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.
GOVERNOR
DEPARTMENT OF CIVIL SERVICE
ALBANY, NEW YORK 12239
www.cs.ny.gov
COMMISSIONER
DANIEL E. WALL
EXECUTIVE
DEPUTY COMISSIONER
PA01-27
TO: Participating Agency Health Benefits Administrators
FROM: Robert W. DuBois, CEBS Director, Employee Benefits Division
SUBJECT: Plan Year 2002 NYSHIP Rates
DATE: November 28, 2001
November 28, 2001
Dear Participating Agency Health Benefits Insurance Administrator:
Attached are the Plan Year 2002 rates for the New York State Health Insurance Program (NYSHIP). Schedule I contains the full share rates, the COBRA rates and the NYS Continuity of Coverage rates. Schedule II represents the Employee/Employer Variable Contribution Rate Table (PS-508). Your bill for January 2002 coverage will reflect the new rates.
The net Five-Tier Mediprime rates for the Core plus all enhancement option have, in the aggregate, increased 10.2%. While this level of increase is higher than we would like it to be, it is lower than what many other plans in the northeast and nationally are reporting. There are a myriad of factors, both positive and negative contributing to this premium increase.
Reductions in Renewal Requests /Retrospective Premium Payments (RETROS)
Reductions of approximately $139.1 million from the carriers’ original baseline renewal requests were made as a result of discussions with Department staff and the Department’s benefit consulting firm, Buck Consultants. A significant portion of this reduction is due to the retro agreements, which are integral to this rate action. Under a retro agreement, the plan pays the insurance companies based on what the plan thinks the ultimate cost will be. The insurance company accepts the payment rate with the condition that if costs are greater than the premium earned from the payment rate, additional premium (the retro) will be paid to the insurance company. The retro payment, if needed, will be made from available dividend or future premium charges, if necessary. Of course using plan year 2001 dividend to meet any plan year 2002 retro obligation will reduce the dividend amount available to offset future premium obligations. In sum, the retros amount to approximately $245 million and according to Buck Consultants are considered a prudent premium development strategy for 2002. Both the Department of Civil Service and Buck Consultants do not expect any material retro payment will have to be made.
Empire Blue Cross Blue Shield (hospital)
A 10.4% premium increase results from a 7.8% going forward trend, 1% margin load, an increase in administrative fees, the integration of the hospital component of the Benefits Management Program and a 2001 premium level generating a projected breakeven position.
UnitedHealthcare (medical)
An overall 8.1% increase in the aggregate premium for the UnitedHealthcare medical component of the Empire Plan is the net result of a number of factors. This action reflects a trend factor of 11.2%, 1.5% margin and a 2001 premium level generating a projected 5.4% dividend.
Group Health Incorporated (mental health and substance abuse)
A 4.2% premium decrease is the blended combination of a 1% trend, .75% margin load, a 2001 premium level generating a projected 8.7% dividend and a targeted increase in fees paid to psychologists.
Cigna (prescription drugs)
A 12.6% premium increase is the result of an 18% underwriting trend, a 3% margin factor and a 2001 premium level generating a projected 4.9% dividend.
The remaining Empire Plan rating components, including dividend and interest, make up the remainder of the premium increase for 2002.
Medicare Premium
The Health Care Financing Administration has announced an increase of $4.00 in the monthly Medicare Part B premium. Accordingly, the calendar year 2002 Medicare premium will increase to $54.00 per month.
Retiree Deductions
Retiree pension deductions for health insurance will change in the checks issued by the retirement systems at the end of December 2001. As you know, with the New York Benefits and Eligibility and Accounting System (NYBEAS), the December 2001 deduction will pay for January 2002 coverage.
Participating Agency Administrative Charge
The 2002 annual administrative per enrollee charge will increase 19.8% from $12.326 to 14.767. The increase charge is the blended result of a higher PA enrollment, a carryforward surplus, and an increase in the costs and the percentage allocable to PAs. The annual agency fee will increase 25.7% from $218 to $274. Any difference between the actual and estimated costs will be factored into the 2003 administrative fees.
The administrative cost charge, which is less than .3% of premium and basically equal to the 1994 rates, will be shown separately on your premium 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 our Operations Unit at (518) 485-6619, (518) 457-5153 or (518) 457-5847.
Sincerely,
Robert W. DuBois, CEBS
Director
Employee Benefits Division