OPERS Health Care PlanOPERS Health Care Plan

OPERS serves more than ½ million Ohio public OPERS serves more than ½ million Ohio public employees and benefit recipientsemployees and benefit recipients

1010thth largest state pension system in the U.S., 17 largest state pension system in the U.S., 17thth largest in the worldlargest in the world

We strive to minimize cost increases for members, We strive to minimize cost increases for members, retirees and employersretirees and employers

Our health care plan allows for maximum Our health care plan allows for maximum flexibility for adjustment if conditions become flexibility for adjustment if conditions become more favorable more favorable

OPERSOPERS

The Health Care ChallengeThe Health Care Challenge

Double digit health care inflationDouble digit health care inflation

Baby Boomers – retiree population Baby Boomers – retiree population will double in 20 yearswill double in 20 years

Workers are retiring younger and Workers are retiring younger and living longerliving longer

• Dual-vendor PPO, HMOsDual-vendor PPO, HMOs

• Co-pays that encourage use of network providersCo-pays that encourage use of network providers

• Exclude or limit services based on necessityExclude or limit services based on necessity

• Plan design encourages generics, use of mail order pharmacyPlan design encourages generics, use of mail order pharmacy

• Prior authorization as appropriatePrior authorization as appropriate

• Formulary incentivesFormulary incentives

Actively managing costsActively managing costs

MedicalMedical

RxRx

Key PointsKey Points

• Employees with less service will pay more for health care Employees with less service will pay more for health care than those with more servicethan those with more service

• Those who are retired or near retirement will be less affectedThose who are retired or near retirement will be less affected by plan changes because they have fewer years to plan and by plan changes because they have fewer years to plan and

savesave

• Changes will be phased in over 5 yearsChanges will be phased in over 5 years

• Plan participants may share cost of health care inflationPlan participants may share cost of health care inflation

• OPERS Health Care Plan will be offering various levels of OPERS Health Care Plan will be offering various levels of coverage and cost to retirees and benefit recipients beginning coverage and cost to retirees and benefit recipients beginning January 2007January 2007

Health Care Plan Options Health Care Plan Options Coming in 2007Coming in 2007

• A monthly health care allowance A monthly health care allowance from OPERS based on a retiree’s from OPERS based on a retiree’s length of service from 10 to 30 yearslength of service from 10 to 30 years

• Benefit recipient is able to use the Benefit recipient is able to use the allowance to select health plan allowance to select health plan coverage, choosing from coverage, choosing from a a cafeteria-cafeteria-stylestyle plan plan

Group One Group One Current retirees and those near Current retirees and those near retirement (eligible to retire with health retirement (eligible to retire with health care coverage by January 1, 2007) care coverage by January 1, 2007)

Group TwoGroup Two Future retirees (eligible to retire after Future retirees (eligible to retire after January 1, 2007) January 1, 2007)

Group Three Group Three Future/Recent Hires (Hired after Future/Recent Hires (Hired after January 1, 2003) January 1, 2003)

The The GroupsGroups

Group OneGroup One Current retirees and those near retirementCurrent retirees and those near retirement (eligible to retire with health care coverage by January 1, 2007)(eligible to retire with health care coverage by January 1, 2007)

• Receive 100% allowanceReceive 100% allowance

• Spouse receive 75 – 90% of retiree allowanceSpouse receive 75 – 90% of retiree allowance

• Spouse premium increase is phased in over 5 Spouse premium increase is phased in over 5 years (20% per year)years (20% per year)

Effective January 1, 2007Effective January 1, 2007

Group TwoGroup Two Future retireesFuture retirees

(eligible to retire with health care coverage after January 1, 2007) (eligible to retire with health care coverage after January 1, 2007) receive graded allowance based on years of service:receive graded allowance based on years of service:

• 50% allowance with 10 to 15 years of service50% allowance with 10 to 15 years of service

• 100% allowance with 30 years of service100% allowance with 30 years of service

• Spouse receive 50 – 90% of retiree allowance Spouse receive 50 – 90% of retiree allowance depending depending on years of serviceon years of service

Effective January 1, 2007Effective January 1, 2007

Group TwoGroup TwoGraduated effective datesGraduated effective dates

Graduated approach applies:Graduated approach applies:

If first eligible for retirement with health care If first eligible for retirement with health care between 01/01/2007 and 12/31/2010.between 01/01/2007 and 12/31/2010.

