TODAYS SMART CHOICES TOMORROWS HEALTHY SAVINGS Office of
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TODAY’S SMART CHOICES. . . TOMORROW’S HEALTHY SAVINGS Office of Group Benefits Tommy D. Teague Chief Executive Officer
Eligibility Full-time employees and retirees of… § state agencies § state colleges and universities § participating school boards …and legal dependents: Ø Legal spouse Ø Never-married child from birth to age 21 Ø Never-married child age 21 -24 (if full time student) Effective date of coverage is first day of month after enrollment plus 30 days 2
OGB Plan Member Premiums n n Plan member pays 25% of premium for self Plan member pays 50% of premium for any dependents Aggregate contribution level is 29% by plan member 3
Retiree Health Coverage 4
OGB Health Plans 4 plans -- for all plan members n PPO (self-insured & administered by OGB) n HMO (self-insured; administered by Humana) n EPO (self-insured; administered by United. Healthcare) n Medical Home HMO (fully-insured & administered by Vantage) 5
OGB Medicare Advantage Health Plans 5 plans – only for retired plan members with Medicare Part A & Part B n 3 Medicare Advantage HMO plans Ø Humana HMO (only in certain areas of LA) Ø Peoples Health (only in certain areas of LA) Ø Vantage/POS Option (statewide) n 2 Private Fee-for-Service (PFFS) plans Ø Humana PFFS (nationwide) Ø Secure. Horizons Medicare Direct (nationwide) 6
OGB Health Plan Enrollment Total Enrollment 132, 305*** n Active employees 86, 253 65% n Retired employees 46, 052 35% *** figures don’t include LSU plans 7
OGB Budget FY 2010 $1. 264 billion 8
Fiscal Year 2009 -10 Fund Balance as of August 14, 2009 $484, 176, 551 9
OGB Administrative Costs MEDICAL BENEFITS DRUGS Administrative costs are 3% of total costs ADMINISTRATIVE MENTAL HEALTH 10
OGB Organization 332 employees 5 divisions q. Benefit Services q. Customer Services q. Information Services q. Quality Assurance & Administration q. Legal & HIPAA 11
OGB Organization Chief Executive Officer Tommy Teague Benefit Services Customer Services Administration & Quality Assurance Information Services Hubert Lincecum Brenda St. Romain Malcolm Veazie Charles Jumonville Legal & HIPAA Compliance Tommy Benoit 12
OGB Organization CHIEF EXECUTIVE OFFICER Tommy Teague (3 positions) INTERNAL AUDIT (4 positions) BENEFITS SERVICES Hubert Lincecum (152 positions) INFORMATION SERVICES Charles Jumonville (53 positions) LEGAL/HIPAA Tommy Benoit (10 positions) CUSTOMER SERVICES Malcolm Veazie (76 positions) ADMINISTRATION Brenda St. Romain (36 positions) ELIGIBILITY SYSTEMS QUALITY ASSURANCE PROVIDER SERVICES LEGAL CLAIMS PROCESSING APPLICATIONS HUMAN RESOURCES AGENCY SERVICES HIPAA FISCAL PLAN ADMINISTRATION COMMUNICATIONS PLAN MEMBER SERVICES FRAUD & ABUSE FLEXIBLE BENEFITS & IMAGING SERVICES PROCUREMENT DEVELOPMENT SUPPORT SERVICES 13
Enrollment Retired Employees 46, 573 With Medicare 27, 854 (Medicare is primary) 59% n n Without Medicare (OGB is primary) 18, 719 41% 14
Life Insurance n Group term life plan n Prudential n n n State pays 50% of premium for employees and retirees Employee pays premium for dependent life Reduced coverage and premiums, on July 1 after reaching age 65 and age 70 15
Life Insurance Basic Plan Option II Employee $5, 000 Spouse $1, 000 $2, 000 Each Child $ 500 $1, 000 16
Life Insurance Basic Plus Supplemental Plan Option II Based on schedule to Based on employee’s maximum of $50, 000 annual salary Spouse $2, 000 $4, 000 Each child $1, 000 $2, 000 Employee: 17
GASB 45 / OPEB Liability Historically, governments accounted for retiree health care benefits on pay-as-you-go (PAYGO) basis. – Cost of covering active employees was only a function of current year costs – Did not reflect total cost of employee health coverage …only included current year – Without projected future costs, governmental entities’ financial statements did not fully disclose all costs – GASB requires disclosure of future costs associated with current services – Those future costs are classified as OPEB 18
GASB 45 / OPEB Liability OPEB (other post-employment benefits) – a compilation of all non-pension benefits an employee receives after retirement Examples include: Ø Health benefits Ø Dental, vision and hearing coverage Ø Prescription drug coverage Ø Life insurance Ø Long-term care commitments Ø Long-term disability 19
GASB 45 / OPEB Liability calculation assumptions: n Benefit composition n Medical inflation n Turnover rate n Mortality assumption – Will employee live to reach retirement? – How long will retiree live in retirement? n Discount rate n Other factors that affect number of dependents 20
GASB 45 / OPEB Liability n n GASB 45 does not require funding of the calculated liability Decision to fund or not is significant: – Funded plans have lower liabilities – Unfunded plans have larger liabilities – Rating agencies may consider funding Funding requirements are strict; funds must be held in irrevocable trust Depending on funding or not: State’s liability now stands at $13. 7 billion over 30 years…. and growing 21
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