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The Empire Plan is a unique health insurance plan designed especially for public employees in New York State. Empire Plan benefits include inpatient and outpatient hospital coverage, medical/surgical coverage, Centers of Excellence for transplants, infertility and cancer, home care services, equipment and supplies, mental health and substance abuse coverage and prescription drug coverage.

State Seal

DAVID A. PATERSON
GOVERNOR

STATE OF NEW YORK
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov

NANCY G. GROENWEGEN
COMMISSIONER

PA09-13

TO: Participating Agency Health Benefit Administrators
FROM: Robert W. DuBois, Director of the Employee Benefits Division
SUBJECT: Empire Plan Quarterly Experience Report
DATE: May 18, 2009

Enclosed are the Fourth Quarter Empire Plan Experience Reports for 2008 and the cover letter to the Chief Executive Officers. This report presents the projected 2008 Empire Plan experience and the projected 2010 premium rates.


May 18, 2009

Dear Chief Executive Officer:

Attached is The Empire Plan Fourth Quarter Experience Report for 2008. This report presents the projected 2008 Empire Plan experience, based on claims paid through December 31, 2008, and the projected 2010 premium rates.

For the 2008 Plan Year, The Empire Plan carriers project a net dividend of $451.0 million, 8.0% of premium. This report explains the basis for this projection.

The projected 2010 rates based on The Empire Plan carriers’ premium projections
and a dividend application comparable to the amount loaded in the 2009 rates are presented in Exhibit II. This yields an insurer driven “best estimate” net premium increase of 9.9% in aggregate for The Empire Plan and 9.7% in aggregate for The Excelsior Plan. The Department’s actuarial consultant, Buck Consultants, developed an independent premium projection using the same dividend application assumption. Buck’s projection is consistent with the optimistic premium rates based on carrier projections, which reflect a 5.8% increase, in aggregate, as presented in Exhibit II.

I hope this report is informative. If you have any questions, comments or suggestions, please don’t hesitate to contact me.

Sincerely,

Robert W. DuBois, CEBS
Director
Employee Benefits Division


EMPIRE PLAN EXPERIENCE REPORT

FOURTH QUARTER
OCTOBER - DECEMBER 2008
Produced for
PARTICIPATING AGENCIES IN THE
NEW YORK STATE
HEALTH INSURANCE PROGRAM
by
the Employee Benefits Division
New York State Department of Civil Service
Nancy G. Groenwegen
President, New York State Civil Service Commission

Exhibits

  1. Projected 2008 Empire Plan Experience
  2. Projected 2010 PA Premium Rates
  3. Empire Plan PA 5-Tier Group Rates (2001-2010)
  4. Empire Plan PA 2-Tier Group Rates (2001-2010)

NEW YORK STATE HEALTH INSURANCE PROGRAM
PARTICIPATING AGENCY GROUP
EMPIRE PLAN - FOURTH QUARTER REPORT

PROJECTED 2008 EMPIRE PLAN EXPERIENCE

The Empire Plan carriers project a composite dividend of $451.0 million (8.0% of premium), or $300.9 million more than the margin loaded in the 2008 rates. The 2008 annual experience projected by the insurance carriers is reported in Exhibit I.

This projection is based on twelve months of 2008 paid claim data. The following chart presents the percentage of the projected incurred claims actually paid as well as the current 2008 trend as compared to the trend assumed during the 2008 premium rate development:

  % of Paid Claims to
Projected Incurred Claims
Projected 2008 Trend
  20072008@ Final Renewal@ 2nd Quarter
Blue Cross Hospital 99.3% 86.9% 12.0% 8.9%
UHC Medical 99.8% 90.1% 10.5% 5.7%
GHI MHSA 99.7% 82.3% 6.0% 14.0%
Blue Cross Rx 99.9% 98.4% 9.7% 4.1%

The 2008 projected dividend for each carrier as compared to the margin level used in the 2008 premium development is as follows:

  Margin2008 Projected
Dividend/(Loss)
Increase/(Decrease)
Blue Cross Hospital $38,176,000 $99,879,000 $61,703,000
UHC Medical $54,975,000 $234,025,000 $179,050,000
GHI MHSA $1,461,000 ($7,803,000) ($9,264,000)
UHC Rx $55,516,000 $124,901,000 $69,385,000
Total $150,128,000 $451,002,000 $300,874,000