This calculation basis locks in, e.g., if you are This calculation basis locks in, e.g., if you are first eligible in 2008, your allowance is based first eligible in 2008, your allowance is based on the 2008 chart regardless of when you on the 2008 chart regardless of when you actually retire!actually retire!

Groups One & Two!Groups One & Two!

It makes NO difference when you It makes NO difference when you actually retire!actually retire!

What matters is…What matters is…

““When are you first eligible to retire?”When are you first eligible to retire?”

Group ThreeGroup Three Recent/Future HiresRecent/Future Hires

(Hired January 1, 2003 and after)(Hired January 1, 2003 and after)

• 25% allowance with 10 to 15 years25% allowance with 10 to 15 years

• 100% allowance with 30 years100% allowance with 30 years

• Spouse receives 50-65% of retiree allowance Spouse receives 50-65% of retiree allowance depending on years of servicedepending on years of service

Effective January 1, 2007Effective January 1, 2007

Health Care Plan StructureHealth Care Plan Structure

Our Our EnhancedEnhanced plan, same as the current health plan, same as the current health care plancare plan

The The IntermediateIntermediate plan, priced at 80% of the plan, priced at 80% of the Enhanced planEnhanced plan

The The BasicBasic plan, priced at 60% of the plan, priced at 60% of the Enhanced planEnhanced plan

Health Care Plan FeaturesHealth Care Plan Features• Any excess goes into a Retiree Medical Account (RMA)Any excess goes into a Retiree Medical Account (RMA)

- Can be used for additional/future health care Can be used for additional/future health care expendituresexpenditures

- Can be rolled over from year to yearCan be rolled over from year to year

• If the selected options exceed the monthly allowance, the If the selected options exceed the monthly allowance, the benefit recipient pays the differencebenefit recipient pays the difference

• In subsequent years, monthly allowance will increase by In subsequent years, monthly allowance will increase by wage inflation. Excess health care inflation up to 5% wage inflation. Excess health care inflation up to 5% may be the member’s responsibilitymay be the member’s responsibility

$3,000 / $6,000$2,000 / $4,000$1,500Out-of-Pocket Max

65%-Generic/Form Brand50% - Non-Form Brand

N/AN/ACoinsurance

$500 / $1,000N/AN/ADeductible

N/A$30 / $70 / $100$10 / $20 / $50Mail Order Copay

N/A$15 / $35 / $50$5 / $10 / $25Retail Copay

Prescription Drug

In - $5,000 / $10,000Out - $10,000 / $20,000

In - $3,000 / $6,000Out - $6,000 / $12,000

In - $750 / $1,500Out - $1,500 / $3,000

Out-of-Pocket Max

In – 70% (after deductible)Out – 50%(after deductible)

In – 80% (after deductible)Out – 60% (after deductible)

In – 80% (after deductible)Out – 60% (after deductible)

Coinsurance

N/AOV - $25OV - $15; ER - $75Copay

In - $2,000 / $4,000Out - $4,000 / $8,000

In - $750 / $1,500Out - $1,500 / $3,000

In - $150 / $300Out - $200 / $400

Deductible

Medical Enhanced Plan(same as current plan)

Intermediate Plan Basic Plan

Enhanced Plan(same as current plan) Intermediate Plan Basic Plan

Plan Design Non-MedicarePlan Design Non-Medicare

Plan Design with MedicarePlan Design with Medicare

N/A

N/A

$1,500 / $3,000$1,000 / $2,000$750 / $1,500Out-of-Pocket Max

80% (after deductible)

80% (after deductible)

80% (after deductible)

