Current benefits Effective January 1, 2017

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1 Health & Dental Care Information - MPP Group benefits change January 1, 2017 The Municipal Pension Board of Trustees has conducted a thorough review of the group benefits offered to the retired members of the Municipal Pension Plan (plan). The board has concluded group benefits need to be changed to continue providing access to coverage and ensure the program continues to provide the best value for the funds available. Current benefits Effective January 1, 2017 Open formulary with low cost alternatives and PharmaCare pricing limits Annual deductible is $100 per family Co-insurance is 80 per cent on first $1,000 Lifetime maximum payable is $100,000 Dental is subsidized Blue RX Drug Formulary Annual deductible will be $100 per person Co-insurance will be 70 per cent on first $1,000 Lifetime maximum payable will be $200,000 No dental subsidy; unsubsidized voluntary dental plan available What's changing Group Benefits for Retired Member FAQ After thoroughly reviewing group benefits for retired Municipal Pension Plan members, the Municipal Pension Board of Trustees has decided on the changes required to continue providing access to coverage, ensuring the program continues to provide the best value for the funds available. Group benefits for retired members are changing January 1, 2017, and will affect you, your spouse and your dependant(s) enrolled in the plan s extended health care and/or dental coverage with Pacific Blue Cross. Retired members who are not enrolled will have a one-time-only opportunity to enrol themselves and their spouse and dependant(s) in the new unsubsidized dental coverage. The following frequently asked questions will help you understand these changes, why they are happening and what you need to do. They are broken down by subject to help you find the information you need.

2 Extended Health Care (EHC) program How will the change from the current EHC plan to the Blue RX Drug Formulary affect me? Blue RX is a customized drug plan based on a managed formulary. Plain and simple, a formulary is a list of covered drugs. It is called a managed formulary because drugs are reviewed to ensure they are both clinically effective and cost-effective before being added to the list. Moving from the current EHC coverage to Blue RX on January 1, 2017, means you, your spouse and your dependant(s) will need to get pre-approval for certain drugs before you fill your prescription to ensure the claim will be covered by Pacific Blue Cross. Some drugs will no longer be eligible for coverage. Pacific Blue Cross will send you a letter in July if you are currently claiming any drugs affected by this change. The letter will provide an explanation and any actions to be taken. More information on Blue RX is available on the Municipal Pension Plan page of the Pacific Blue Cross website at pac.bluecross.ca/mpp. How will the change from an annual deductible of $100 per family to $100 per person affect me? The annual deductible is the dollar amount a retired member is responsible for paying each year when making an EHC claim with Pacific Blue Cross; this dollar amount must be deducted before any money is reimbursed. Currently, the annual deductible for EHC is $100 per family. As of January 1, 2017, the annual deductible will be $100 per person. If you have a spouse or dependant(s) on your EHC coverage, you may see an increase in cost. How will the change from co-insurance of 80 per cent to 70 per cent until $1,000 of paid claims per person per calendar year affect me? When you make a claim, once the deductible amount has been paid, you are still responsible for a percentage of your costs. EHC co-insurance is the percentage of the cost that Pacific Blue Cross will pay. Currently, the co-insurance is 80 per cent until $1,000 of claims paid per person per calendar year. As of January 1, 2017, the co-insurance will be 70 per cent until $1,000 of claims paid per person per calendar year. This means, as of January 1, 2017, if you have paid the deductible of $100 and make a claim for $100 to Pacific Blue Cross, you would be responsible for $30 of the claim, while Pacific Blue Cross would pay $70. After $1,000 has been paid to you in a calendar year, any further eligible expenses you claim within that calendar year will be reimbursed by Pacific Blue Cross at 100 per cent, subject to the coverage rules.

3 How will the change from a lifetime maximum of $100,000 per person to a lifetime maximum of $200,000 per person affect me? Under Pacific Blue Cross coverage, the lifetime maximum is the maximum amount of benefits payable to a member, spouse or dependant. Currently, the lifetime maximum is $100,000 per person. As of January 1, 2017, it will increase to $200,000 per person. Does the amount of the existing $100,000 lifetime maximum that I ve used carry over to count toward the $200,000 lifetime maximum? Yes, your current lifetime amount will be carried forward. What if my spouse, my dependant(s) or I previously maxed out the $100,000 lifetime maximum EHC program? Can I reapply under this new lifetime maximum? If you, your spouse or your dependant(s) are eligible to be reinstated for EHC coverage, you will be contacted directly by the plan or Pacific Blue Cross. Are the EHC premiums changing? EHC premiums will continue to be assessed by the Municipal Pension Board of Trustees each fall. This may result in changes to EHC premiums effective next year. The current premiums for EHC for retired members living within Canada and their enrolled spouses and dependants are: Monthly extended health care plan rates in effect as of February 1, 2016 Pensionable service of retired member Single Couple Family Under 2 years (full premium) $78.00 $ $ years under 4 years years under 6 years years under 8 years years under 10 years years or more Individual receiving a survivor pension When the board has set the premiums for 2017, they will be published in the Retirement Health Benefit Premiums rate sheet by November 2016 and posted to the Retired Member section of the plan website on the Publications page. The premiums will also be published in the Pension Life Winter 2017 retired member newsletter in January. This newsletter will be mailed to you with your T4A and pension statement, and posted to the Retired Member section of the plan website on the Publications page. Note: the EHC premium will be taken off your January 2017 pension payment for EHC coverage starting February 1, 2017, as usual.

