The Arkansas Board of Directors agreed to propose a contract for health coverage for retired public schools and state employees

The state Board of Finance on Friday approved a proposed government contract with UnitedHealthcare Insurance Co. To provide Group Medicare Advantage with coverage of prescription drugs for eligible retirees in state health insurance plans for public school employees and government employees.

Jake Blade, director of the state’s employee benefits division, said he will contract with the company to provide Medicare Advantage services to eligible retirees in calendar years 2023, 2024 and 2025, and additional years can be added when the initial three-year period expires. State employee benefits department. UnitedHealthcare Insurance is one of three companies that bid for the contract.

He said there are about 16,000 retirees in the state health insurance plan for public school employees and about 14,000 retirees in the state health insurance plan for state employees.

Bleed said in a memo to the state assembly that retirees, age 65 or older or eligible for Medicare, will automatically be enrolled in Medicare Advantage and will be given the opportunity to opt out of Medicare Advantage and keep existing benefits. Finance.

The benefits offered under Medicare Advantage will reflect existing benefits, he said, but also provide additional services including coverage for vision, dental, hearing and other benefits that are not currently provided to retirees.

“We feel it’s a very rich program for them to consider,” Blade told the Board of Finance.

He said Medicare Advantage will provide significant savings to retirees and the state.

Blade said UnitedHealthcare will work statewide to educate retirees and health care providers about the program and ensure all retirees have a chance to make an informed decision.

He said the proposed contract with UnitedHealthcare would be subject to strict performance guarantees that the employee benefits department would oversee and stipulate minimum amounts that the seller must spend in providing benefits to members.

In calendar year 2023, the company will be paid $165.31 per month in Medicare Advantage retiree in a state employee health insurance plan and $85.31 per month in Medicare Advantage retiree in public school employee health insurance under the proposed contract, according to Bleed’s memo.

Blade said the state will cover most of the costs and retirees will cover the rest.

In calendar year 2024, the company will be paid $170.31 per Medicare Advantage retiree per month in a state employee health insurance plan and $90.31 per Medicare Advantage retiree per month in a public school employee health insurance plan, Blade said in his memo.

In calendar year 2025, the company will be paid $175.31 per Medicare Advantage retiree per month in a state employee health insurance plan and $95.31 per Medicare Advantage retiree per month in a public school employee health insurance plan.

With 50% of eligible retirees enrolled in Medicare Advantage in 2023, a state health insurance plan for state employees could save $25.7 million and a state plan for public school employees could save $9.3 million, Bleed predicted.

With 50% of eligible retirees enrolled in Medicare Advantage by 2025, a state health insurance plan for state employees could save $30.4 million and a public school employee plan could save $10.1 million, according to a Bleed memo.

“That sounds too good to be true,” said CFA member Andrea Lea, a Republican state auditor from Russellville. But Bleed said the federal government provides significant subsidies to companies that offer Medicare Advantage coverage.

He said Medicare Advantage has been in place since 2008 and has been successfully approved by many states.

In response to Leah’s questioning in March, Blade acknowledged that there were doubts among some retirees that “this is too good to be true”.

Last year, the consulting firm Segal Group recommended to the legislature that Medicare Advantage should be assigned to state employee plans and public schools, so the benefits are at least equal to current benefits, and that prescription drug coverage for reinstating public school retirees. The state should structure contributions to incentivize Medicare Advantage so that lower premiums create savings for both the state and retirees, according to the advisor.

The state should expect savings of at least $34 million to $41 million for the state employee plan and “expect [this] The Segal Group said last year that reinstating coverage of prescription drugs to a public school employee plan for retirees would likely be cost-neutral during competitive bidding.

cost share

In another action, the state’s Board of Finance on Friday adopted a policy designed to more fairly and accurately distribute the increased cost of health insurance across members of state health insurance plans for public school employees, state employees, and the state.

The policy aims to prevent financial crises and address the annual challenge of funding health insurance for employees in a planned and orderly manner, Blade said in a memo to the Finance Board.

Under the policy, he said, the state would adjust the premium rates to reflect the actuarial risk posed by individual members to the plans and ensure that state contributions were uniformly distributed across the plans.

Blade said the state’s share of costs is not consistent across health insurance plans and is relatively low compared to neighboring states. On average, he said, the state pays about 65% of premiums to its employees.

He said the adoption of a flat rate 80% higher than the premium rate would require time to absorb the resulting increase in state financing. He said the state’s policy to cover 80% of the cost and staff to cover the remaining 20% ​​would be implemented in the state’s health insurance plans over the next five years.

The state Board of Finance also voted to eliminate the $25 per month monthly wellness credit provided to plan members and the $25 monthly contribution to non-wellness program participants.

Instead, the Employee Benefits Department recommended that “all employees begin the transition to new premium rates…as if they had received a wellness bonus,” Blade wrote in his memo to the state. In other words, the minority of employees who do not meet health and pay the $50 surcharge will no longer be required to pay the fine in 2023. While this would impose an additional cost to the plan, that cost would be less than the cost of testing Health and will significantly simplify the registration process and eliminate bureaucracy for our members.”

Blade said the plans still encourage plan members to go to the doctor.

“We are not suggesting that the wellness program be cancelled.”

Blade said he expects the employee benefits department to propose rates soon for members of 2023 health insurance plans.