Effective January 1, 2018 there will be no increase in premiums for any active state or local government workers that are in the State Health Benefit Plan.
Premium rates for local government early retirees will go down by 2.3%; rates for local government Medicare retirees will go down 6.2%.
Premium rates for state early retirees will fall 4.4% and the rates for Medicare retirees go down 6.3%.
Active local and state workers will see no change in plan design. The only plan design change for 2018 is that the retiree prescription drug copay for mail order brand drugs will fall from $33 to 28.
The incentive program for those newly choosing a tiered network plan (Aetna Liberty or Horizon Omnia) will continue for plan year 2018. New employees and employees changing coverage due to a life event will now be able to participate in the incentive program.
The incentives vary depending on level of coverage: Single-coverage employees receive $1,000; Member/Spouse or Parent/Child-covered employees receive $1,250; and Family-covered employees receive $2,000. This incentive is paid by gift card within the first quarter of Plan Year 2017, and is deemed reportable income for tax purposes.
Effective 1/1/18 OptumRx will replace Express Scripts as the vendor operating the SHBP prescription drug program.
The new vendor was chosen through a reverse on-line auction -- a union initiative developed by CWA, AFT, and NJEA with the help of the national union-based health coalition, America's Agenda.
We anticipated the reverse on-line auction would produce overall drug savings of 8 to 10% but it looks like the savings will be closer to 12%. It's a major factor in the lack of rate increases for active employees and fall in rates for retirees.
It's estimated that about ten percent of drugs currently on the Express Scripts formulary will not be on the OPTUM formularies.
We will be meeting in the near future with OPTUMRx to ensure a smooth transition.
The active state worker part of SHBP saw large surpluses of $121 million in 2016 and $101 million projected for 2017. The surpluses were because claims were 5 to 8% less than projected by Aon.
Normally surpluses are good news but in this case it means 91,000 state workers probably paid $40 to $50 million more in premium share than they needed to over the two year period.
That's because once premiums are set for the year that determines the amount members pay in premium share but it does not determine the amount the state pays. The states simply pays for the amount of claims and other expenses not covered by our members premium share.
When there are surpluses in the state plan, it means members pay more than they need to because the premiums have been set too high but the state pays less.
Stay tuned, the Union side of the Plan Design Committee will be pursuing this issue further.
IMPORTANT NOTE: this problem does NOT effect local government as any surplus due to lower than expected claims is deposited in the Claims Stabilization Reserve (the State part has no reserve fund.) For the last two years we have used some of the surplus in the local government Claims Stabilization Reserve to keep local government rates at 0% for active members. The Claims Stabilization Reserve, even with this spend-down, has a more than adequate reserve with