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
PA12-21
TO: Participating Agency Chief Executive Officers and Health Benefits Administrators
FROM: Employee Benefits Division
SUBJECT: 2013 New York State Health Insurance Program (NYSHIP) Rates
DATE: November 29, 2012
Attached are the 2013 NYSHIP Participating Agency premium rates that become effective January 1, 2013. 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 III represent the Employee/Employer Variable Contribution Rate Table for drug and non-drug rates, respectively. Your bill for January 2013 coverage will reflect the new rates.
The five tier premium rates chargeable to Participating Agencies have, in the aggregate, increased 5.4% for The Empire Plan and increased 6.7% for The Excelsior Plan. The percentage increase for each type of coverage does vary; see the attached schedules for rate details.
Factors contributing to this favorable rate action:
Reductions in Premium Demands
Premium reductions of approximately $541.1 million from the carriers' baseline renewal requests were made as a result of the discussion between the insurers, Department staff, Division of Budget staff and our benefit consulting firm. Of this amount, $403.7 million of the premium reduction is subject to 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.A
Consistent with previous years' premium development strategies, the entire amount of the margin ($261.4 million) was removed from the 2013 rates. In addition, these rates include a claims reduction of $142.3 million below the carriers' projections.A This strategy is intended to closely match the rates charged to participating local governments to actual claims costs and expenses. 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/Charges
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 2013 Empire Plan premiums include a dividend credit of $140 million. As a result, we project there will be $110 million in dividends earned as of December 31, 2012 to be available to offset 2014 premiums or pay for any retro premium payment pertaining to the 2013 plan year.A In addition, a $10.4 million charge was included to recover premium underpayment resulting from the five tier premium structure in 2011 and 2012 as compared to the two tier premium liability.A This premium shortfall results from the increased shift of Participating Agency enrollees to lower premium rates as they become Medicare eligible throughout the year.
Specific carrier premium changes and factors:
Empire Blue Cross and Blue Shield (Hospital Program)
A 2.3% premium increase results from an 8.7% trend assumption, a 0% margin load, a 2.0% increase in administrative fees and a 2012 premium level generating a projected 3.7% surplus.
UnitedHealthcare (Medical Program)
An overall 8.7% increase in the aggregate premium for the UnitedHealthcare medical component is the net result of a 9.0% trend assumption, 0% margin and a 2012 premium level projecting a 1.3% surplus.
UnitedHealthcare (Mental Health and Substance Abuse Program)
A 10.9% premium increase is the blended combination of an 8.0% trend assumption, 0% margin load, an $11.0 million load for new benefit mandates and a 2012 premium level generating a projected 5.2% surplus.
United Healthcare (Prescription Drug Program)
A 14.1% premium decrease is the result of a 4.3% trend assumption, 0% margin load, $280 million in savings from the implementation of the Employer Group Waiver Plan and a 2012 premium level generating a projected 5.2% surplus.
Other important information
NYSHIP Medicare Part B Premium Reimbursement
The Centers for Medicare and Medicaid Services announced that the January 1, 2013 Part B premium amount will be $104.90 for all enrollees except for those in high income brackets whom will continue to be subject to the Income Related Monthly Adjustment 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 2012. The December 31, 2012 deduction will pay for January 2013 NYSHIP coverage.
Participating Agency Administrative Charge
The annual administrative charge for Participating Agencies will increase 4.6% from $4.90 million to $5.12 million resulting in a 2013 monthly per enrollee charge of $2.1144. This reflects EBD administrative costs less the application of the PA Rate Fluctuation Surplus as of March 31, 2012.
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 Agency Services Unit at (518) 474-2780.
Rate Charts