The increase in the dividend projection is primarily attributable to the decrease in the 2007 claims base for the medical and prescription drug components projected during the development of the 2008 rates and an improvement in 2008 trend for the medical, hospital and prescription drug programs. There also is a substantial increase in the projected pharma revenue for the prescription drug program. Offsetting the favorable prescription drug program experience is a significant increase in the disabled lives reserve. In addition, the cost of non-network mental health and substance abuse claims is higher than previously anticipated resulting in a moderate projected loss for that program.

2010 PROJECTED PREMIUM RATES

Exhibit II presents the 2010 Empire Plan gross and net premium rates as projected by the insurances carriers, assuming the application of $275 million in dividend to all payors. In aggregate, The Empire Plan gross premium is projected to increase 9.4%, while the net premium is projected to increase 9.9%. In aggregate, The Excelsior Plan gross premium is projected to increase 9.3%, while the net premium is projected to increase 9.7%. Exhibit II also includes a range of projected gross and net premium rates projected by the carriers (5.8% - 14.1%).

Exhibit III presents The Empire Plan individual and family 5-tier billing rate history since 2001. Exhibit IV presents, for illustrative purposes only, the 2-tier rate history from 2001 to 2010.

As noted above, the 2010 premium projections in Exhibit II are based on The Empire Plan insurance carriers’ 2008 fourth quarter reports. These projections do not take into account any 2009 paid claim activity. Historically, premium projections made early in the year have been conservative. The actual premium rates negotiated with the carriers in October for the following plan year have, in aggregate, been below the optimistic projections made in the 4th quarter report.

Additionally, the Department receives quarterly premium rate projections from our actuarial consultant, Buck Consultants (Buck). Buck projects an aggregate 2010 premium increase of 5.6% with the application of $275 million in dividend. This level of projected increase is consistent with the carriers’ optimistic projections at this time. Each agency should assess its budgetary environment in using the projected information contained in this report.

The current assumed dividend application of $275 million is reflective of a strategy to promote rate stability over a number of years. However, the actual amount of dividend to be applied as a credit in the 2010 premium rates will be determined in October 2009 based on a number of factors including, but not limited to, the following:

  • The final results of premium negotiations with the carriers;
  • The impact on the stability of premium over time (2010-2014); and
  • The state of the economy, as well as the State and Local Government fiscal climate.

We will work together with the Division of the Budget to ensure that NYSHIP rates for local governments are kept as low as is fiscally prudent.


Exhibit I

2008 PROJECTED EMPIRE PLAN EXPERIENCE
In (000's)

 BLUE CROSS HOSPITALUnited Healthcare MEDICAL CoreUnited Healthcare MEDICAL NY EnhancementUnited Healthcare MEDICAL PA EnhancementUnited Healthcare MEDICAL CombinedGHI MHSA CoreGHI MHSA NY EnhancementGHI MHSA PA EnhancementGHI MHSA CombinedUHC DRUGTOTAL
(A) Premium (1) 1,766,786 1,710,354 253,094 241,998 2,205,446 105,851 1,617 983 108,451 1,538,222 5,618,905
(B) Incurred Claims (2) 1,544,009 1,401,135 198,538 191,980 1,791,653 88,732 4,849 4,095 97,676 1,340,394 4,773,732
(C) Administrative Expense (3) 122,898 147,040 16,640 16,088 179,768 17,964 362 252 18,578 72,927 394,171
(D) Gain/(Loss) (A-B-C) 99,879 162,179 37,916 33,930 234,025 (845) (3,594) (3,364) (7,803) 124,901 451,002

(1) Earned Premium - Premium which pays for coverage for the period reported (accrual basis).
(2) Incurred Claims - Represents the cost of covered services provided during the period reported by the insurance company (accrual basis).
(3) Administrative Expenses - All charges by the insurance carrier other than for the payment of claims. Includes carrier’s cost to administer the program, interest charges, and other retention.

