【正文】 employee pays the remainder. % for Benchmark。 amount not used can be carried over or not ? Aggregate (“l(fā)ump sum”) promise – Employer promise is onetime credit (., $30,000。 total projected to be over $2 trillion by 2023 $0$500$ 1 , 0 0 0$ 1 , 5 0 0$ 2 , 0 0 0$ 2 , 5 0 01980 1990 1995 1998 1999 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023In US $ BillionsOOP P r i v a t e I ns ura nc e G ov e r nm e ntSource: CMS 7 Mercer Human Resource Consulting Medical Trends ? Pop Quiz ? How many years will it take gross medical costs to double, assuming no specific employer interventions or national health care? – 10 or more – 9 – 8 – 7 – 6 – 5 or fewer 8 Mercer Human Resource Consulting Medical Trends Responses from a group of 25 actuaries who had time to get their calculators W h e n w i l l M e d i c a l C o s t s b e D o u b l e t h e 2 0 0 2 L e v e l ?0246810122023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023 2023NeverY e a rNumber of respondents9 Mercer Human Resource Consulting Legislation ? Medicare Prescription Drugs – If made into law, will have major impact on retiree benefits and strategies – Initial confusion aside, should have positive impact on retiree plans – Expect cost shifting to negatively impact active plans ? EEOC Proposed changes in ADEA regulations – Cline vs. General Dynamics ? Wells Fargo case – Appears to allow prefunding (and taxdeductibility) of entire retiree liability ? an ILP approach ? won’t be exactly same number as FAS liability ? funding in years 2+ would be limited to service cost – IRS weighing its options 10 Mercer Human Resource Consulting Proposals to Increase Coverage Among Early Retirees Few government programs except for financially indigent ? COBRA extensions and/or Medicare buyins ? Prohibitions on postretirement benefit reductions ? Expanded prefunding for retiree medical Still few viable products for pre65 in individual market that overe access and affordability issues. 11 Mercer Human Resource Consulting ADEA Issues Impact on retiree medical coverage ? Age Discrimination in Employment Act (ADEA) prohibits discrimination against persons age 40 or older in terms and conditions of employment ? Agebased distinctions in employee benefit plans are permissible only if: – A specific statutory exception applies, or – Equal benefit/equal cost test is satisfied ? Plan must provide equal benefits for older and younger workers, or ? Plan must incur equal costs for older and younger workers ? Third and Sixth Circuit Courts reach different conclusions ? EEOC reviewing ADEA regulations 12 Mercer Human Resource Consulting Marketplace Changes Consolidation of Major Health Care Carriers Employer options are greatly reduced, carriers have more clout United Healthcare HealthSource Provident CIGNA Equicor Metrahealth US Healthcare Aetna TakeCare FHP PacifiCare HealthSource CIGNA Aetna US Healthcare NYLCare Prudential HealthCare FHP PacifiCare Provident Transamerica Equitable HCA Metropolitan Partners Aetna GSDHP Lincoln National HPs TakeCare PacifiCare Health Plan of America WellPoint/Blue Cross of California Hancock Mass Mutual Travelers United Healthcare Aetna PacifiCare Health Systems WellPoint/Blue Cross of California CIGNA BCBS of Geia Multiple BCBS Plans Fewer Major BCBS 13 Mercer Human Resource Consulting Marketplace Changes PBM consolidation continues。 HIPAA may eventually make this a viable option for preMedicare retirees 38 Mercer Human Resource Consulting AccountBased Approaches Examples ? Monthly/annual promise – Retirees receive monthly (or annual) credits of a specified dollar amount (., $100/monthly。 increases subject to employer discretion ? Not a taxadvantaged approach 40 Mercer Human Resource Consulting Access Only Plans ? Employer “sponsors” pany health plans (stays “in the business”) ? By doing so, retains group underwriting, pricing and risk profile ? Employer contemplates no subsidy ? Full cost and annual increases absorbed by employees/retirees ? Fully insured plans – Works best – Costs known in advance – Premiums fixed in advance ? Selfinsured plans – Requires more management – Costs not known in advance – But premiums must be fixed in advance – Caution regarding active/retiree subsidy – May impact other accounting (FAS 106) 41 Mercer Human Resource Consulting Capped Plans ? “Employer cost will be capped at 2 times the 1993 cost” ? Implication is that employer share bees a fixed dollar mitment at some point in the future ? Typical action taken in early to mid 1990s for retiree programs in response to FAS 106。 DC for Others Pure DC Full Cost High Low 47 Mercer Human Resource Consulting Medicare+Choice Health plan takes risk, receives “capitated” payment ? Medicare “Part C” (Medicare Advantage?) ? Health plan offered by private insurance panies, usually on an HMOlike basis ? Benefits broader than Original Medicare – Reduced out of pocket expenses for deductibles and copayments – May offer prescription drug coverage ? Medicare pays a set amount of money to private insurer ? May be additional premium cost over Part B premium (fully insured to employer) ? Available only in certain areas ? Recent private insurer profitability poor and insurers have curtailed availability and increased costs to retiree 48 Mercer Human Resource Consulting Medicare+Choice HMO Enrollment Enrollment declined for first time in 2023 Source: Medicare Managed Care Contract (MMCC) Plans Monthly Summary Reports from CMS Website () Dec 90 Dec 91 Dec 92 Dec 93