4 What if my pension payment is not large enough to cover EHC premiums? You have the option of paying Pacific Blue Cross directly if your pension payments are not large enough to cover EHC premiums. For more information, contact the plan at in Victoria or toll-free in Canada and the U.S. If I currently do not have EHC coverage through the plan, can I enrol now with these changes? If you, your spouse or your dependant(s) currently do not have EHC coverage through the plan, you won t be able to enrol under the plan s EHC coverage unless you can provide proof of continuous coverage. Can I get coverage under another EHC program? Yes, however, if you choose to stop EHC through the plan for yourself, your spouse or your dependant(s), you won t be able to enrol under the plan s EHC coverage in the future unless you can provide proof of continuous coverage. Dental program What are the changes to the dental program? As of January 1, 2017, the plan will no longer subsidize dental coverage for retired members. This means there will be a one-time-only opportunity for you, your spouse and your dependant(s) whether you currently have dental coverage with Pacific Blue Cross to enrol in one of two voluntary dental plans at your own expense. Monthly dental benefits plan rates as at January 1, 2017: Name of dental plan Single Couple Family Essential $26.73 $50.83 $85.66 Enhanced $51.44 $97.66 $ More information is available on the Municipal Pension Plan page of the Pacific Blue Cross website at pac.bluecross.ca/mpp. You will also receive in the mail an information package from Pacific Blue Cross or the plan. Where can I get more information on the Essential and Enhanced dental plans? More information is available on the Pacific Blue Cross website, pac.bluecross.ca/mpp. You will also receive in the mail an information package from Pacific Blue Cross or the plan. Do I have to prove I have had continuous dental coverage to be eligible for the

5 new dental program? No, you, your spouse or your dependant(s) do not have to have dental coverage to enrol in the new unsubsidized dental program during this one-time-only enrolment opportunity that closes August 31, After August 31, 2016, you, your spouse or your dependant(s) won t be able to enrol under the plan s group dental unless you can provide proof of continuous coverage. What is the cost of the new voluntary dental program? Starting January 1, 2017, monthly rates for the new dental program: Name of dental plan Single Couple Family Essential $26.73 $50.83 $85.66 Enhanced $51.44 $97.66 $ Note: if you enrol in the new dental coverage, the premium will be taken off your December 2016 pension payment for dental coverage starting January 1, When will I start paying the premiums for the new voluntary dental program? The premium will be taken off your December 2016 pension payment for dental coverage starting January 1, What if my pension payment is not large enough to cover the dental premiums? You have the option of paying Pacific Blue Cross directly if your pension payments are not large enough to cover dental premiums. For more information, contact the plan at in Victoria or toll-free in Canada and the U.S. Can I get coverage under another dental program? Yes, however, if you choose to stop dental coverage through the plan for yourself, your spouse or your dependant(s), you won t be able to enrol under the plan s group dental in the future unless you can provide proof of continuous coverage. Medical Services Plan of B.C. (MSP) Are the MSP premiums changing? MSP premium rates are set by the provincial government. Generally, these rates are updated yearly effective January 1. The MSP premium is taken off retired members December pension payment. The Municipal Pension Plan will continue to subsidize your MSP based on your years of pensionable service.

6 In 2016, based on these subsidies, you are paying a premium of: Pensionable service of retired member Single Couple Family Under 2 years (full premium) $75.00 $ $ years to under 5 years $56.25 $ $ years of more $37.50 $68.00 $75.00 The new MSP rates for 2017 will be published in the Pension Life Winter 2017 retired member newsletter available in January It will be mailed with your T4A and pension statement, and posted to the Retired Member section of the plan website on the Publications page. Why is the plan s group benefits for retired members changing? Why is the board changing group benefits? The current group benefits program for retired members is not sustainable; program costs are growing faster than the available funding. Many factors drive both the increasing cost of providing access to a group benefits program for retired members and increased costs for products and services covered, including: more retirees, general health of retirees, longer life expectancy, an aging population, and significant cost increases of new drugs. These factors increase the cost of extended health and dental coverage so the amount of subsidy the board is able to provide declines over time. Member contributions paid to the plan while working do not fund group benefits for retired members. A portion of employer contributions allocated to the inflation adjustment account funds cost-of-living-adjustments and group benefits for retired members, both subject to available funding. These changes are required to continue meeting one of the board s priorities of providing access to group benefits for retired plan members. The board wants to ensure group benefits for retired members continue to deliver the best value for the money available. How did the board decide what changes to make? The board decided to make changes based on a comprehensive review considering

