Lisa Turpen RN Associate Administrator Adventist Retirement Plan

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1 Lisa Turpen RN Associate Administrator Adventist Retirement Plan

2 NAD Mandate to Retirement Provide a Retirement Healthcare Plan To all Eligible retirees Pension only Retirees Pension and Defined Contribution combined Retirees Defined Contribution (DC) only Retirees Forever Adventist Retirement is trying to figure how best to fulfill this mandate.

3 Plan History Historically the NAD Retirement health plan has paid secondary to Medicare. SHARP (Supplemental Healthcare, Adventist Retirement Plan) was developed by Del Johnson and ARM in The roll out of the current SHARP plan occurred in The plan was developed with four options Base Option (medical benefits secondary to Medicare) MCx Option (catastrophic/medical benefits secondary to Medicare) Rx Option (prescription drug plan) DVH (Dental, Vision & Hearing) Option

4 SHARP Financials The annual SHARP budget: healthcare costs have continued to increase in each of the past three years. Healthcare costs in the United States are predicted to increase by 4% - 6% each year for the foreseeable future. SHARP has participated in two government sponsored prescription drug subsidy programs to provide savings to the Plan was the RDS (Retiree Drug Subsidy) program; saving an $2-$3 million/year current is the Medicare D plan with a wrap; saving $3 - $5 million/year.

5 SHARP Funding A percentage of NAD tithe covers the retiree Defined Benefit pension. The Joint & Survivor 10% reduction of the Defined Benefit plan funds SHARP healthcare. In the Defined Contribution era there will not be a Joint & Survivor reduction: no additional funds going into the healthcare bucket.

SHARP Retiree Subsidy Years 35+ 30-34 25-29 20-24 15-19 8-14 5-7 EC $220.00 $200.00 $175.00 $155.00 $130.00 $110.00 $88.00 Med B $94.41 $83.92 $73.

6 SHARP Retiree Subsidy Years EC $ $ $ $ $ $ $88.00 Med B $94.41 $83.92 $73.43 $62.94 $52.45 $41.96 $31.47 Total $ $ $ $ $ $ $ Annual $3,772 $3,407 $2,981 $2,615 $2,189 $1,823 $1,433

7 Base Option The Base Option was started in 2002 as the standard default medical option for a retiree. Base Option has a $2100/person/year medical deductible After the retiree pays the deductible then SHARP begins to pay the retirees Medicare Coinsurance (20%). Medicare pays 80% of allowed amount/claim Retiree pays the 20% coinsurance up to $2100 and then, SHARP pays the retiree 20% coinsurance/claim

8 MCx Option The catastrophic option, MCx, is intended as the stop gap scenario option for a retiree who has very high medical costs on a year to year basis. The MCx Option does not have a yearly deductible Medicare pays 80% of the allowed amount/claim Retiree pays 0% SHARP pays 20% retiree coinsurance/claim The MCx Option costs the retiree more on a monthly basis than the Base Option.

9 Comparison: monthly cost Base Option $ month = $175 for the retiree to put aside into a savings account for healthcare. $35/month SHARP cost before earned credit, taken from the retiree pension. You pay $175 +$35= $210/mo. total of your savings and SHARP cost. If you are not ill often during the plan year any money you put aside to use to meet the deductible that is leftover is yours to keep in your savings account. MCx Option $175/month SHARP cost before earned credit, taken from the retiree pension. If you are not ill often during the year the money taken from your pension for the SHARP cost that you may not use, is not returned to you.

10 Healthcare in : freeze the Earned Credit at 2015 levels 2016: increase the SHARP costs for two of the options. MCx DVH 2016: freeze the Medicare Part B Premium Reimbursement at 2015 levels. This will save the plan an estimated $5 million.

11 2016 SHARP Retiree Monthly Cost Base Option MCx Option DVH Option Rx Option Pre-Medicare Option Non-Medicare Option $35/mo/person $175/mo/person $75/mo/person $120/mo/person $450/mo/person $130/mo/person

12 Example Category A, 35+ YSC with DVH & Rx Options Base Option: $35 DVH Option: $75 Rx Option: $120 Subtotal: $230 Less EC:-$220 Total Monthly Cost: $10 MCx Option: $175 DVH Option: $75 Rx Option: $120 Subtotal: $370 Less EC: -$220 Total Monthly Cost: $150 This is a $10 increase over 2015 rates. This is $40 increase over 2015 rates.

