Medical Rate Setting – Claims Experience and Cost of Administration Matter
October 11, 2019
From the rate you see when you first look into the enrollment tool, keep in mind the wellness credit for non-smokers is applied at the end of the enrollment process.
There is also negotiated transitional HMO cost share language in Section 29.B.3.c.(2). of our Contract that affects HMO plans offered to subsidiary UA Flight Attendants in 2016 (including any HMO that is a Select Regional Medical Plan under this agreement). These HMOs were required to be offered through 2019 (unless not available). For the 2020 plan year and later, any HMO that is not a Select Regional Medical Plan shall be considered an optional Medical Plan under the terms of the Agreement.
Following the 2017 calendar year, any increase in the composite required Monthly Contribution for the Core Medical Options, Traditional PPO, Medical PPO and Select Regional Medical Plans from one year to the next will not exceed 9.25% of the prior year’s contribution. The 9.25% is tied to core plans, not optional plans. With the change to some HMOs becoming optional plans, this has had an effect on the rates.
In addition, the Medical Rate Setting LOA #21 describes the rather complex process of rate setting to Flight Attendant medical, dental and prescription drug programs. The company is able to consider actual “Claims Experience” meaning the per-capita rate of actual clams paid and incurred plus unpaid claim liability during the Experience Period by all active employees of the Company as well as pre-Medicare retired employees of the company enrolled in the domestic medical plan. The company had one year of data to make this assessment in advance of 2019. This year, the company had two years of data in advance of 2020. This experience true up, especially coming off a couple of bad years of claims, places us at a higher starting point. The company uses the claims paid for the past two (2) years, assumes an increase based on what is expected to be spent next year and then divides that cost 80/20 in setting the rates for next year. What, you may ask, does this mean?
When we are healthier, we cost less and our share of the premiums are less. We also enjoy a better quality of life overall when we are healthier. Participating in preventive services, annual physicals and screenings help keep our family safe. In the unfortunate event we do find something early, we recover quicker and return to a higher overall quality of life sooner. Early diagnosis provides for a different level of efficiency with available resources and ensures we are getting the right kind of care. By selecting the right plan for our unique family circumstance this serves for a better overall quality of life not only health-wise for our family, but also financially. The annual selection of benefits is a complex process where effort is being invested in tools to make life easier during the selection process. We encourage you to use the tools available on the company’s open enrollment website to look at all of the available options. As our circumstances change, it may be in our best interest to consider alternate available medical, dental and vision plans. While we are not encouraging anyone to make changes simply for the sake of change or because the benefit is less expensive, we do encourage everyone to look at the plans within the framework of their particular life situation. Don’t be afraid to reach out and use the available resource in making the best choices for your family and your future.