Delivery of Employee
Benefits in the BC K-12 Sector
John Trieu, Partner and Allen Furlong, Consultant
2015 BCSTA AGM Session
April 16, 2015
Agenda
Overview of Benefits in BC K-12 Sector
Key Milestones
BCPSEA Buying Group
Public Education Benefits Trust
Current Trends
Industry Perspective
BC K-12 Strategy
Opportunities for the Future
Questions
Confidential – Not for Distribution
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Overview of Benefits in the BC K-12 Sector
Confidential – Not for Distribution
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Key Milestones
1992 – Provincial government established the Commission of
Inquiry into the Public Service and Public Sector
Judy Korbin named sole commissioner directed to report to
provincial cabinet
Mandate was broad in scope, encompassing all areas of human
resource management including cost effectiveness of employee
benefits arrangements
Korbin concluded there would be significant savings by setting up
a provincial purchasing arrangement, including the K-12 sector
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Key Milestones (cont’d)
1994 – PSEC established
Purpose in part was to ensure the co-ordination of Human
Resource and Labour Relations policies and practices among
public sector employees
1994 – BCPSEA established
Part of mandate was to co-ordinate benefit purchase and delivery
within the K-12 sector
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Guiding Principles
Improved governance
Infrastructure that supports shared services
Streamlined administration
Improved communications
Better access to benefits information
Preferred client status
Improved disability management
Foster positive labour relations
Volume purchasing
Shared risk
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Volume Purchasing & Shared Risk
Without
Change in
Provisions!
Typical
Arrangement
Retention and
Reserves
BCPSEA
Buying
Group &
PEBT
Retention and
Reserves
Volume Purchasing
Increased negotiation power with
insurers and other providers
Shared Risk
Can view all small groups as one
large group
Paid Claims
Paid Claims
Benefit from alternative
underwriting arrangements
Can self-insured reserves
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Volume Purchasing & Shared Risk
Claim
Payer
ASO
Stand-Alone
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Administrative
Services Only (ASO)
ASO
Plan
Sponsor
Experience Rated
Non-Refund
Plan Sponsor Pool
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Overview of Benefits in the BC K-12 Sector
Significant progress has been made by the sector to
reduce the cost of delivery of benefits
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Overview of Benefits in the BC K-12 Sector
Economies of Scale/Participation
Harmonization of Plan Designs
Underwriting
Administration & Delivery
Level of Coordination
Ontario
Manitoba
Low
Coordination
Confidential – Not for Distribution
Quebec
Saskatchewan
Newfoundland
BC
PEI
Nova Scotia Alberta
New Brunswick
Optimal
Coordination
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Overview of Benefits in the BC K-12 Sector
BCPSEA Buying Group
Insurance Buying Group sponsored
by BCPSEA
Membership: 40,000 (varies by
benefit)
Inception: 1997
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The BCPSEA Buying Group at a Glance…
Basic Life – Experience Rated, Refund Accounting with risk sharing
for most districts
EHC and Dental – Coverage for other employee groups and risk
sharing for small districts
Other Benefits – The BCPSEA Buying Group facilitates the delivery
of other benefits paid by the district/member such as Health,
Dental, Life, Accident, and others.
Confidential – Not for Distribution
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Overview of Benefits in the BC K-12 Sector
Public Education
Benefits Trust (PEBT)
Jointly Trusteed Health and Welfare
Trust that provides ‘Core LTD’ and
other benefits to unionized support
staff in BC (59 districts)
Membership: 21,000
Inception: 2003
Confidential – Not for Distribution
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The PEBT at a Glance…
Core LTD – Government Funded taxable LTD benefit for all eligible
members
Other LTD – Benefit top-ups sponsored by the PEBT and insured
by Desjardins for certain locals that previously had benefit plans
more generous than the Core LTD
Joint Early Intervention Service (JEIS) – A program to help
members return to work in early stages of disability/absence
Other Benefits – The PEBT facilitates the delivery of other
benefits paid by the district/member such as Health, Dental, Life,
Accident, and others.