Source: Carrier 2008 4th Quarter Experience Reports


Exhibit II

Participating Agency Premium Rates
Comparison of 2009 and Projected 2010 Rates

EMPIRE PLAN CORE PLUS MEDICAL & PSYCHIATRIC ENHANCEMENTS

Plan Prime: Individual

 Gross Rates (1)
2009
Gross Rates (1)
2010 (3)
Gross Rates (1)
% Change
Net Rates (2)
2009
Net Rates (2)
2010 (3)
Net Rates (2)
% Change
Optimistic 630.73 662.76 5.1% 598.58 629.87 5.2%
Best estimate 630.73 686.57 8.9% 598.58 653.68 9.2%
Pessimistic 630.73 710.56 12.7% 598.58 677.67 13.2%

Plan Prime: Family

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 1,350.26 1,419.86 5.2% 1,282.17 1,350.77 5.4%
Best estimate 1,350.26 1,469.91 8.9% 1,282.17 1,400.82 9.3%
Pessimistic 1,350.26 1,520.35 12.6% 1,282.17 1,451.26 13.2%

MedPrime: Individual

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 384.38 405.38 5.5% 359.22 382.66 6.5%
Best estimate 384.38 423.80 10.3% 359.22 401.08 11.7%
Pessimistic 384.38 442.25 15.1% 359.22 419.53 16.8%

MedPrime: Family - 1

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 1,103.90 1,162.52 5.3% 1,042.81 1,103.58 5.8%
Best estimate 1,103.90 1,207.17 9.4% 1,042.81 1,148.23 10.1%
Pessimistic 1,103.90 1,252.06 13.4% 1,042.81 1,193.12 14.4%

MedPrime: Family - 2

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 857.54 905.16 5.6% 803.45 856.36 6.6%
Best estimate 857.54 944.41 10.1% 803.45 895.61 11.5%
Pessimistic 857.54 983.79 14.7% 803.45 934.99 16.4%

(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates

EXCELSIOR PLAN

Plan Prime: Individual

 Gross Rates (1)
2009
Gross Rates (1)
2010 (3)
Gross Rates (1)
% Change
Net Rates (2)
2009
Net Rates (2)
2010 (3)
Net Rates (2)
% Change
Optimistic 557.49 581.74 4.3% 529.17 552.47 4.4%
Best estimate 557.49 606.10 8.7% 529.17 576.83 9.0%
Pessimistic 557.49 626.50 12.4% 529.17 597.23 12.9%

Plan Prime: Family

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 1,197.21 1,250.47 4.4% 1,137.16 1,188.95 4.6%
Best estimate 1,197.21 1,301.76 8.7% 1,137.16 1,240.24 9.1%
Pessimistic 1,197.21 1,344.79 12.3% 1,137.16 1,283.27 12.8%

MedPrime: Individual

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 320.35 329.29 2.8% 296.43 308.15 4.0%
Best estimate 320.35 352.55 10.1% 296.43 331.41 11.8%
Pessimistic 320.35 367.53 14.7% 296.43 346.39 16.9%

MedPrime: Family - 1

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 960.08 998.01 4.0% 904.43 944.61 4.4%
Best estimate 960.08 1,048.20 9.2% 904.43 994.80 10.0%
Pessimistic 960.08 1,085.82 13.1% 904.43 1,032.42 14.2%

MedPrime: Family - 2

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Optimistic 722.95 745.55 3.1% 671.71 700.28 4.3%
Best estimate 722.95 794.64 9.9% 671.71 749.37 11.6%
Pessimistic 722.95 826.96 14.4% 671.71 781.59 16.4%

(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.
(3) Projected Rates


Exhibit III

EMPIRE PLAN
PA 5 TIER GROUP RATES
2001-2010 Monthly Rates

Core Plus Medical & Psychiatric Enhancements

Individual Planprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 325.23 10.3% 314.26 9.7%
2002 353.81 8.8% 344.66 9.7%
2003 400.00 13.1% 384.89 11.7%
2004 448.00 12.0% 438.15 13.8%
2005 490.41 9.5% 478.49 9.2%
2006 547.86 11.7% 529.76 10.7%
2007 600.69 9.6% 564.84 6.6%
2008 633.79 5.5% 592.38 4.9%
2009 630.73 -0.5% 598.58 1.0%
2010 projected 686.57 8.9% 653.68 9.2%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 8.1% 8.5%
Most Recent 10 Years 8.9% 8.7%
Most Recent 5 Years 7.0% 6.5%

