Appendix H

12/4/18

REPORT POSTPONED UNTIL THE JANUARY 29, 2019 MEETING

SENATE COMMITTEE ON FACULTY BENEFITS
JOINT COMMITTEE ON INSURANCE AND BENEFITS

2017-2018 Annual Report on the Status of Benefit Changes

(Informational)

This report is a summary of Penn State benefit changes, changes under consideration, and issues discussed, for which the Joint Committee on Insurance and Benefits provided consultation with Penn State administration between September, 2017 and May, 2018.

Changes to Penn State Benefits

Health Plan Benefit changes in 2018

Beginning January 1, 2018, the health plan third-party administrator changed from Highmark Blue Shield to Aetna and the pharmacy benefit manager/third party administrator from Highmark (Express Scripts) to CVS Caremark. The PPO and PPO Savings plans remained the two health plan choices in 2018.

The PPO plan structured the annual deductible around an employee’s base salary.  Specifically, those with a salary of $45,000 or less have a $250/$500 (single/all other tiers) deductible; those making $45,000-$60,000, $375/$750; those making $60,000-$90,000, $500/$1,000; and those making greater than $90,000, $625/$1,250.  Premiums continued to be salary-based for the PPO plan and remained the same percent of salary as 2017:  Individual, 1.51%; Two-Person, 3.68%; Parent/Child(ren), 3.41%; and Family, 4.69%.  The annual prescription out-of-pocket (OOP) maximum in the PPO is $2,000 per person/$8,000 per family.

In the PPO Savings plan, the Health Savings Account seed contribution from the University changed to a four-band approach based on an individual’s annual base salary as follows:

Band 1: Less than or equal to $45,000, $800/$1,600
Band 2: $45,000.01 – $60,000, $600/$1,200
Band 3: $60,000.01 – $90,000, $400/$800
Band 4: Over $90,000, $200/$400

Premiums in the PPO Savings plan are also salary-based and increased for each subscriber tier: Employee only from 0.52% to 0.78%; Employee plus spouse from 1.25% to 1.89%; Employee plus child(ren) from 1.16% to 1.75%; Family from 1.60% to 2.41%.  Co-insurance rates remained the same for medical and prescription drugs.

Technical Service PPO and PPO Savings plan percentages of salary contributions for 2018 are defined per the terms of the collective bargaining agreement.

The one other change that was implemented for health care benefits was related to those employees who are dually-employed at Penn State.  The following changes took effect on January 1, 2018:

Faculty/Staff:  If employee and spouse are both employed at Penn State and are currently covered under one employee’s medical plan, the coverage election for 2018 must be made by the higher-paid spouse.

Technical Service Employees:  Defined under the terms of the collective bargaining agreement.

In addition, the tobacco surcharge was eliminated for 2018.

Two other vendor additions/changes for 2018 included:

Unum for Short-term Disability, Long-Term Disability, Life insurance and Accidental Death & Dismemberment.

HealthEquity for managing flexible spending accounts, health savings accounts and dependent care accounts.

Retiree health

Retirees who are not Medicare-eligible subscribe to the same PPO or PPO Savings plan as active employees until they turn age 65.  In the PPO, retiree-only rates increased from $176.16 to $177.96, retiree plus spouse increased from $352.31 to $355.92, retiree plus children increased from $264.23 to $266.94, and retiree family increased from $440.39 to $444.90.  In the PPO Savings plan, retiree-only rates increased from $127.18 to $128.45, retiree plus spouse increased from $254.37 to $256.90, retiree plus children increased from $190.77 to $192.68, and retiree family increased from $317.96 to $321.14.  The 2018 non-Medicare retiree premiums are roughly equal to an active employee salary of $90,000.

Retirees who are Medicare participants can select the Part B Freedom Blue PPO plan as a Medicare Advantage plan that is fully insured by Highmark.  For 2018, premiums for this plan increased from $79 to $80.  Penn State pays approximately 80% of the total premium for this plan.

For 2018 health plan enrollment data indicated:

  • 12,194 or 70% of employees enrolled in the PPO plan
  • 5,203 or 30% of employees enrolled in the PPO Savings plan
  • 1,193 moved from PPO in 2017 to PPO Savings plan in 2018
  • 327 moved from PPO Savings in 2017 to PPO plan in 2018
  • 87 Technical Service members chose the PPO Savings option

Table 1:  Actual Costs with Premium Cost Share

CALENDAR
YEAR
INFORMATION
Total Claims Paid
(% Change)
Employee Premium
Contributions (% of
Total Claims)
Net PSU Cost
(% Change)
2013217,677, 285
5% from 2012
41,167,636
18.91%
176,509,649
4.5% from 2012
2014220, 479, 189
1%
42,747,904
19.39%
177,731,285
0.7%
2015236,236,199
7%
45,286,942
19.17%
190,949,257
7.44%
2016270,407,414
14%
47,273,759
17%
223,133,655
17%
2017271,123,472
0.26%
48,292,496
17.8%
222,830,976
-0.14%

The 2017 total claims for the plans remained relatively flat compared to the 14% increase in 2016.  Employee premium contributions as a percent of total claims, which offset the total claims cost to the University, increased slightly from 2016.  As in previous reports, the University total cost does not include out-of-pocket payments made by employees directly to providers and these are detailed in the Table 2 below.

