Originally posted 9/5/06

STRS Ohio Health Care Program News — Special Edition

Retirement Board Approves Premiums and Plan Design Changes for 2007 Health Care Program
At its Aug. 18 meeting, the State Teachers Retirement Board approved the premiums for calendar year 2007 for each of the health care plans offered through the STRS Ohio Health Care Program. The increases for benefit recipients are lower than what had been forecast earlier this year due to plan design changes the board approved for 2007 in June. In addition, the financial impact of adverse selection on the health care fund was less than anticipated during 2005.

2007 Medical Mutual Premiums*

For example, premiums for the Medical Mutual Plus Plan will increase by about 10% for non-Medicare benefit recipients, while benefit recipients with Medicare will see about a 15% increase in premiums. Original forecasts had called for increases of 15% and 19%, respectively. Enrollees in Medical Mutual’s Basic Plan will see more modest increases. Non-Medicare benefit recipients will experience premium increases of around 6%, depending on their years of service. For benefit recipients with Medicare, the increases will range from 0% for a 30-year retiree to approximately 11% for a retired educator with only 15 years of service.

The amount of increase in monthly premiums varies among plans. The minimum monthly premium is $40. In October, all current enrollees in the STRS Ohio Health Care Program will receive personalized information that outlines their 2007 plan options, monthly premiums and coverage features.

In developing premiums for 2007, the Retirement Board returned to its former contribution strategy of providing a premium subsidy of 2.5% per year of service, up to a 75% maximum, for benefit recipients, and requiring spouses and dependents to pay 100% of projected rates. This helps ensure that the current legislative initiative to increase member and employer contributions by a total of 5% — to be dedicated solely to the Health Care Stabilization Fund — will be adequate to fund the health care program on a full-reserve basis (i.e., a 30-year funding period).

The plan benefit changes approved by the board in June 2006 affect the Aetna and Medical Mutual Plus and Basic Plans, as well as the Paramount plans. About 94% of enrolled STRS Ohio retirees and their family members participate in these plans. The changes will result in gross health care cost savings of about $16.5 million. This number represents a savings for the Health Care Stabilization Fund through reduced claim payments and for individual plan enrollees, who are experiencing a lower increase in premiums than originally projected because of the changes.

Several of the approved changes enhance the Basic Plan offered through Aetna and Medical Mutual. There are currently about 8,700 STRS Ohio benefit recipients and their family members enrolled in the Basic Plan, which offers lower monthly premiums in exchange for a higher annual deductible and out-of-pocket maximum for each enrollee. Recent research shows that more benefit recipients are considering the Basic Plan as a viable health plan option for them and their dependents. To make the 2007 Basic Plan even more attractive, it will cover preventive services, such as annual physicals, mammograms and colorectal cancer screenings, at 100% in 2007; no deductibles or coinsurance costs will apply. Also, the prescription drug maximum annual benefit for the Basic Plan will increase to $5,000 from $3,100 per enrollee and generic drugs will be exempt from the benefit maximum. In other words, the enrollee pays 100% of the cost of Tier 2 and Tier 3 brand-name prescription drugs for the remainder of the year only after STRS Ohio has paid $5,000 in brand-name retail and mail prescription drug costs for that individual. The enrollee continues to pay only the copayment for Tier 1 (generic) drugs, even if the $5,000 maximum is reached.

In addition, two coverage features are being added to both the Plus and Basic Plans. The annual amount for outpatient alcoholism treatment will be increased to $1,000 from $550. Also, coverage for nutritional counseling will be expanded to single conditions that can be impacted by changes in diet. These conditions include diabetes, hypertension, kidney disease and obesity.

In 2007, several changes will also be made to the prescription drug coverage available from Caremark through the Aetna and Medical Mutual Plus and Basic Plans, as well as through the Paramount plans. To encourage the use of generic drugs, the Tier 2 copayment will increase to $30 from $25 at retail. In addition, mail-service copayments will increase for all tiers, from the current levels of $20/$50/$100 to $25/$75/$125. Even with this change, STRS Ohio members still realize a cost savings when they receive their drugs through mail service. The final change affects the Plus Plan and Paramount plans. Enrollees will see their annual out-of-pocket maximum for their prescription drug benefit increase to $2,000 from $1,500. Once an enrollee has paid a total of $2,000 out of pocket in retail and mail-service copayments, that individual pays nothing for covered drugs for the remainder of the year.

There are no changes in medical or prescription drug coverage for the Kaiser and AultCare plans offered through STRS Ohio, and no changes to the Paramount plans except those noted above.

This year’s health care open-enrollment period will run from Oct. 9–Nov. 22, 2006. During the same time period, open enrollment will also be held for the optional dental and vision plans that are administered by Delta Dental and Vision Service Plan (VSP). Information about these plans will be sent to all benefit recipients in October.

When evaluating your health care plan options for 2007, keep these items in mind:

• The Basic Plan offers lower monthly premiums for benefit recipients and their family members in exchange for a higher annual deductible and out-of-pocket maximum for each enrollee. The Basic Plan can be a good alternative for individuals who are generally healthy. Be sure to note its preventive services coverage and prescription drug coverage for 2007.
• If you’re currently enrolled in either the Aetna Plus or Basic Plans and not eligible for Medicare, you should compare your monthly premiums for 2007 with Medical Mutual’s Plus and Basic Plans. The in-network providers (e.g., physicians and hospitals) for the Aetna and Medical Mutual plans are very similar. However, due to a difference in provider discount levels between the plans, Medical Mutual’s premium increases for 2007 for non-Medicare enrollees are much less. Just as an example, if a 30-year retiree in the Aetna Plus Plan switched to the Medical Mutual Plus Plan, the monthly premium would actually go down from the current level of $175 in 2006 to $163 in 2007. Further, the monthly spouse premium for the Medical Mutual Plus Plan will be $581 in 2007 versus $626 for the Aetna Plus Plan. If you are considering a change, check with the plans to be sure you know what providers are available to you.
• If you’re enrolled in Medicare and an STRS Ohio-sponsored health care plan, you do not need to enroll in a Medicare Part D prescription drug plan for 2007. STRS Ohio will continue to offer prescription drug coverage that is as good as or better than the standard Medicare Part D coverage.

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