OPERS Health Care Plan

1
OPERS Health Care Plan
2
OPERS
OPERS serves more than ½ million Ohio public
employees and benefit recipients 10th largest
state pension system in the U.S., 17th largest in
the world We strive to minimize cost
increases for members, retirees and employers
Our health care plan allows for maximum
flexibility for adjustment if conditions become
more favorable
3
The Health Care Challenge
Double digit health care inflation Baby Boomers
retiree population will double in 20
years Workers are retiring younger and living
longer
4
Actively managing costs

• Dual-vendor PPO, HMOs
• Co-pays that encourage use of network providers
• Exclude or limit services based on necessity
• Plan design encourages generics, use of mail
  order pharmacy
• Prior authorization as appropriate
• Formulary incentives

5

• Key Points
• Employees with less service will pay more for
  health care than those with more service
• Those who are retired or near retirement will be
  less affected
• by plan changes because they have fewer years
  to plan and save
• Changes will be phased in over 5 years
• Plan participants may share cost of health care
  inflation
• OPERS Health Care Plan will be offering various
  levels of coverage and cost to retirees and
  benefit recipients beginning January 2007

6
Health Care Plan Options Coming in 2007

• A monthly health care allowance from OPERS based
  on a retirees length of service from 10 to 30
  years
• Benefit recipient is able to use the allowance
  to select health plan coverage, choosing from a
  cafeteria-style plan

7
The Groups
Group One Current retirees and those near
retirement (eligible to retire with
health care coverage by January 1,
2007) Group Two Future retirees (eligible to
retire after January 1,
2007) Group Three Future/Recent Hires (Hired
after January 1, 2003)
8

• Group One
• Current retirees and those near retirement
• (eligible to retire with health care coverage by
  January 1, 2007)
• Receive 100 allowance
• Spouse receive 75 90 of retiree allowance
• Spouse premium increase is phased in over 5
  years (20 per year)
• Effective January 1,
  2007

9

• Group Two
• Future retirees
• (eligible to retire with health care coverage
  after January 1, 2007)
• receive graded allowance based on years of
  service
• 50 allowance with 10 to 15 years of service
• 100 allowance with 30 years of service
• Spouse receive 50 90 of retiree allowance
  depending on years of service
• Effective January 1, 2007

10
Group Two
Graduated effective dates
Graduated approach applies If first eligible
for retirement with health care between
01/01/2007 and 12/31/2010. This calculation
basis locks in, e.g., if you are first eligible
in 2008, your allowance is based on the 2008
chart regardless of when you actually retire!
11
Groups One Two! It makes NO difference when you
actually retire! What matters is When are you
first eligible to retire?
12

• Group Three
• Recent/Future Hires
• (Hired January 1, 2003 and after)
• 25 allowance with 10 to 15 years
• 100 allowance with 30 years
• Spouse receives 50-65 of retiree allowance
  depending on years of service
• Effective January 1, 2007

13
Health Care Plan Structure
Our Enhanced plan, same as the current health
care plan The Intermediate plan, priced at 80
of the Enhanced plan The Basic plan, priced at
60 of the Enhanced plan
14
Health Care Plan Features

• Any excess goes into a Retiree Medical Account
  (RMA)
• Can be used for additional/future health care
  expenditures
• Can be rolled over from year to year
• If the selected options exceed the monthly
  allowance, the benefit recipient pays the
  difference
• In subsequent years, monthly allowance will
  increase by wage inflation. Excess health care
  inflation up to 5 may be the members
  responsibility

15
Plan Design Non-Medicare
Medical
Enhanced Plan (same as current plan)
Intermediate Plan
Basic Plan
In - 2,000 / 4,000 Out - 4,000 / 8,000
In - 750 / 1,500 Out - 1,500 / 3,000
In - 150 / 300 Out - 200 / 400
Deductible
N/A
OV - 25
OV - 15 ER - 75
Copay
In 70 (after deductible) Out 50(after
deductible)
In 80 (after deductible) Out 60 (after
deductible)
In 80 (after deductible) Out 60 (after
deductible)
Coinsurance
In - 5,000 / 10,000 Out - 10,000 / 20,000
In - 3,000 / 6,000 Out - 6,000 / 12,000
In - 750 / 1,500 Out - 1,500 / 3,000
Out-of-Pocket Max
Enhanced Plan (same as current plan)
Prescription Drug
Intermediate Plan
Basic Plan
N/A
15 / 35 / 50
5 / 10 / 25
Retail Copay
N/A
30 / 70 / 100
10 / 20 / 50
Mail Order Copay
500 / 1,000
N/A
N/A
Deductible
65-Generic/Form Brand 50 - Non-Form Brand
N/A
N/A
Coinsurance
3,000 / 6,000
2,000 / 4,000
1,500
Out-of-Pocket Max
16
Plan Design with Medicare
Enhanced Plan (same as current plan)
Medical
Intermediate Plan
Basic Plan
N/A
N/A
N/A
Copay
80 (after deductible)
80 (after deductible)
80 (after deductible)
Coinsurance
1,500 / 3,000
1,000 / 2,000
750 / 1,500
Out-of-Pocket Max
Enhanced Plan (same as current plan)
Prescription Drug
Intermediate Plan
Basic Plan
N/A
15 / 35 / 50
5 / 10 / 25
Retail Copay
N/A
30 / 70 / 100
10 / 20 / 50
Mail Order Copay
500 / 1,000
N/A
N/A
Deductible
65 - Generic/Form Brand 50 - Non-Form Brand
N/A
N/A
Coinsurance
3,000 / 6,000
2,000 / 4,000
1,500
Out-of-Pocket Max
17
Example Assuming - Group One Under 65, assumed
plan cost is 800/month, 10 years service

• Benefit recipient 100 of the cost of the
  enhanced plan in 2007 (or the year you actually
  retire after 2007)
• With 800 allowance, can choose from
• Enhanced Plan - 800
• Intermediate Plan - 640
• Basic Plan - 480

18
Example Assuming - Group One Under 65, assumed
plan cost is 800/month, 10 years service

• Dependents allowance - Based on length of
  service, 75 of the benefit recipients amount
• Assuming allowance is 600 ( 800 x 75)
• Enhanced Plan - 800
• Intermediate Plan - 640
• Basic Plan - 480

19
Calculating your benefit - Group One Assuming
Intermediate Plan Selected
Health Care Allowance for Member 800.00 Cost
to Member for Intermediate Plan
640.00 Excess

160.00 Health Care Allowance Spouse
600.00 Cost for Spouse in Intermediate Plan
640.00 Monthly Cost to member

- 40.00 Balance to RMA
120.00

20
Additional Considerations

• Income-based Discount Program (30 premium
  reduction)
• Treatment of dual OPERS households
• Purchasable service credit
• Disability Survivor recipients will receive
  monthly allowance based on years of service, with
  10 year level as a floor
• Dependent(s) allowance/premiums determined by
  number of eligible children

21
Points to Remember

• Changes will be phased in over 5 years
• Both the allowance and the cost of the medical
  plans change proportionately when the retiree
  becomes Medicare eligible
• Group is determined by the year in which one is
  first eligible to retire with health care
• It does not matter when you actually retire!

22
(No Transcript)
23

• OHIO PUBLIC EMPLOYEES
• RETIREMENT SYSTEM

Member Services Center
730 500 Weekdays
1-800-222-7377
Columbus, Ohio 43215
www.opers.org
healthcare_at_opers.org