Table 2:  Employee out-of-pocket contributions

CALENDAR YEAR INFORMATIONEmployee Medical
Out-Of-Pocket
(% change)
Employee
Prescription Drug
Out-Of-Pocket (%
change)
Total Employee Out
Of-Pocket Cost
(%change)
201315,890,082 6,460,526 22,350,608
201417,179,997
8.1%
6,277,005
-2.8%
23,457,002
5.0%
201518,073,639
5.2%
6,649,340
5.9%
24,722,979
5.4%
201619,707,691
9.04%
6,618,254
-0.47%
26,325,945
6.48%
201725,664,374
30.2%
6,969,709
5.3%
32,634,083
24.0%

Employee out-of-pocket costs increased by 30.2% for medical claims and 5.3% for prescription drug claims.  Overall employee out-of-pocket costs increased by 24.0% in 2017 over the 6.48% increase in 2016.  When these out-of-pockets costs are combined with premiums and University contributions the goal is to adhere to the cost sharing guiding principle approved in 2016, which is a 75% University/25% employee cost share.  This is further examined below in Table 3.

Table 3:  Cost-sharing of total health care contributions between the University and employees

CALENDAR
YEAR
INFORMATION
Total Health
Care Cost
(% change)
Employee
Premium and
Out-Of-Pocket
Contributions
(% change)
Net University
Cost
(% change)
University %
Share of Total
Health Care
Cost
(% change)
2013240,027,893 63,518,244 176,509,649 73.5%
2014243,936,191
1.6%
66,204,906
4.2%
177,731,285
0.7%
72.9%
-0.9%
2015260,959,178
7.0%
70,009,921
5.7%
190,949,257
7.4%
73.2%
0.43%
2016296,733,359
14%
73,133,056
4.46%
233,133,655
17%
75.35%
2.98%
2017303,757,555
2.4%
80,926,579
10.7%
222,830,976
-0.14%
73.4%
-2.6%

The increase in the year-over-year total health care claims paid by the University changed from 14% in 2016 to 2.4% in 2017.  The full employee contribution of premiums and out-of-pocket costs increased 10.7% in 2017 over 2016.  The 2017 overall University cost for the total allowable charges decreased .14% over the cost in 2016.  The actual percentage cost sharing between the University and employees for 2017 was 73.4% and 26.6%.

Health Plan Benefit Changes for 2019

The total allowed medical costs for calendar year 2019 are projected at $209,527,000. The medical plan costs and cost-sharing projections used to develop the 2019 plan design and contribution levels are in Table 4 below.

Table 4:  2019 Estimated Medical Health Plan Cost Projections

CALENDAR YEAR
INFORMATION
2019 Projected Costs*
Total of Allowed Charges$282,409,900
PPO Plan Cost Share
Participant OOP
Premium Contributions
Total Employee Share
HSA seed
Penn State Cost Share
Total Penn State Share

10.1%
15.2%
25.3%
0.0%
74.7%
74.7%
PPO Savings Plan Cost Share
Participant OOP
Premium Contributions
Total Employee Share
HSA seed
Penn State Cost Share
Total Penn State Share

14.2%
9.9%
24.1%
4.6%
71.3%
75.9%
Contribution by
University
Employee

$211,923,000
$70,486,000
Projected Cost Sharing %
University
Employee

75.0%
25.0%

*2019 Benefits Open Enrollment is November 1, 2017-November 16, 2018 with all changes made effective January 1, 2019.

Benefit Changes under Consideration at this Time and/or

Topics Discussed with No Change at this Time, or for Informational Purposes

There will not be changes to the health plan premium contribution percentages for 2019.  Rather, Human Resources will be monitoring and measuring plan performance for the next year to assess the impact that the changes in third-party administrators may have to the cost of medical services and prescription drugs for both employees and the University.

Specific changes for health care plans effective January 1, 2019 include:

Higher co-insurance amounts when not using Quest/LabCorp

Beginning in January 2019, if employees use Quest/Lab Corp for non-urgent labs, the coinsurance remains at 10%, after deductible.  Employees and their family members will pay more in coinsurance (after deductible is met) if they do not use Quest Diagnostics/Lab Corp for non-urgent labs.  If another Aetna in-network lab other than Quest/Lab Corp is used the co-insurance goes up to 30% and if an out-of-network lab is used, the co-insurance will go up to 50%.  There are more than 115 Quest labs and more than 65 LabCorp labs within Pennsylvania.

Additional option for dependent child life insurance

In 2019, there will be two dependent child life insurance options offered through Unum; a $5,000 policy at a premium of $1.20 per month; or, $10,000 policy at a premium of $2.40 per month.

Survey

The Senate Committee on Faculty Benefits requested HR develop a satisfaction survey about the changes to Aetna and CVS Caremark in health plan and prescription drug administrators. The survey is anticipated to be sent to benefits-enrolled faculty and staff in October 2018.  The survey will also include a list of voluntary benefits asking the likelihood of employees signing up for them if the University offers them.

Requests for Proposal (RFPs) For Dental/Vision

The contracts with UCCI for the dental benefit and Davis Vision (Highmark) for the vision benefit expire on December 31, 2018. During April, 2018, RFPs will be sent to national vendors for both dental and vision with the goals of reducing Administrative Services Only (ASO) fees for the University and enhancing benefits to employees.  The changes to vendors, if any, would take effect January 1, 2019, and will be announced prior to benefits open enrollment.

SENATE COMMITTEE ON FACULTY BENEFITS

  • Mary Beahm
  • Ingrid Blood
  • Denise Costanzo
  • Joseph Enama
  • Cassandra Kitko
  • Jeffrey Laman
  • Hector Lopez
  • Raymond Najjar
  • Kathleen Noce, Vice-Chair
  • Linda Rhen
  • Ira Saltz, Chair
  • Geoff Scott
  • Greg Stoner

JOINT COMMITTEE ON INSURANCE AND BENEFITS

  • Mary Beahm
  • Renee Borromeo, Chair
  • Gina Burge
  • Joe Doncsecz
  • Cassandra Kitko
  • Jon Light
  • Willie Ofosu
  • Ira Ropson
  • Kim Smith
  • Erica Smithwick
  • Greg Stoner