eligible to make a catch-up contribution of $1, 000 per year (100% taxdeductible from gross income) to their HSA account

HSA Administrator: One. Digital (CHS) • Archdiocese partnering with One. Digital to set-up and administer the HSA • One. Digital to provide account holders with access to a secure, easy-to-use web portal – View account balances / activity, fund performance and prospectus information for mutual funds, requests for distributions

HSA Administrator: One. Digital (CHS) • Receive an HSA “Benny Card” to pay for expenses directly from your HSA account – Can also fill in your Benny Card number on bills you receive from providers to pay the amount you owe – No claim forms to complete; no waiting to get a check in the mail

HSA: Enrollment Process If setting up an HSA, complete the following two forms: 1. Enrollment and Election of Benefits Form • Elect coverage under the high deductible health plan by checking the box marked “HSA - Group Value Network”

HSA: Enrollment Process If setting up an HSA, complete the following two forms: 2. HSA Enrollment Form: • First page of HSA enrollment packet (separate from annual enrollment packet) • Complete that form indicating the annual amount you wish to contribute and the coverage level – self or family • Pre-tax payroll deductions will be taken from your paycheck (evenly divided by the number of payrolls in the plan year) and deposited to your HSA account

HSA: Enrollment Process • You may elect the high deductible plan without an HSA, but you may not set up an HSA without being enrolled in the HDHP

HSA / FSA: The Difference • Similarities – Both Flexible Spending Accounts (FSAs) and HSAs allow you to pay for medical expenses with pre-tax dollars – The list of eligible expenses is the same – defined by Section 213(d) of the Internal Revenue Code • Differences – HSA balances can roll from year to year; FSA money is limited to a 75 day grace / 90 day runout period – FSAs require that all purchases be validated as eligible at time of reimbursement with receipts; HSAs do not

Limited Purpose FSA • For employees who elect to open an HSA, a limited purpose FSA is available for reimbursements for dental and vision qualified expenses – Vision expenses: Glasses, frames, contacts, prescription sunglasses, vision co-payments optometrists or ophthalmologist fees, and corrective eye surgery – Dental expenses: Dental care, deductibles and co-payments, braces, x-rays, fillings, and dentures

Limited Purpose FSA • An employee enrolled in an HSA would elect to enroll in a limited purpose FSA to increase total amount they can save in the HSA for qualified medical expenses – Employee can contribute an additional $2, 550 to a Limited Purpose FSA for dental and vision expenses – Preserves the HSA funds for other qualified medical expenses – Employee also has the option of paying for qualified medical, dental and vision expenses through the HSA

Questions? Contact: Mary Ellen Moe, Director of HR and Benefits 651 -291 -4426, moem@archspm. org