Fiscal Year 2013-2015 Special Budget Meeting

FiLED Of nctOFTHE. C!Ty CLEHK . OAKLAND DISTRIBUTION DATE: 6/24/13 13JUN2t* PM 1:52 MEMORANDUM CITY OF OAKLAND TO: HONORABLE MAYOR & FROM: Katano Kasaine CITY COUNCIL SUBJECT: CalPERS New Health Benefit Plans DATE: June 24, 2013 and Plan Rates for Calendar Year 2014 City Administrator Date Approval Isl Deanna J. Santana 6/24/13 This information memorandum provides information regarding recent Health Benefit Plan changes with California'Public Employees' Retirement System (CalPERS) and the Plan Rates for Calendar Year 2014. On June 18, 2013, the California Public Employees' Retirement System's (CalPERS) Board of Administration approved recommendations from the Pension and Health Benefits Committee (PHBC) related to a 2014 health care package that would raise overall premiums next year by a statewide averajge of 3 percent for the Pension Fund's nearly 1.3 million health program members. Regioiially, the premium changes vary with some regions incurring a higher rate increase than is reflected in the Statewide average. The Health Benefit Plan Rates will become effective January 1, 2014. According to CalPERS, the requirements of the federal Affordable Care Act accounted for about 2 percent of the;2014 premium rate increases. The rate package will increase Basic HMO plan coverage by 3.8 percent, PPO plans by 2.5 percent and Association plans by 6 percent. Medicare HMO plans will increase about 5.8 percent, PPO plans will decrease 8.7 percent, and Association plans will increase 2.2 percent. However, in certain geographic areas, Plan Rates experienced a higher rate increases because of the impact of regional pricing differences. This higher rate increase impacted mainly the rates for Bay Area plans. Another change to CalPERS Health Benefits includes the introduction of additional plan options for members, also effective January 1, 2014. In 2014, members will be able to choose from multiple plans including: Anthem Blue Cross, Health Net, Sharp Health and United Healthcare joining Blue Shield of California and Kaiser Permanente as HMO providers. Some of these plans are only ayailable in certain regions within the State. Three PPO options remain available including PERS Choice, PERS Select and PERSCare - all administered by Anthem Blue Shield as CalPERS' Third Party Administrator. All of the CalPERS health plan providers have five- year contracts that expire December 31, 2018.