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.
ANDREW M. CUOMO
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
PA11-22
PAEX11-19
TO: Participating Agency Chief Executive Officers and Health Benefits Administrators
FROM: Employee Benefits Division
SUBJECT: Plan Year 2012 NYSHIP Rates
DATE: December 1, 2011
Enclosed are the Plan Year 2012 rates for the New York State Health Insurance Program (NYSHIP). Schedule I contains the full share rates, the no-drug rates for Medicare Part D Low Income Subsidy (LIS), the COBRA rates and the NYS Continuity of Coverage rates. Schedules II and II represent the Employee/Employer Variable Contribution Rate Table for drug and non-drug rates, respectively. Your bill for January 2012 coverage will reflect the new rates.
The Five-Tier premium rates chargeable to Participating Agencies have, in the aggregate, increased 2.7% for The Empire Plan and increase 2.4% for The Excelsior Plan. The percentage increase for each type of coverage does vary.
Factors contributing to this favorable rate action:
Negotiated Reductions in Premium Demands
Negotiated premium reductions of approximately $502.5 million from the carriers’ baseline renewal requests were obtained as a result of the discussion between the insurers, Department staff, Division of Budget staff and our benefit consulting firm. Of this amount, $441.5 million of the premium reduction was provided in exchange for Retrospective Premium Arrangements.
A retrospective premium arrangement provides for the payment of a reduced premium throughout the year with a provision for an additional premium payment at settlement in the event that claims and expenses exceed the premium amount paid throughout the plan year.
Consistent with previous years’ premium development strategies, the entire amount of the margin ($255.5 million) was removed from the 2012 rates. In addition, the carriers agreed to reduce the paid premium an additional $186.0 million. This strategy is intended to ensure that the level of dividend that is ultimately generated is kept to a minimum. If, at the end of the year the actual claims and expenses exceed the amount of the paid premium, a retrospective premium payment will be made by the plan from available dividend.
Application of Dividends and Other Credits
Premium above what is necessary to pay claims in any given year is returned to the Plan as a dividend and, consistent with State Law, is deposited in the Health Insurance Fund and used as a premium stabilization reserve. Funds from this reserve are applied each year to reduce the Plan premium charged to payors. The 2012 Empire Plan premiums include a dividend credit of $275.5 million in available dividends. The Empire Plan premium rates also include $90 million in Early Retiree Reinsurance Program (ERRP) credits pertaining to 2010 and 2011 claims activity. As a result, we project there will be $226.3 million in dividends/ERRP earned as of 12/31/2011 to be available to offset 2013 premiums or pay for any retro premium payment pertaining to the 2012 plan year.
Specific carrier premium changes and factors:
Empire Blue Cross and Blue Shield (Hospital Program)
A 5.1% premium increase results from a 10.0% trend assumption, a 0% margin load, a 1.75% increase in administrative fees and a 2011 premium level generating a projected 1.0% dividend.
UnitedHealthcare (Medical Program)
An overall 0.7% decrease in the aggregate premium for the UnitedHealthcare medical component is the net result of a 7.3% trend assumption, 0% margin, a 1.0% increase in retention and a 2011 premium level projecting a 2.8% dividend.
UnitedHealthcare (Mental Health and Substance Abuse Program)
A 20.6% premium increase is the blended combination of a 10.4% trend assumption, 0% margin load, and a 2011 premium level projecting a 13.5% loss.
United Healthcare (Prescription Drug Program)
A 0.5% premium decrease is the result of an 8.9% trend assumption, 0% margin load, $82.3 million in savings from benefit design changes and a 2011 premium level generating a projected 6.4% dividend.
Other important information
NYSHIP Medicare Part B Premium Reimbursement
The Centers for Medicare and Medicaid Services announced that the January 1, 2012 Part B premium amount will be $99.90 for all enrollees except for those in high income brackets whom will continue to be subject to the Income Related Monthly Adjusted Amount (IRMAA).
Retiree Deductions
Retiree pension deductions for health insurance will change in the checks issued by the retirement systems at the end of December 2011. As you know, the December 31, 2011 deduction will pay for January 2012 NYSHIP coverage.
Participating Agency Administrative Charge
The 2011 annual administrative per enrollee charge will decrease 6.8% from $5.25 million to $4.90 million. This annual charge equates to a monthly per enrollee charge for 2012 of $2.037. This reflects EBD administrative costs less the application of the PA Rate Fluctuation Surplus as of March 31, 2011.
The administrative charge cost will be shown separately on your monthly bill. Please send one check each month for the combined amount, made payable to the “New York State Employees’ Health Insurance Pending Account.” Please note that the administrative charge must be borne entirely by the agency and may not be passed on to active employees, retirees, or other enrollees.
If you have any questions about this rate change, please contact the PA/PE Operations Unit at (518) 474-2780.