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SAPOA HealthCare Proposal Community Membership Department October 21, 2014
Overview SAPOA recognizes the concerns and issues raised by the City with regards to increasing costs associated with the current benefit plan, the concern that the current plan could subject the City to the Cadillac Tax, and the desire to create a plan with greater cost sharing by plan participants. 2
Collective Bargaining Healthcare & Wage Counter Proposal (October 21, 2014) After long deliberations over the current state of healthcare and how it relates to the SAPOA membership, the SAPOA bargaining committee presented their latest healthcare proposal to the city today. The proposal focused on the following: 1. Transition from benefits based model to pay based model of total compensation. 2. Maximize member tax advantages when combining pay and healthcare components. 3. Increase fairness of cost sharing amongst members in regards to healthcare plan costs. 4. Account for 2018 federal Cadillac Tax liabilities associated with the affordable healthcare act for members. 5. Capture tax free compensation for members in the form of a Health Savings Account (HSA). 6. Member earns healthcare purchasing power and consumer control in how their healthcare dollar is used. 7. Update the current longevity calculation to correspond with adjustments in member healthcare costs. 8. Keep members whole as compared to peer cities public safety employees. 9. Establish positive foundation for calculation of total compensation package. 3
COSAs Medical Plan Offer (October 7, 2014 Summary) The City Proposed a schedule of benefit options and payroll deductions estimated at a per employee per year cost of $11,000, compared to the projected continued cost of the current PPO plan of $14,868. The City offered a $2,000 contribution to the HSA portion tied to the Consumer Driven Health Plan, effectively stating they were willing to contribute about $13,000 per year for each employee in the CDHP / HSA option. 4
Projected Costs Comments The healthcare benefit consultants have met periodically throughout this process. The proposal from SAPOA to the City on 9/23/14 assumed a 25% reduction in costs using a $3,000 CDHP plan, which generated the $11,000 PEPY cost. The counter proposal from the City on October 7, used the same discount assumption for a higher deductible ($4,000), which is not logical. The discount should have been greater. 5
How COSA Views Benefit Differences For Civilian Benefits (CY 2015) Two Plan Choices New Value and Consumer Choice As referenced in the 2015 Benefits Budget Presentation (slide 13) One of the City s goals was to align Premiums with Claims Experience. SAPOA s Benefits Consultant endorses this concept. The 2015 premium methodology is more consistent with the City s practice. The Consumer Choice Premiums are benchmarked at 31.9% less than the New Value Premiums. 6
COSA Non-uniformed Medical Consumer Choice 393.42 $ 736.34 $ 649.88 $ 992.74 $ Reduction of Consumer Choice Compared to New Value New Value 577.80 1,081.44 $ 954.46 $ 1,458.02 $ $ 31.91% 31.91% 31.91% 31.91% 8
SAPOA Medical Plan Proposal Only offer Consumer Driven Health Plan (CDHP) to SAPOA participants on a zero premium basis as already proposed Set plan deductibles at $2,600 per individual, $5,200 per family (Summary on next slide) COSA Contributes $2,000 to members HSA account Projected Plan Contributions assuming (excluding H.S.A. Contribution): 32.5% reduction in plan costs: $ 9,947 PEPY 35.0% reduction in plan costs: $ 9,579 PEPY 37.5% reduction in plan costs: $ 9,210 PEPY Cost sharing goal approaching 70/30 achieved through plan design changes Increased savings allow for funding of H.S.A. and other compensation variables 2018 Cadillac Tax issue avoided Long term inflationary trends controlled Sustainable solution created for managing General Fund expenses 9
SAPOA Medical Plan Proposal (cont.) LEGACY PLAN City Offer 10/7/14 CONSUMER DRIVEN HEALTH PLAN City Offer 10/7/14 CONSUMER DRIVEN HEALTH PLAN SAPOA PROPOSAL 10/21/14 In-Network $250 $500 20% OON $500 $1,000 40% In-Network $4,000 $8,000 0% OON $8,000 $16,000 50% In-Network $2,600 $5,200 0% OON $5,000 $10,000 30% Individual Annual Deductible Family Annual Deductible Coinsurance Percentage Maximum Individual Out-of-Pocket (includes deductibles and co-pays) $850 $1,700 $4,000 UNLIMITED $2,600 $9,000 Maximum Family Out-of-Pocket - (includes Deductibles and Co-Pays) Office Visit Co-Pay Emergency Room Co-Pay Urgent Care Center Co-Pay $2,000 $4,000 $8,000 UNLIMITED $5,200 $18,000 20% after deductble 20% after deductble 20% after deductble $150 OOP per individual, $300 OOP per family (in