Family Planprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 673.67 10.9% 651.09 10.3%
2002 742.98 10.3% 723.97 11.2%
2003 842.38 10.4% 811.41 12.1%
2004 945.29 12.2% 924.74 14.0%
2005 1,038.64 9.9% 1,013.68 9.6%
2006 1,164.16 12.1% 1,126.19 11.1%
2007 1,273.96 9.4% 1,198.07 6.4%
2008 1,346.27 5.7% 1,258.78 5.1%
2009 1,350.26 0.3% 1,282.17 1.9%
2010 projected 1,469.91 8.9% 1,400.82 9.3%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 7.7% 8.1%
Most Recent 10 Years 9.3% 9.1%
Most Recent 5 Years 7.3% 6.7%

Individual Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 245.64 12.7% 239.94 12.0%
2002 259.96 5.8% 253.82 5.8%
2003 307.02 18.1% 297.50 17.2%
2004 341.87 11.4% 334.22 12.3%
2005 340.50 -0.4% 331.93 -0.7%
2006 359.35 5.5% 338.88 2.1%
2007 363.02 1.0% 333.18 -1.7%
2008 397.23 9.4% 360.41 8.2%
2009 384.38 -3.2% 359.22 -0.3%
2010 projected 423.80 10.3% 401.08 11.7%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 5.3% 5.9%
Most Recent 10 Years 7.1% 6.7%
Most Recent 5 Years 4.6% 4.0%

Family - 1 Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 595.25 12.1% 577.95 11.5%
2002 649.14 9.1% 633.13 9.5%
2003 749.40 15.4% 724.05 14.4%
2004 839.18 12.0% 820.82 13.4%
2005 888.71 5.9% 867.09 5.6%
2006 975.66 9.8% 935.32 7.9%
2007 1,036.30 6.2% 966.44 3.3%
2008 1,109.74 7.1% 1,026.86 6.3%
2009 1,103.90 -0.5% 1,042.81 1.6%
2010 projected 1,207.17 9.4% 1,148.23 10.1%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 6.4% 6.8%
Most Recent 10 Years 8.6% 8.3%
Most Recent 5 Years 6.4% 5.8%

Family - 2 or More Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 514.40 13.5% 502.37 12.8%
2002 555.29 7.9% 542.29 7.9%
2003 656.42 18.2% 636.67 17.4%
2004 733.05 11.7% 716.88 12.6%
2005 738.79 0.8% 720.53 0.5%
2006 787.16 6.5% 744.45 3.3%
2007 798.65 1.5% 734.81 -1.3%
2008 873.21 9.3% 794.94 8.2%
2009 857.54 -1.8% 803.45 1.1%
2010 projected 944.41 10.1% 895.61 11.5%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 5.2% 5.8%
Most Recent 10 Years 7.8% 7.4%
Most Recent 5 Years 5.1% 4.5%

(1) Represents premiums paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.


Exhibit IV

EMPIRE PLAN
PA 2 TIER GROUP RATES
2001-2010 Monthly Rates
(For Illustrative Purposes Only)

Core Plus Medical & Psychiatric Enhancement

Individual

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 289.41 11.0% 280.25 10.3%
2002 313.58 8.4% 305.67 9.1%
2003 357.44 14.0% 345.36 13.0%
2004 402.70 12.7% 394.31 14.2%
2005 433.70 7.7% 423.31 7.4%
2006 477.33 10.1% 459.25 8.5%
2007 511.23 7.1% 477.96 4.1%
2008 536.84 5.0% 498.88 4.4%
2009 527.09 -1.8% 497.91 -0.2%
2010 projected 577.00 9.5% 547.99 10.1%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception (1986) 7.7% 7.7%
Most Recent 10 Years 8.4% 8.1%
Most Recent 5 Years 6.0% 5.4%