7 benefit improvements, funding limits, cost pressures, cost-containment and costsharing strategies, evolving plan design standards and the effect on members. It also included a thorough analysis of members usage by group benefits experts. The board contracted Cubic Health Inc., an independent drug plan management and health care analytics company, to work with Pacific Blue Cross to analyze members use of the current group benefits program. Cubic Health Inc. analyzed three years of member data, including frequency and number of claims, and drug type usage by members. The board used the Cubic Health Inc. analysis because it is based on real data, ensuring the board is working with facts rather than opinions. No personal identifying information of members was shared with Cubic Health Inc., BC Pension Corporation or the board during this review; only broad aggregated data was reviewed. Are these changes a sign that the pension plan is not doing well? No, the Municipal Pension Plan is fully funded, the plan assets cover the plan liabilities, and the money in investments exceeds the pensions owed. Group benefits for retired members are not a guaranteed plan benefit; they are subject to available funding from a different account than members basic pensions. A member s basic pension is secure and guaranteed for life, including any cost-ofliving adjustments previously granted. The number one priority of the board is paying your basic pensions, followed by providing cost-of-living adjustments and access to group benefits for retired members. Why aren t group benefits guaranteed? Group benefits for retired members are not guaranteed because they are not prefunded. Member contributions paid to the plan while working do not fund group benefits for retired members. A portion of employer contributions allocated to the inflation adjustment account funds cost-of-living-adjustments and group benefits for retired members, both subject to available funding. The current group benefits program for retired members is not sustainable; program costs are growing faster than the available funding. How long before group benefits need to be reviewed again? The board regularly monitors the group benefits program experience and costs, with

8 a more comprehensive review every three years to compare the available funding to group benefits program costs and assess if changes are needed. Many factors drive both the increasing cost to the plan of offering a post-retirement group benefits program and increased costs to the products and services covered, including: more retirees, general health of retirees, longer life expectancy, an aging population, and significant cost increases of new drugs. They increase the cost of extended health and dental coverage so the amount of subsidy the board is able to provide declines over time. The board has committed to reviewing and consulting with members on their experience with the new unsubsidized voluntary dental plan within two years Why weren t retired members consulted about these changes? There are many ways for the board to understand retired members needs in a group benefits program. This time, the board used the thorough analysis of members past usage conducted by group benefits experts. The board contracted Cubic Health Inc., an independent drug plan management and health care analytics company, to work with Pacific Blue Cross to analyze members use of the current group benefits program. Cubic Health Inc. analyzed three years of drug claims, including frequency and number of claims, and drug type usage. Note: no personal identifying information of members was shared with Cubic Health Inc., BC Pension Corporation or the board during this review; only broad aggregated data was reviewed. The board used the Cubic Health Inc. analysis because it is based on real data, ensuring the board is working with facts rather than opinions. Because this analysis is based on the actual usage of current EHC and dental coverage, the board believes it provides an important picture of what is valued and required by retired members. This approach will help the board ensure group benefits for retired members continue to deliver the best value for the money available. What do retired members need to do? Ensure your address is up to date with the plan and Pacific Blue Cross. Soon, both

9 organizations will be mailing retired members more information about the changes. To update your address with the plan log on to My Account and choose Update Profile New to My Account? To create your profile, you will need your Person ID, or PID, is an eight digit number assigned to your pension record. It is unique to you and the same for the rest of your life. Where to find your PID: Your enrolment confirmation letter from when you joined the plan Your previous years Member s Benefit Statement Any official correspondence from the plan Can t find your PID? No problem. Give us a call at in Victoria or toll-free in Canada and U.S. To update your address with Pacific Blue Cross log on to CARESnet at pac.bluecross.ca If you reside outside of BC, update your address by logging on tobluecross.ca/members New to CARESnet? To create your profile, you will need your policy and ID numbers. You can find these numbers on your Pacific Blue Cross ID card. If you are not able to register for CARESnet, give us a call at or tollfree at Who do I contact for more information? More information from the plan and Pacific Blue Cross will be included in the Pension Life Summer 2016 retired member newsletter in July, mailed to you directly and available on the plan website on the Publications page. More questions about: EHC and/or voluntary dental coverage? Contact: Pacific Blue Cross pac.bluecross.ca/mpp Phone for retired members living in BC: or toll-free Phone for retired members living outside of BC: Why or how the board made this decision? Contact: Municipal Pension Board of Trustees PensionBoard Secretariat MPBT@pensionsbc.ca Phone: Fax: