The week of June 23, the Employee Benefits Council (EBC) and the
Oklahoma
State and Education Group
Insurance Board (OSEEGIB) met to begin the process of setting insurance rates
for state employees. EBC contracts with
insurance companies who offer their product to state employees. OSEEGIB administers HealthChoice, which is a
self-funded traditional insurance plan offered across the state to public and
education employees.
At the EBC meeting on Tuesday afternoon, the Council decided on the plan
design to send out for bid through the
request-for-proposal (RFP) process. The
decision was to obtain bids on the traditional standard and alternative HMO
plans that are currently being offered to state employees. In addition, insurance companies will be
asked to bid on a modified/standard plan, which changes co-payments for
participants. The change would raise
co-pays by approximately $5, with the annual out-of-pocket maximum increasing
from $1,500 to $2,000 for an individual and $2,000 to $4,000 for a family. In August, the Council will decide whether to
offer the standard or modified/standard plan.
In addition, the Council raised the maximum amount that state employees
can set aside in their tax-free flexible spending account from $4,200 to
$5,000. Beginning January 1, 2009,
metro-area participants may pay fees related to commuting when riding public
transportation from their flexible spending account.
On Friday morning, OSEEGIB met to discuss recent claims
experience that will be used in setting rates.
“Because HealthChoice is a state agency that does not make a profit,
premiums are set by actuaries who review current claims experience and trends to
forecast future costs,” said OPEA Policy and Research Director Trish Frazier.
“Basically, premiums are collected and dispersed to pay for health
care. If state employees don’t get sick
and costs are low, the system has a good year.”
Unfortunately, this has not been a good year for the insurance plan. The claims experience data indicate that a
13.4 percent increase in premium will be needed beginning January 1. However, in the past OSEEGIB has utilized
reserves saved from better years to keep costs down.
“OPEA will be monitoring the rate setting process closely in the next two
months,” said Frazier. “Because OPEA
passed legislation in the 1990’s requiring that the benefit allowance rise with
the premiums, state employees will not have to pay for the additional
costs. However, state agencies will be
even more challenged with the 2009 standstill budget.”
Insurance rates for calendar year 2009 will be finalized on August 15.