Family

YearGross Rate (1)% ChangeNet Rate (2)% Change
2001 640.64 10.8% 619.28 10.0%
2002 703.61 9.8% 685.83 10.7%
2003 805.64 14.5% 778.82 13.6%
2004 899.98 11.7% 881.48 13.2%
2005 968.40 7.6% 945.11 7.2%
2006 1,073.28 10.8% 1,034.40 9.4%
2007 1,158.16 7.9% 1,084.90 4.9%
2008 1,233.38 6.5% 1,150.41 1,536,436 5,611,992
(B) Incurred Claims (2) 1,557,807 1,403,790 199,271 189,741 1,792,802 86,509 3,816 3,315 93,640 1,343,304 4,787,553
(C) Administrative Expense (3) 122,757 150,359 16,318 15,584 182,261 17,777 335 230 18,342 72,114 395,474
(D) Gain/(Loss) (A-B-C) 83,769 154,446 37,518 35,990 227,954 1,325 (2,537) (2,564) (3,776) 121,018 428,965

(1) Earned Premium - Premium which pays for coverage for the period reported (accrual basis).
(2) Incurred Claims - Represents the cost of covered services provided during the period reported by the insurance company (accrual basis).
(3) Administrative Expenses - All charges by the insurance carrier other than for the payment of claims. Includes carrier’s cost to administer the program, interest charges, and other retention.

Source: Carrier 2008 3rd Quarter Experience Report


Exhibit II

Empire Plan
Participating Agency Premium Rates
Comparison of 2008 and 2009 Rates
Mediprime Rate Structure

EMPIRE PLAN

Plan Prime

 Gross Rates (1)
2008
Gross Rates (1)
2009
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009
Net Rates (2)
% Change
Individual 633.79 630.73 -0.5% 592.38 598.58 1.0%
Family 1,346.27 1,350.26 0.3% 1,258.78 1,282.17 1.9%

Medprime

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Individual 397.23 384.38 -3.2% 360.41 359.22 -0.3%
Family - 1 medicare 1,109.74 1,103.90 -0.5% 1,026.86 1,042.81 1.6%
Family - 2 medicares 873.21 857.54 -1.8% 794.94 803.45 1.1%

(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.

EXCELSIOR PLAN

Plan Prime

 Gross Rates (1)
2008
Gross Rates (1)
2009
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009
Net Rates (2)
% Change
Individual 551.81 557.49 1.0% 513.43 529.17 3.1%
Family 1,173.06 1,197.21 2.1% 1,091.89 1,137.16 4.1%

Medprime

 Gross Rates (1)
2008
Gross Rates (1)
2009 (3)
Gross Rates (1)
% Change
Net Rates (2)
2008
Net Rates (2)
2009 (3)
Net Rates (2)
% Change
Individual 322.07 320.35 -0.5% 286.19 296.43 3.6%
Family - 1 medicare 943.33 960.08 1.8% 864.68 904.43 4.6%
Family - 2 medicares 713.58 722.95 1.3% 637.43 671.71 5.4%

(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.


Exhibit III

EMPIRE PLAN
PA 5 TIER GROUP RATES
2000-2009 Monthly Rates

Core Plus Medical & Psychiatric Enhancements

Individual Planprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 294.94 5.5% 286.53 9.7%
2001 325.23 10.3% 314.26 9.7%
2002 353.81 8.8% 344.66 9.7%
2003 400.00 13.1% 384.89 11.7%
2004 448.00 12.0% 438.15 13.8%
2005 490.41 9.5% 478.49 9.2%
2006 547.86 11.7% 529.76 10.7%
2007 600.69 9.6% 564.84 6.6%
2008 633.79 5.5% 592.38 4.9%
2009 630.73 -0.5% 598.58 1.0%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 8.1% 8.5%
Most Recent 10 Years 8.5% 8.7%
Most Recent 5 Years 7.2% 6.5%

Family Planprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 607.33 5.9% 590.16 11.0%
2001 673.67 10.9% 651.09 10.3%
2002 742.98 10.3% 723.97 11.2%
2003 842.38 13.4% 811.41 12.1%
2004 945.29 12.2% 924.74 14.0%
2005 1,038.64 9.9% 1,013.68 9.6%
2006 1,164.16 12.1% 1,126.19 11.1%
2007 1,273.96 9.4% 1,198.07 6.4%
2008 1,346.27 5.7% 1,258.78 5.1%
2009 1,350.26 0.3% 1,282.17 1.9%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 7.6% 8.0%
Most Recent 10 Years 9.0% 9.3%
Most Recent 5 Years 7.5% 6.8%

