How To Improve Health Care Benefits In A Pension Plan

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1 Health Benefits and Your Pension Plan March 2011 Linda Watson

2 Outline Pension fund update Inflation account sustainability Extended health care benefits

3 Pension Fund Update Year at Dec. 31 Investment Return Fund Total % est. $16.4 billion est % $15.5 billion % $14.2 billion % $16.5 billion % $16.0 billion % $14.0 billion % $12.5 billion

4 B. C. Pension Plans Pensions at 02/2010 Teachers College Municipal Public Service Lowest $ 0.36 $ 0.51 $ 0.06 $ 1.01 Median $ 2, $ 1, $ $ 1, Average $ 2, $ 1, $ 1, $ 1, Highest $ 8, $ 7, $ 14, $ 12, # of Retirees 28,535 1,171 59,798 35,667

5 Inflation Adjustment Account IAA pays for cost-of-living increases to pensions in pay Not guaranteed Increasing pressures on the IAA: decreasing ratio of actives to retireds longer lifespans lower investment earnings increasing health care costs for premium subsidies EHC prescription drugs costs and usage MSP premiums Dental plan costs Pharmacare changes

6 Inflation Adjustment Account Sustainability Search BCTF consultation with plan members Pension Board meetings with the Plan Partners BCTF AGM decisions Plan Partners Agreement Teachers Pension Board decisions

7 IAA Decisions: Plan Partners and Teachers Pension Board 1% increase in active members contributions to IAA this is in addition to a 1.04% increase to Basic for active members and employers from 2009 actuarial valuation indexing only past age 56 end subsidies for retired members EHC coverage

8 IAA Decisions: Future Funding Plan Partners amended the Joint Trust Agreement for future IAA funding increases: first 2% of surplus to IAA next 2% of surplus to reduce employer contributions to Basic further surpluses may go to IAA before future pension improvements

9 History of Health Benefits 1939 Vancouver School Teachers Medical Services Association established provides medical coverage for retirees and actives 1942 Provincial Teachers Medical Services Plan set up covers B. C. teachers, retired and active 1966 government subsidizes retirees MSA premiums at set rates ($2.25 single; $4.00 couple) 1968 Vancouver plan joins PTMS 1971 government starts B. C. Medical Services Plan (MSP); PTMS dissolves gov t pays 50% of retiree MSP premiums retirees pay 50% through pension deduction 1971 BCRTA sets up an EHB plan retirees pay 100% through pension deduction

10 Health Benefits in the Pension Plan 1994 legislation allows health benefits in pension plans 1994 January - June employer contributions pay 50% of MSP member pays 100% of EHC 1994 July - December ER contributions pay 100% of MSP and EHC 1995 dental plan begins, subsidy on years of service 1995 MSP and EHC change subsidy to years of service 1995 government contributes additional 0.13% to IAA (to 1.13%) to help pay premium subsidies

11 Health Benefits in the Pension Plan cont d 2000 out-of-province (within Canada) coverage for EHC and dental added 2001 TPP Joint Trusteeship begins 2002 MSP subsidies end 2003 dental and EHC subsidies end for spouses and dependents 2004 premiums can be paid directly to PBC for members with small pensions 2007 dental subsidy ends for retirees 2012 EHC subsidy ends for retirees

12 New Extended Health Care Plan: the Process Plan design discussions: BCRTA TPPAC (BCTF, BCRTA, BCPVPA, BCSSA) Hewitt Associates consultants EHC and Dental plans put out to tender Successful bidder: Pacific Blue Cross an improved EHC plan at best available rates

13 Dental Plan Pacific Blue Cross continues as carrier essential and enhanced plans continue voluntary; premiums paid by members since premium rates frozen for 2012 and 2013 you do not need to re-apply for dental if not in the plan now, cannot join unless you can show continuous coverage in a comparable plan

14 Dental and MSP Rates 2011 Coverage MSP Dental Essential Dental Enhanced Single $60.50 $23.58 $46.62 Couple $ $44.84 $88.51 Family $ $75.57 $125.00

15 What s New in the EHC?

16 EHC Plan Provisions Deductible annual, per person (not insulin injectors, hearing aids, vision) Co-insurance reimbursement Lifetime maximum Vision care & eye exams Hearing aids Current Plan New EHC Plan $200 $200 70% to $1000, then 100% $100,000 $150/2 years vision care only $700/4 years/ per ear 80% to $1000, then 100% $200,000 resets to $0 to start $300/2 years vision and exams $1400/4 years/ total

17 EHC Plan Provisions Current Plan New EHC Plan Paramedical per visit Paramedical annual max. Hospital stay Home care RN & LPN $10 first 12 visits Varies, $100 - $600/practitioner semi-private and private none reasonable & customary $1000 combined max semi-private and private $50/day up to 10 days after a hospital stay Dual coverage not allowed allowed

18 Cost Containment Provisions Prescription drugs Special authority drugs Dispensing fee maximum Current Plan no restrictions no requirement New EHC Plan generic substitution unless brand name req d by dr. special authority application required none $10 Markup max. 7% 8%

19 Extended Health Care Premium Rates Coverage (unsubsidized) Current EHC Plan New EHC Plan Single $55.00 $55.60 Couple $ $ Family $ $216.35

20 Extended Health Transition Current EHC Plan New EHC Plan ends December 31, 2011 last claims in by June 30, 2012 (for expenses incurred by December 31, 2011) begins January 1, 2012 enrolment deadline: September 30, 2011 enrolment open to all plan members and dependents

21 CARESnet online access to benefits and personal claims information printable claim forms and ID cards direct deposit forms eclaims Blue Advantage savings

22 Cost Containment Tips 10 ways to save money How to apply for Pharmacare s Special Authority Program Dispensing fees city averages

23 Health Benefits and Your Pension Plan March 2011 Linda Watson