Services provided by Mercer Health & Benefits LLC

Public Safety Employees Association Health and Welfare Trust

April 2009

Wes Yoder, Trust Consultant

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General Information

Sponsored by the Public Safety Employees Association of Alaska (PSEA)

Governed by a Board of Trustees elected by PSEA members participating in the Trust

Current participants include:– Alaska State Troopers– Airport Police and Fire Officers– Juneau Police Department– Fairbanks Police and Fire Departments

Trust website: http://www.pseahealth.org

Health benefits purchased through Premera Blue Cross Blue Shield of Alaska

Trust administered by Labor Trust Services, Anchorage, AK

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Eligibility and Benefits

To be eligible for benefits, an employee must:– Be a regular and active employee of an employer participating in the Trust– Regularly work a minimum of 25 hours per week if salaried or 20 hours per

week if part-time– Have the required contribution made by their employer and received by the

Trust

Eligibility is on a family basis. All eligible dependents are covered when the employee becomes eligible

Eligible dependents include:– Legal spouse or same-sex domestic partner– Natural or adopted children under age 25 who are unmarried and primarily

dependent upon the employee for support

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Eligibility and Benefits

Medical, prescription drug, dental and vision benefits provided by Premera Blue Cross Blue Shield of Alaska

Business travel accident insurance provided through CIGNA

Death benefit provided by the Trust

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Benefit Summary

MEDICAL Premera Blue Cross Blue Shield of AlaskaAnnual Deductible $250 per person;

$750 per family

Coinsurance/Annual PPO Services: 90% of first $10,000 after deductible Out-of-Pocket Limit (Maximum out-of-pocket is $1,250 per person, including deductible)

Non-PPO services: 60% after deductible(No out-of-pocket maximum for non-PPO services)

Office Visits Paid at 100% with no deductible after $25 copay per office visit

Emergency Room $100 deductible per emergency room visit(Waived if admitted to the hospital)

Preventive Care Covered subject to office visit copay or deductible and coinsuranceImmunizations covered at 100%

Lifetime Maximum $2,000,000 per person

PRESCRIPTION DRUGS Premera Blue Cross Blue Shield of AlaskaRetail Copay $10 generic / $30 brandMail-Order Copay $20 generic / $60 brand

Note: This is a summary only and is not intended as a full description of benefits. If there are differences between

this summary and official plan documents the benefits as described in official plan documents apply.

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Benefit Summary

DENTAL Premera Blue Cross Blue Shield of AlaskaAnnual Limit $1,500 per person

Annual Deductible $25 per person;$75 per family

CoinsuranceDiagnostic/Preventive 100% with no deductible (Routine exams, x-rays)Basic/Restorative 85% after deductible (Fillings, extractions)Major/Prosthetics 50% after deductible (Crowns, inlays, dentures)Orthodontics Not Covered

VISION Premera Blue Cross Blue Shield of AlaskaExam Covered at 100%

One exam every calendar year.

Lenses Covered at 80%One pair every calendar year.

Frames Covered at 80%One set every 2 calendar years

Note: This is a summary only and is not intended as a full description of benefits. If there are differences between

this summary and official plan documents the benefits as described in official plan documents apply.

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Benefit Summary

DEATH BENEFIT Self-FundedBasic Life Amount $10,000

BUSINESS TRAVEL ACCIDENT CIGNAPrincipal Sum $100,000

Accident must occur while traveling on, and in the course of, business for Employer

Note: This is a summary only and is not intended as a full description of benefits. If there are differences between

this summary and official plan documents the benefits as described in official plan documents apply.

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Trust Funding and Administration

Trust is funded by employer and member (participant) contributions.

Total required contribution rate established each July by the Board of Trustees.

Current required monthly contribution rate (effective July 1, 2008) is $1,117 per participant per month.

Total contributions remitted monthly by each employer to the Trust administrator, Labor Trust Services, Inc. (LTS).

LTS forwards eligibility and premiums to insurers and provides COBRA administration for the Trust.

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Historical Expenses

Over the last five years, Trust expenses have increased 10% annually.

Currently over 97% of expenses are used for purchasing benefits, with less than 3% of expenses attributed to Trust operations.