Individual Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 217.94 16.9% 214.25 22.0%
2001 245.64 12.7% 239.94 12.0%
2002 259.96 5.8% 253.82 5.8%
2003 307.02 18.1% 297.50 17.2%
2004 341.87 11.4% 334.22 12.3%
2005 340.50 -0.4% 331.93 -0.7%
2006 359.35 5.5% 338.88 2.1%
2007 363.02 1.0% 333.18 -1.7%
2008 397.23 9.4% 360.41 8.2%
2009 384.38 -3.2% 359.22 -0.3%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 4.9% 5.4%
Most Recent 10 Years 7.7% 7.7%
Most Recent 5 Years 2.5% 1.5%

Family - 1 Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 530.97 10.4% 518.52 16.0%
2001 595.25 12.1% 577.95 11.5%
2002 649.14 9.1% 633.13 9.5%
2003 749.40 15.4% 724.05 14.4%
2004 839.18 12.0% 820.82 13.4%
2005 888.71 5.9% 867.09 5.6%
2006 975.66 9.8% 935.32 7.9%
2007 1,036.30 6.2% 966.44 3.3%
2008 1,109.74 7.1% 1,026.86 6.3%
2009 1,103.90 -0.5% 1,042.81 1.6%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 6.2% 6.6%
Most Recent 10 Years 8.7% 8.9%
Most Recent 5 Years 5.7% 4.9%

Family - 2 or More Medprime

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 453.22 17.1% 445.51 23.5%
2001 514.40 13.5% 502.37 12.8%
2002 555.29 7.9% 542.29 7.9%
2003 656.42 18.2% 636.67 17.4%
2004 733.05 11.7% 716.88 12.6%
2005 738.79 0.8% 720.53 0.5%
2006 787.16 6.5% 744.45 3.3%
2007 798.65 1.5% 734.81 -1.3%
2008 873.21 9.3% 794.94 8.2%
2009 857.54 -1.8% 803.45 1.1%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception of 5 Tier Structure (1996) 4.8% 5.4%
Most Recent 10 Years 8.5% 8.6%
Most Recent 5 Years 3.3% 2.4%

(1) Represents premiums paid to the carriers.
(2) Represents cost to a participating agency.
(3) Inception of Medprime Rate Structure.


Exhibit IV

EMPIRE PLAN
PA 2 TIER GROUP RATES
2000-2009 Monthly Rates
(For Illustrative Purposes Only)

Core Plus Medical & Psychiatric Enhancement

Individual

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 260.67 9.0% 253.98 14.4%
2001 289.41 11.0% 280.25 10.3%
2002 313.58 8.4% 305.67 9.1%
2003 357.44 14.0% 345.36 13.0%
2004 402.70 12.7% 394.31 14.2%
2005 433.70 7.7% 423.31 7.4%
2006 477.33 10.1% 459.25 8.5%
2007 511.23 7.1% 477.96 4.1%
2008 536.84 5.0% 498.88 4.4%
2009 527.09 -1.8% 497.91 -0.2%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception (1986) 7.7% 7.6%
Most Recent 10 Years 8.3% 8.5%
Most Recent 5 Years 5.6% 4.8%

Family

YearGross Rate (1)% ChangeNet Rate (2)% Change
2000 578.26 7.3% 563.03 12.7%
2001 640.64 10.8% 619.28 10.0%
2002 703.61 9.8% 685.83 10.7%
2003 805.64 14.5% 778.82 13.6%
2004 899.98 11.7% 881.48 13.2%
2005 968.40 7.6% 945.11 7.2%
2006 1,073.28 10.8% 1,034.40 9.4%
2007 1,158.16 7.9% 1,084.90 4.9%
2008 1,233.38 6.5% 1,150.41 6.0%
2009 1,230.02 -0.3% 1,165.24 1.3%

Average Percent Increase

 Gross Rate % ChangeNet Rate % Change
From Inception (1986) 8.2% 8.1%
Most Recent 10 Years 8.7% 8.9%
Most Recent 5 Years 6.5% 5.8%

(1) Represents premiums charged by the carriers.
(2) Represents cost to a participating agency.