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Current Trends
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Current Trends – Industry Perspective
2,400
Increasing Cost of Health
Benefits
Inflation
Utilization
Drug Costs
Generic vs. Brand Names
Biologic Drugs
Other
Attendance Management
Retiree Benefit Solutions
Healthcare Cost Trend
Cost per Covered per Year
2,200
2,000
1,800
EHC Trend - 9.5%
1,600
Inflation - 2.0%
1,400
1,200
1,000
1
2
3
4
5
6
7
8
9
10
Years
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Current Trends – BC K-12 Strategy
Focus on longevity of plans
Standardization of Benefits Delivery
Teachers EHC Plan
CUPE EHC Plan
Proactive Drug Cost Management
BlueRx
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Standardization of Benefits – Teachers EHC
Standardization evolved of several rounds of collective bargaining
Change in delivery left plan provisions unchanged
Morneau Shepell invited by BCPSEA and BCTF to participate in
benefits plan review
Parties were seeking a benefits consultant and actuary that has:
Deep subject matter expertise
A strong understanding of the sector
Relevant data readily available
Ability to provide objective advice
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Standardization of Benefits – Teachers EHC
Morneau Shepell provided facilitation and education
Establish Common Goals
Confirmation of the most common plan provisions
Established a baseline for cost
Focus perspective on overall plan value rather than provisions
Developed costing model for plan design options
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What Was Achieved
Membership votes initially reduced the number of Teachers
extended health plans from 60 to 8. Further reduced in 2014 to 4
Additional participants in the BCPSEA Buying Group
Administrative savings for the sector
Provider Search to ensure fair and open tendering process
Consistency in internal benefits administration
Modernization of benefits plan
Pay-direct drug card
Additional services
Cost containment features
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Teachers’ Standardized EHC Plan
Standard Plan
effective August 1, 2014
effective July 2017
effective July 2018
80% until $1,000 paid
per person, then 100%
80% until $1,000 paid
per person, then 100%
80% until $1,000 paid
per person, then 100%
80% until $1,000 paid
per person, then 100%
Annual deductible
$50
$50
$50
$50
Lifetime maximum
Unlimited
Unlimited
Unlimited
Unlimited
Termination Age
70
70
70
70
Survivor Benefit1
2 years without premium
contributions
2 years without premium
contributions
2 years without premium
contributions
2 years without premium
contributions
Dual Coverage Restriction
None
None
None
None
Prescription Drugs
Drug formulary
Pay-direct drug card
Per prescription deductible
Sexual dysfunction
Oral contraceptives
Fertility
Blue Rx
Yes
$0
Covered
Covered
Not covered
Blue Rx
Yes
$0
Covered
Covered
$20,000 per lifetime
Blue Rx
Yes
$0
Covered
Covered
$20,000 per lifetime
Blue Rx
Yes
$0
Covered
Covered
$20,000 per lifetime
Not covered
Not covered
Not covered
Not covered
Extended Health
Reimbursement
Smoking cessation2
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Teachers’ Standardized EHC Plan
Standard Plan
effective August 1, 2014
effective July 2017
effective July 2018
Included
Included
Included
Included
Covered
Covered
Covered
Covered
Ambulance
Hospital
Private duty nursing (including in-home)
Covered
Private/Semi-private
$20,000 per year
Covered
Private/Semi-private
$20,000 per year
Covered
Private/Semi-private
$20,000 per year
Covered
Private/Semi-private
$20,000 per year
Hearing aids
$1,000 every 5 years
$2,000 every 4 years
$2,700 every 4 years
$3,500 every 4 years
Covered
Covered
Covered
Covered
Orthopedic shoes
$400 per year
(adults and children)
$400 per year
(adults and children)
$400 per year
(adults and children)
$500 per year
(adults and children)
Orthotics
$200 per year
(adults and children)
$400 per year
(adults and children)
$500 per year
(adults and children)
$500 per year
(adults and children)
Medical Services and Supplies
Medi-Assist
Out-of-province
emergency medical
Miscellaneous services and supplies
(subject to reasonable and customary
limits as defined by the Insurer)
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Teachers’ Standardized EHC Plan
Standard Plan
Vision
Maximum
$200 per 24 months
effective August 1, 2014
effective July 2017
effective July 2018
$400 per 24 months
$500 per 24 months
$550 per 24 months
1 per 24 months separate from vision care
maximum3
1 per 24 months separate from vision care
maximum3
Eye exams
1 per 24 months Included in vision maximum
separate from vision care
(1 per 24 months)
maximum3
Prescription sunglasses
Included in vision maximum Included in vision maximum Included in vision maximum Included in vision maximum
Paramedical
Naturopath
$500 per year
$800 per year
$800 per year
$900 per year
Chiropractor
$500 per year
$800 per year
$800 per year
$900 per year
Massage therapist
$500 per year
$800 per year
$900 per year
$900 per year
Physiotherapist
$500 per year
$800 per year
$850 per year
$900 per year
Psychologist
$500 per year
$700 per year
$700 per year
$900 per year
Speech therapist
$500 per year
$700 per year
$700 per year
$800 per year
Acupuncturist
$500 per year
$700 per year
$800 per year
$900 per year
Podiatrist/Chiropodist
$500 per year
$700 per year
$700 per year
$800 per year
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Blue Rx at a Glance…
Dynamic program with continuous refinement
Features include:
Managed formulary
Special authorization enforcement
BC Cancer Agency drug management
Lowest cost alternative price control
Reasonable and customary mark-up and dispensing fee limits
Reviewed on a quarterly basis
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CUPE EHC Plan
BCPSEA and CUPE invited Morneau Shepell to engaged in a similar
exercise in 2013
Facilitated similar discussions, including:
Confirmation of the most common plan provisions
Established a baseline for cost
Focus perspective on overall plan value rather than provisions
Expected to benefit Support Staff members at 45 school districts
(approximately 79% of membership)
Costing and analysis was facilitated by BCPSEA/PEBT access to
claims data
Anticipate achieving many of the same outcomes
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Opportunities for the Future
Framework for discussions was established
Standardization of other employee groups (PVPs, other)
Further standardization of other benefits/policies
Life, Dental, etc.
EFAP Buying Group
Attendance Management, etc.
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Questions?
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Thank You!
John Trieu
Allen Furlong
Partner
Consultant
[email protected]
[email protected]
604-642-5212
604-642-5236
Visit us: morneaushepell.com
Follow us: @Morneau_Shepell
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