Coinsurance

N/AN/ACopay

$900 / $1,800$400 / $800$150 / $300Deductible

Medical Enhanced Plan(same as current plan) Intermediate Plan Basic Plan

$3,000 / $6,000$2,000 / $4,000$1,500Out-of-Pocket Max

65% - Generic/Form Brand50% - Non-Form Brand

N/AN/ACoinsurance

$500 / $1,000N/AN/ADeductible

N/A$30 / $70 / $100$10 / $20 / $50Mail Order Copay

$15 / $35 / $50$5 / $10 / $25Retail Copay

Prescription Drug Enhanced Plan(same as current plan) Intermediate Plan Basic Plan

Example Assuming - Group OneExample Assuming - Group One UnderUnder 65, assumed plan cost is $800/month, 65, assumed plan cost is $800/month, 1010 years service years service

Benefit recipient – 100% of the cost of the Benefit recipient – 100% of the cost of the enhanced plan in 2007 (or the year you actually enhanced plan in 2007 (or the year you actually retire after 2007)retire after 2007) With $800 allowance, can choose from:With $800 allowance, can choose from:

• Enhanced Plan - $800Enhanced Plan - $800

• Intermediate Plan - $640 Intermediate Plan - $640

• Basic Plan - $480Basic Plan - $480

Dependent’s allowance - Based on length of Dependent’s allowance - Based on length of service, 75% of the benefit recipient’s amountservice, 75% of the benefit recipient’s amount

Assuming allowance is $600: ( $800 x 75%)Assuming allowance is $600: ( $800 x 75%)

• Enhanced Plan - $800 Enhanced Plan - $800

• Intermediate Plan - $640Intermediate Plan - $640

• Basic Plan - $480Basic Plan - $480

Example Assuming - Group OneExample Assuming - Group One UnderUnder 65, assumed plan cost is $800/month, 65, assumed plan cost is $800/month, 1010 years service years service

Calculating your benefit - Group OneCalculating your benefit - Group OneAssuming Intermediate Plan SelectedAssuming Intermediate Plan Selected

Health Care Allowance for Member $800.00Health Care Allowance for Member $800.00

Cost to Member for Intermediate Plan $640.00Cost to Member for Intermediate Plan $640.00

Excess $160.00Excess $160.00

Health Care Allowance Spouse $600.00Health Care Allowance Spouse $600.00

Cost for Spouse in Intermediate Plan $640.00Cost for Spouse in Intermediate Plan $640.00

Monthly Cost to member -$ 40.00Monthly Cost to member -$ 40.00

Balance to RMA $120.00 Balance to RMA $120.00

Additional ConsiderationsAdditional Considerations

• Income-based Discount Program (30% premium Income-based Discount Program (30% premium reduction)reduction)

• Treatment of dual OPERS householdsTreatment of dual OPERS households

• Purchasable service creditPurchasable service credit

• Disability & Survivor recipients will receive Disability & Survivor recipients will receive monthly allowance based on years of service, monthly allowance based on years of service, with 10 year level as a “floor”with 10 year level as a “floor”

• Dependent(s) allowance/premiums determined Dependent(s) allowance/premiums determined by number of eligible childrenby number of eligible children

Points to RememberPoints to Remember

• Changes will be phased in over 5 yearsChanges will be phased in over 5 years

• Both the allowance and the cost of the medical Both the allowance and the cost of the medical plans change proportionately when the retiree plans change proportionately when the retiree becomes Medicare eligiblebecomes Medicare eligible

• Group is determined by the year in which one Group is determined by the year in which one is first eligible to retire with health careis first eligible to retire with health care

• It does not matter when you actually retire!It does not matter when you actually retire!

OHIO PUBLIC EMPLOYEESOHIO PUBLIC EMPLOYEES

RETIREMENT SYSTEMRETIREMENT SYSTEM

Office HoursOffice Hours

7:30 – 4:30 Weekdays7:30 – 4:30 Weekdays

277 E. Town Street277 E. Town Street

Member Services CenterMember Services Center

7:30 – 5:00 Weekdays7:30 – 5:00 Weekdays

1-800-222-73771-800-222-7377Columbus, Ohio Columbus, Ohio

4321543215 www.opers.orgwww.opers.org

healthcare@opers.orghealthcare@opers.org