13 2016 Earned Credit

14 Rx Option- prescription drugs In 2014 the SHARP Rx Option moved to an EGWP/Medicare D plan administered by Express Scripts. Express Scripts Medicare PDP SHARP pays the Medicare D premium for you The program is a Medicare D plan plus a wrap of additional drugs that a Medicare D plan does not cover. The Medicare D plan is approved by CMS Only Medicare D drug costs, not the wrap drugs, are used to calculated your spend in each stage of the Medicare D program.

15 Rx Option: Medicare D Deductible Stage: you pay a $200 deductible on Medicare D and non-d drugs at Retail and Mail before the Plan begins to assist with your drug costs. Initial Stage: you pay the copay until your Medicare D spend = $3,310.00(gross drug cost paid by SHARP, you and the Manufacturer discount) Coverage Gap Stage: you pay the copay until your Medicare D spend = $4, (Manufacturer discounts and SHARP pay the cost beyond the copay) Catastrophic Stage: you pay Either $2.95 for generic $7.40 for brand Or 5% coinsurance of specialty drugs

16 Rx Option Copay Retail Home Generic $12/30 days Generic $29/90 days Brand $29/30 days Brand $70/90 days Non-Preferred Brand $45/30 days Non-Preferred Brand $110/90 days

17 CMS Rules for Medicare D Break in creditable prescription drug coverage must be <63 days or the retiree can be penalized. LEP (Late Enrollment Penalty): 1% for every month you don t have creditable coverage. This is a lifetime penalty. Part D Income Related Monthly Adjustment Amount. Some retirees pay an extra Part D premium based upon their yearly income. Base income is $85,000 single & $170,000 married will pay $12.70 and then increases for each level of income from there. Social Security withholds this from the monthly benefit. If the monthly benefit is insufficient you must send a check to Social Security for this additional premium.

18 Express Scripts Medicare D Mailings Each enrolled retiree will receive a booklet with details of the program and a list of participating pharmacies in their demographic region. Evidence of Coverage booklet 2016 Formulary (List of Covered Drugs) The Medicare Rx Option retiree/eligible spouse will have a yearly opt out period: December Annual Notice of Coverage sent by Express Scripts. There are individual prescription drug ID cards.

19 Excluded Medicare D Drug Drugs payable under Medicare Part A or Part B Drugs purchased outside of the United States or its Territories Off-label use of a drug is not covered Compound Medications are not covered The 2016 Formulary booklet provides most drugs covered and any certification rules. Call Express Scripts Customer Service to verify specific drug coverage.

20 Medicare Part B Premium (CMS data at If your yearly income in 2013 (for what you pay in 2015) was File individual tax return File joint tax return File married & separate tax return You pay (in 2015) $85,000 or less $170,000 or less $85,000 or less $ above $85,000 up to $107,000 above $170,000 up to $214,000 Not applicable $ above $107,000 up to $160,000 above $214,000 up to $320,000 Not applicable $ above $160,000 up to $214,000 above $320,000 up to $428,000 above $85,000 and up to $129,000 $ above $214,000 above $428,000 above $129,000 $335.70

21 Medicare Part B CMS/Medicare reviews two years of tax records to set the retiree s Part B premium. SHARP provides a subsidy to help off-set the Part B premium cost. The SHARP subsidy is only available to a retiree/spouse with Defined Benefit service or a combination of Defined Benefit and Defined Contribution service. The SHARP Part B subsidy is not available to Defined Contribution only service retiree/spouse.

22 Medicare Part B Table: $ Category A 35+ Years 90% $94.41 Category B Years 80% $83.92 Category C Years 70% $73.43 Category D Years 60% $62.94 Category E Years 50% $52.45

23 SHARP Contacts ARM Customer Service Retiree: ARM Pre & Non-Medicare: Express Scripts Medicare PDP: Express Scripts Pre & Non-Medicare SHARP:

24 SHARP Team Gayle Fell SHARP Assistant Vernon Rogers SHARP Assistant Lisa Sharpe SHARP Manager

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