【正文】 Sterling Life Insurance Company Coverage Data as of 3/31/023 Mercer Human Resource Consulting 51 Medigap Overview Plans supplement “original Medicare” benefits ? Sold to individuals age 65+ (and certain other Medicare Eligibles under 65) ? Medigap carriers must accept all applicants for the first six months of eligibility ? The basic benefits included in every Medigap plan are – Part A coinsurance (for admissions of more than 60 days) – Coverage for 365 additional hospital days after Medicare benefits exhausted – Part B coinsurance – The first three pints of blood each year ? Product types – Standard products ? A through J sold from 1992 to present ? Only H, I and J cover prescription drug – Medicare Select ? Provides Medigap benefits with work discount and lower prices Mercer Human Resource Consulting 52 Medigap Policies Overview AARP and BCBS plans offer majority of products ? Only individual insurance plans permitted by law that can be issued to Medicare Eligible individuals ? Carriers cannot customize plans and must offer “standardized” plans ? Regulated by state insurance authorities within federal government guidelines ? Major providers include AARP, Blues plans, some insurers – AARP in all states with Plan A through J – Blues in all states but limited offering, particularly of plans H, I and J ? Most plans underwrite where allowed – Exception is AARP, with minimal underwriting requirements (only ESRD) except on plans H, I and J Mercer Human Resource Consulting 53 Medigap Policies Policy features Item Plan A Plan B Plan C Plan D Plan E Plan F Plan G Plan H Plan I Plan J Basic Benefits* Skilled Nursing Coinsurance Part A Deductible Part B Deductible Part B Excess Foreign Travel Emergency At Home Recovery Drugs** Preventive Care Approximate Monthly Premium Range $55$150 $90$190 $100$210 $90$200 $100$200 $110$210 $100$230 $150$230 $160$250 $200$290 *Basic Benefits = Part A coinsurance plus 365 extra days of hospital care plus Part B coinsurance plus three pints of blood/year **$250 deductible, 50% coinsurance to contract limit Mercer Human Resource Consulting 54 Medicare Select ? Same standardized plan designs (A through J) as other Med Supp policies – AARP offers it on Plan C only ? Works like a Preferred Provider Organization (PPO) – Full supplemental benefits available if work providers used – Reduction or loss of supplemental benefits if nonwork providers used – Always retain full Medicare benefits ? Most mon provider works are hospitals only – Hospital can waive Part A deductible via safe harbor from antikickback statutes – Limited ability to affect Part B cost – Negotiations with other vendors possible ? Lower cost than Medigap: typically 20% discount – AARP example: Ohio Plan C: $122。 employee pays the remainder. % for Benchmark。 ends when fund exhausted), or “l(fā)ump sum” is converted to an annuity (multiple options) Mercer Human Resource Consulting 40 Reimbursement Plans ? Employer often requires submission of receipts for health care expenditures – Premiums – OutofPocket costs ? Typically defined with a maximum reimbursable limit (. $75/month) ? Most mon is reimbursement (or prepayment) of Medicare Part B premium for Medicare eligible retirees – Current cost $ per month with moderate yeartoyear trends – Employer motivated to ensure Part B in effect for Medicareeligible retirees – Part D reimbursement may bee popular ? Employer achieving – Escape from plan sponsorship (for whichever segment of his population the plan applies to) – Fixed costs。 amount not used can be carried over or not ? Aggregate (“l(fā)ump sum”) promise – Employer promise is onetime credit (., $30,000。 employer contributions are taxfree to the retiree and deductible for employer under Sections 105, 106 and 162 of IRC ? Can be funded or unfunded ? For Medicareeligible, Medicare+Choice, Medigap and traditional Medicare available。 total projected to be over $2 trillion by 2020 $0$500$ 1 , 0 0 0$ 1 , 5 0 0$ 2 , 0 0 0$ 2 , 5 0 01980 1990 1995 1998 1999 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020In US $ BillionsOOP P r i v a t e I ns ura nc e G ov e r nm e ntSource: CMS Mercer Human Resource Consulting 8 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 Mercer Human Resource Consulting 9 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 ?0246810122020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020NeverY e a rNumber of respondentsMercer Human Resource Consulting 10 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 Mercer Human Resource Consulting 11 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 medi