TO:                      Executive Board and Council Leaders                     

FROM:               Deborah Stayman and Lorraine Simpkins

DATE:                 November 22, 2006

RE:                      2007 Empire Plan & HMO Premium Rates/Option Transfer Period

 

SPECIAL NOTE: Immediately following the release of the 2007 health insurance rates, PEF received notice that we prevailed in our legal action challenging the state’s inclusion of Medicare Part B premiums in health insurance rates. The rates in this memo include a cost component for Medicare Part B. At this point we have no information on how this important legal decision will impact the 2007 rates.

The Empire Plan and HMO premium rates for the year 2007 have been approved and are being distributed to state agencies. Pursuant to the authority established in NYS Insurance Law Section 4235 (j) (1), (2) and (3), Empire Plan premiums are adjusted annually based on plan experience. The PEF/NYS contract does not give PEF authority to negotiate premium rates.

Empire Plan premiums will increase 7.0% for individuals and 8.6% for families (increases in dollar amounts are in the table on page two). To put these increases into perspective, the table below shows increases of other large employer health plans, comparing plans similar to the Empire Plan where possible.

*Separate increases for individual and family premiums are only available for the Empire Plan. Increases for other plans represent an average of individual and family premium increases.

**One reason the Federal Employees Health Benefits Program average increase is so low is that 8 million federal employees, retirees and dependents are enrolled in high-deductible consumer-driven health plans, which provide less comprehensive benefits than the Empire Plan.

The following table shows how the 2006-2007 rate increases compare with Empire Plan rate increases from the previous two years.

Under the terms of the PEF/NYS contract, members have a minimum of 30 calendar days to change health plans after the rates are distributed to the agencies. The option transfer period will run through December 29, 2006. If anyone is considering changing health plans they should consider their options now. Deductions for the 2007 rates will begin on January 4, 2007 for Institution Payroll employees and on December 28, 2006 for Administration Lag- Payroll employees.

The NYSHIP Rates and Deadlines for 2007 flyer will be mailed directly to employees' homes beginning on November 22, 2006. In the meantime, members can get option transfer information, including the rates, from their agency health benefits administrator (HBA), who is usually located in the Personnel Office. This information is also available on the Department of Civil Service web site at www.cs.state.ny.us. Click on “NYSHIP Online,” then click on “Health Benefits and Option Transfer.” Employees can download, print and complete the PS-404 form required to change health plan options, and then bring it to their HBA for processing on or before December 29, 2006. W e will post the rates in the “Current News” and “ Health Benefits ” sections of the PEF web site at www.pef.org as soon as possible.

The 2007 Empire Plan premium rates are given below. HMO rates are here.

Fourteen of the HMO options have biweekly premium deductions over $100 for family coverage; three HMO options (Aetna, Empire BCBS HMO-Mid-Hudson Region and HMO Blue-Utica/ W atertown) will have a biweekly deduction over $200. W e ask that you remind members to check their health plan rates now to avoid an unpleasant surprise in their first bi-weekly paycheck with the new deductions.

While most of the HMOs increased their rates, there were some decreases.  Four HMOs decreased their Individual rates and seven decreased their Family rates.

Neither PEF nor the state has the authority to negotiate HMO rates, which are community rated. Community rating means all enrollees in an HMO are pooled and charged the same premium for the same benefits.  The HMO premium cap limits the state's contribution to HMO premiums to an amount no greater than the cost of Empire Plan hospital/medical/mental health and substance abuse premiums. Any amount of HMO premium greater than the Empire Plan’s for these components must be paid in full by the enrollee.

It is important to look at more than premium contributions and copayments when selecting or remaining with an HMO. By now, all members enrolled in an HMO should have received side-by-side comparisons illustrating any benefit changes their HMOs will implement for plan year 2007. PEF does not negotiate the level of benefits provided by each HMO. HMOs can change their benefits from year to year and many do.

Please share this information with your members. Members who have questions about the rates may call Deborah Stayman or Lorraine Simpkins at 1-800-342-4306 or 518-785-1900 ext. 283.

cc: PEF Staff

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