Public Safety Employees Association Health and Welfare TrustHistorical Trust Expenses (Per Eligible Participant Per Month)

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

12/03-11/04 12/04-11/05 12/05-11/06 12/06-11/07 12/07-11/08(Unaudited)

Trust Fiscal Year

Operating Expenses

Benefit Expenses

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Historical Income vs. Expenses

Over the last several years, expenses have outpaced income.

For the current policy period (July 2008 – June 2009) the Trust is expected to deficit spend approximately $350,000 ($47 per participant per month).

Public Safety Employees Association Health and Welfare TrustIncome vs. Expenses

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

12/03-11/04 12/04-11/05 12/05-11/06 12/06-11/07 12/07-11/08(Unaudited)

Trust Fiscal Year

Total Income

Total Expenses

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Historical Assets

Net assets available for benefits have declined. As of November 30, 2008, the Trust had approximately $2.4 million in net assets. This represents approximately 3.4 months of current projected expenses.

Public Safety Employees Association Health and Welfare TrustNet Assets Available For Benefits

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

11/30/2004 11/30/2005 11/30/2006 11/30/2007 11/30/2008(Unaudited)

Trust Fiscal Year Ending

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Historical Claims Utilization

Claims have increased significantly during the current contract period.

The Trust is 100% experience rated. Each year Premera sets the Trust’s premium rates based on the Trust’s own historical utilization

Utilization History Chart

$0

$200

$400

$600

$800

$1,000

$1,200

2004-05 2005-06 2006-07 2007-08 2008-09 YTD

Contract Year (July - June)

Ne

t C

laim

s P

er

Pa

rtic

ipa

nt

Pe

r M

on

th

Vision

Dental

Rx

Medical

hc&gb\pseawa\reports\2009\trust report

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Projection for July 2009 – June 2010 Contract Period

Based on projected premium increases at July 1, 2009, a significant deficit is projected for the upcoming contract period (approximately $217 PPPM).

The projected deficit will need to be offset by the following:– Increases in employer contributions (varies by employer)– Increases in participant contributions– Benefit changes to reduce premium costs

Projected Income and Expenses7/09 - 6/10 Contract Period

$1,123

$1,340

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

$1,300

$1,350

$1,400

Initial Estimate(Per Employee Per Month)

Projected Income (Current Contributions) Projected Expenses (Current Benefits)

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Options

The Trustees value your input

Each year the Trustees have to balance the cost of benefits with the available contributions.

If benefits remain at current levels, significant increases in participant contributions will be required.

Increases in participant contributions can be lessened with benefit changes. Examples include:– $300 deductible/80% coverage/$2000 OOP max ~ $40 per month– $500 deductible/70% coverage/$3000 OOP max ~ $100 per month– Rx - $8 generic copay/20% brand copay ~ $6.50 per month

The Trustees will continue to review strategies to control costs over the long term.

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What Can You Do?

Being a smart health care consumer can help lower costs.

Use generic prescriptions when possible– Currently 65% of prescriptions received by Trust participants are generic. – On average, brand name drugs can cost three to five times more than generic drugs.

– If you are currently taking a brand name drug, ask your doctor or pharmacist if there

is a generic drug that would work.

Use a Premera preferred provider when available– Preferred providers have agreed to discounted fees as payment in full for their

services. – Preferred providers cannot balance bill you for amounts above the agreed upon fee.

– During 2008, medical preferred provider discounts for the Trust totaled $1.3 million

(approximately $174 per participant per month).

Remember to update your enrollment data with the Trust office (LTS) whenever you have a change in dependent status (i.e. marriage, divorce, birth, child attaining age 25).

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Other Information

Current PSEA Health and Welfare Trustees– Rob Cox – Alaska State Troopers, PSEA President– Chip Gallagher – Airport Police and Fire– Mo Hughes – Alaska State Troopers– Tim Schoenberg – Alaska State Troopers– David Wrightson – Juneau Police Department– Robert Thompson – Fairbanks Police Department

PSEA Trust Administrative Office (LTS) Contact Information

P.O. Box 93870

Anchorage, AK 99509

3380 C Street, Suite 107

Anchorage, AK 99503

Local: .................................................. (907)561-5119

Toll Free:........................................... 1-800-325-6532

Premera Customer Service (Claims Questions) - 1-800-508-4722

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Questions?

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