Fourth Quarter Report - 2008

The American Recovery and Reinvestment Act of 2009 (ARRA)

The ARRA of 2009, passed by Congress in February, includes provisions that provide COBRA assistance to individuals involuntarily terminated from employment between September 1, 2008 and December 31, 2009. Assistance eligible individuals will pay 35% of the COBRA premium, with the remaining 65% reimbursed to the employer through Federal payroll taxes. The Employee Benefits Division issued PA Memo 09-10 (PAEX-09-06 for agencies that offer The Excelsior Plan), dated April 2, 2009, which provides information on the COBRA Subsidy Provisions. Participating Agencies that are subject to the COBRA laws are responsible for complying with these new provisions. NYSHIP will assist agencies with fewer than 20 employees since the federal subsidy must be claimed by the insurers. PA Memo 09-11 (PAEX 09-07), dated April 16, 2009, includes the procedures for administration of the ARRA COBRA Premium Subsidy for these smaller agencies.

The Employee Benefits Division also issued PA Memo 09-12 (PAEX 09-08), dated April 16, 2009, with additional information specifically related to eligibility of vestees and local officials.

Please be sure to review these documents carefully, as they provide important information about this new legislation and your responsibilities for administering it.

Dependent Eligibility Verification Project

The NYSHIP dependent eligibility audit is underway. The Employee Benefits Division issued PA Memo 09-06, dated March 5, 2009, which provides details about this project, including the timeframes and the materials that will be sent to enrollees, as well as a copy of the letter that was sent to all enrollees. Budco, a company with extensive experience in this field, is administering the Dependent Eligibility Verification Project. Budco is providing call center services for enrollees, as well as reviewing proofs and handling appeals.

The project includes a 60-day amnesty period during which enrollees can remove ineligible dependents without penalty. In early April, enrollees with family coverage were sent an amnesty packet which included a list of covered dependents and instructions for removing any ineligible dependent during the amnesty period which ends on June 12. To date, over 10,000 dependents have been voluntarily deleted. In September participating agency enrollees will receive the audit packet. At that time enrollees will be required to submit documentation of each dependent’s eligibility for coverage. Failure to provide acceptable documentation by the due date will result in the removal of the dependent from the enrollment file.

Increase in Health Insurance Assessments

The Employee Benefits Division has received numerous inquiries about the State’s recent increases in health insurance assessments and how NYSHIP rates will be affected. Please note that there will NOT be any mid-year NYSHIP rate increases as a result of this.

NYBEAS Upgrade

An upgrade of NYBEAS is planned for early June. Watch for information about the changes. HBAs will have an opportunity to familiarize themselves with the system changes before the implementation date.

Medicare Part D Employer Subsidy Update

To date, NYSHIP applied for and received estimated Employer Subsidies through the third quarter of 2008 (through September); the latest subsidy was applied to the bill issued in January for February 2009 coverage. The Department will continue to credit PA bills as the employer subsidies are received.

Prompt Payment of NYSHIP Premium

As indicated in previous reports, the Employee Benefits Division has been aggressively monitoring agencies that fail to submit premium payments in a timely manner. This procedure includes suspension of claims for enrollees of any agency that falls three months behind in their premiums. To avoid disruption of your employees’ benefits, please be sure to submit your premium payments by the due date, as we must submit premium to the Empire Plan insurers on time. You may wish to consider submitting your payments electronically to promote timely payments. Attached are guidelines to initiate electronic transfer of funds.

GASB 45 Census Reports

As indicated in previous reports, NYSHIP will provide agency census reports upon request for use in complying with the provisions of GASB 45. Since the data included in these reports will be current at the time they are provided, it is important that your agency NYBEAS file is up-to-date, including correctly identifying and coding retirees before requesting census reports. To request a copy of your agency’s census information, please send an e-mail to: Kevin.Hill@cs.state.ny.us and include your name, agency name & code number, mailing address, phone number and e-mail address. For additional information about GASB 45, please refer to PA Memos 06-11 and 06-18.