addition to OOP limit above 40% after deductble 40% after deductble 40% after deductble 0% after deductble 0% after deductble 0% after deductble 50% after deductble 50% after deductble 50% after deductble 0% after deductble 0% after deductble 0% after deductble 30% after deductble 30% after deductble 30% after deductble Separate Brand Drug Deductible or out of pocket cap 0% after deductble 50% after deductble 0% after deductble 30% after deductble $0 generic/20% brand/ 30% non-preferred brand 20% generic/40% brand/ 50% non- preferred brand 0% After Ded, Preventive Drugs Subject to Co-Pays $10/$25/$40 0% After Ded, Preventive Drugs Subject to Co-Pays $10/$25/$40 RX - 30 day Tier 1/ Tier 2 /Tier 3 $0 generic/10% brand/ 20% non-preferred brand 20% generic/40% brand/ 50% non- preferred brand 0% After Ded, Preventive Drugs Subject to Co-Pays $20/$50/$80 0% After Ded, Preventive Drugs Subject to Co-Pays $20/$50/$80 RX - 90 day Tier 1/ Tier 2 /Tier 3 Annualized H.S.A Contribution From City (First year - then $1,000) $2,000 $2,000 $2,000 $2,000 Annualized H.S.A Contribution From City (per year) $2,000 $2,000 $2,000 $2,000 Monthly Deduction Monthly Deduction Monthly Deduction $101 $264 $195 EE Only EE & Spouse EE & Child(ren) EE & Family $0 $0 $0 $0 $0 $0 $0 $0 $408 10 Note: ~ 3% of SAPOA membership incurs Out Of Network costs
Comparative Chart https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcTrTgF2VYYnfebFu6XC3URuSHYKG2jY4UWj_-vfgxCIlx1XaXCg-Q EE Employee Only ES Employee & Spouse / Domestic Partner EC Employee & Children EF Employee & Family PEPY Per Employee Per Year HSA Health Savings Account 11
CBA Healthcare & Wage Proposal (October 21, 2014) Calendar Year Out of Pocket (Single / Family) Health Savings Account Maximum New Exposure FY Pay Raise 2009 - 2014 $1,000 / $2,300 $ 0 $1,000 / $2,300 - 2015 $2,600 / $5,200 $2,000 $600 / $3,200 4% * 2016 $2,600 / $5,200 $2,000 $600 / $3,200 4% 2017 $2,600 / $5,200 $2,000 $600 / $3,200 1% + Longevity Adjustment 2018 $2,600 / $5,200 $2,000 $600 / $3,200 3% 2019 $2,600 / $5,200 $2,000 $600 / $3,200 3% * Elimination of Probationary Pay Step FY 14 12
Health Savings Account Info An HSA is a tax-free investment account whose proceeds are earmarked exclusively for medical expenses. You and / or your employer put pre-tax dollars into an investment account that grows your money tax-free, then you spend that money on qualified health care costs without paying tax on it. If you re covered by a CDHP and no other non-CDHP plans, aren t enrolled in Medicare and aren t claimed as a dependent on someone else s tax return, you re an eligible individual. Differences between HSAs and FSAs Health Savings Account (HSA) Flexible Spending Account (FSA) (COSA Non-Uniform Employees) You own the money in your account Funds do not belong to the contributor Funds left over at the end of the year rollover automatically You lose any unused funds at the end of the year You decide when and how to use your funds The plan administrator has final say about every request for reimbursement You can be reimbursed from an extensive qualified medical expense list that includes medical, optical and dental These plans usually have a short list of reimbursable expenses 13
Payroll Proposal Longevity Transition 24 Year Amortization FY 2015 FY 2019 SAPOA Proposal 10/21/14 10/21/2014 14
Payroll Calendar July 1, 2015 : 4 % Base Pay Raise (Effectively 1.33% FY 15 due to 9 months of savings) Elimination of Probationary Pay, Probationaries will be paid Step A Patrolman October 1, 2015 : 4% Base Pay Raise FY 16 October 1, 2016 : 1% Base Pay Raise FY 17 Transition and simplification of Longevity October 1, 2017 : 3% Base Pay Raise FY 18 October 1, 2018 : 3% Base Pay Raise FY 19 10/21/2014 15
Longevity Transition Current Language : In addition to wages as set forth in the pay schedule, each Officer's base pay shall be increased by three percent (3%) for each five (5) years of his longevity, to a maximum of thirty (30) years, i.e., a thirty year veteran would receive an additional eighteen percent (18%). On each Officer's anniversary date which is not a multiple of five, he shall receive an eight dollar ($8.00) increase in his longevity pay per month, provided, however, that he shall no longer receive monthly longevity pay of $4.00 per year of service, to a maximum of twenty-five (25) years as is set forth in State law, and that the eight dollar ($8.00) interim monthly adjustments will not increase any fifth year level. Proposed Transition: Each Officer s base pay shall be increased by 0.75% on the anniversary date of each year in seniority for the first 24 years in lieu of the state mandated $4.00 per year of service. 10/21/2014 16
