Retirees and active employees have different benefit needs and it is important to have in place a benefits program that reflects these differences.

Examples of this include retiree pharmacy benefits with formularies designed specifically for seniors, benefits delivered to Medicare-eligible retirees via Medicare Advantage and Part D Prescription Drug Plans (with special consideration for retirees not qualifying for free Part A coverage), lower health plan contributions for longer-service retirees and active employees, and life insurance benefits that step-down with advancing age.

CMC is experienced in designing different benefit and contribution strategies for active employees and retirees of public sector plans. We can help you design an effective benefits program to recruit and retain the best employees and provide benefits in the most cost effective and administratively efficient manner possible.

The decisions made during the design phase of a benefits plan have a direct impact on costs and employee/retiree access to care. A properly designed benefits plan should deliver quality and effective care that is readily accessible and affordable for employer, employee and retiree.

This is true for all benefits - medical, prescription drug, dental, vision, life, disability, etc. However, medical and prescription drug benefits are the benefits employees and retirees use the most and also comprise the largest (non-pension) components of a typical employer's benefits budget.

Many employers have recently introduced consumer driven health care (CDHC) plans, some on a total replacement basis, but mostly on a "slice" basis as an additional plan option. Initially, most of this activity was in the private sector, but now many public sector employers are giving serious consideration to implementing new options, and those that have current consumerism features in place are re-evaluating their design.

A consumer-focused approach is not the "silver bullet" many hope it to be. However, if executed properly and in conjunction with other efforts (i.e., effective wellness initiatives, health education programs, disease and case management, etc.) a CDHC plan can contribute to healthier employees and retirees who are more engaged in their health care decisions and generate claims with lower annual trends than in the past.

CMC is experienced in implementing effective consumer-focused benefits for governmental employers. We can help you determine, for example, if Health Savings Accounts or Health Reimbursement Accounts are best suited for your employees, as well as the number of plan options and the design of those options necessary to effectively distribute and stabilize risk.

CMC actuaries and consultants have extensive experience in establishing funding rates and premium equivalencies that result in effective funding and budgeting of self-insured employee and retiree benefits. We work with employers that self-fund medical, prescription drug, dental, vision, life, disability and even long-term care.

CMC actuaries and consultants understand the complexities and nuances specific to budgeting, funding and financing benefit plans in the public sector. We help our clients by establishing rates - whether defined as a percent of active pay, as a flat per employee rate, rate(s) that vary by coverage option or possibly by employee group - that lead to healthy funding levels and the most cost-effective delivery of benefits possible.

CMC actuaries can recommend ways for plan sponsors to develop adequate reserves to fund outstanding claim liabilities for Incurred but not Reported (IBNR) claims for self-funded plans. We can estimate claims reserves for your medical, prescription drug, dental, vision, disability and long-term care, vacation and paid-time off benefits.

There are many choices when it comes to developing a schedule of contributions for active employees and retirees. For example:

• Is the employer subsidy the same for dependent coverage, or should it be higher for the employee/retiree? (For example, some employers require no contributions for employee/retiree coverage, but the cost of dependent coverage is fully paid by the employee/retiree.)
• What tier structure is most appropriate? (Single, Employee + Spouse, Employee + Child(ren), Family, etc.)
• Does the employer subsidy vary by plan election? (For example, employee/retiree share is 20% for the PPO or the HMO and in the base, buy-up structure the employer pays 80% of the HMO, and the employee pays the difference in cost to enroll in the PPO.)
• Do retirees and active employees pay the same contributions?
• Do contributions vary by service, by salary, by location or other factors?

While these questions address issues based in policy or even the employer's general philosophy of providing and funding benefits, additional factors need to be considered. For example, it is important that contributions are established in consideration of enrollment election assumptions and enable projected plan elections to result in sufficient employee/retiree contributions to meet budget forecasts. This is especially important when changing or implementing plan options, such as when introducing a consumer-focused plan.

CMC actuaries and consultants have the experience necessary to help you design a contribution strategy that fits your benefits philosophy and ensure that the schedule is accurately and properly reflected in the budget.

Finding the right partners is an important consideration in designing a benefits program. For self-funded benefits, it is imperative that the claims administrator(s) are able to administer the plan as designed and do so as efficiently as possible. For insured benefits, finding a carrier that can effectively manage the risk and provide stable premiums from year to year enables an employer to more effectively manage its benefits budget.

In both cases, partnerships should be established with vendors that provide your employees and retirees access to care and benefits, the necessary information to access their benefits on an informed basis, help resolve conflicts between beneficiaries and providers, and provide the information and data to help you manage your benefits program.

CMC actuaries and consultants have extensive experience and industry contacts to help you conduct a vendor search and manage existing vendor relationships.

In today's world, new drugs are being developed and discovered at a rapid pace, each seemingly at a higher price tag than the last. A number of factors result in a list of available and recommended treatments and coverage levels that is in an almost constant state of flux:

• Large numbers of drugs that fall from patent protection annually (and therefore are added to the list of generic equivalents)
• Drug treatment compliance - an important means of ensuring members with chronic conditions remain in stable, "maintenance" condition.
• Members who require extremely specialized treatments (i.e., bio-drugs) that are not regularly stocked at the local pharmacy and that can cost hundreds or thousands of dollars per treatment
• Direct-to-member advertising bombardment

Staying on top of the situation - never mind getting ahead of things and being proactive - has never been more difficult. CMC actuaries and consultants have the experience and expertise to help you develop an effective program that is up-to-date with today's most effective and efficient treatments and that reflects differences in needs between active employees and retirees (i.e., senior-specific formularies).

We can work with your clinical staff to:

• Analyze utilization patterns (medical and drug) and identify opportunities to adjust formularies (to reflect recent generic offerings)
• Change copay structure (i.e., to incent increased generic or mail order utilization)
• Review the effectiveness of any utilization review programs
• Introduce (or improve current) specialty pharmacy programs (with the existing PBM or with a third-party specialty vendor) that work to ensure treatment compliance, as well as ensure the patients receive the drugs in a timely and convenient manner (i.e., sent via overnight delivery if homebound)

If you do not have clinicians or pharmacists on staff, we have a strategic partnership with a leading pharmacy benefits consulting firm and can put those resources to work for you.

While preventive care measures and other wellness incentives may help keep members healthy (or at least healthier), there will always exist a minority of the membership that has chronic conditions, catastrophic illnesses or events that contribute to the majority of your annual claims costs. The "80/20" rule, referring to 20% of the membership generating 80% of the claims costs, seems to reflect reality.

Most disease management programs cover such conditions as coronary heart disease, hypertension, diabetes, asthma, heart failure, kidney failure and obesity. These conditions readily lend themselves to determination of return on investment (ROI) rates.

However, many programs also cover other conditions that can be harder to diagnose and quantify, such as depression and sleep apnea. Programs that work to identify and focus on members with co-morbidities are usually the most effective in helping patients manage their health holistically. Similarly, effective case management for advanced chronic conditions or traumatic events looks at the entire picture, and works with practitioners across many disciplines cooperatively to help the patient regain as much of their overall health as possible.

Most administrators and insurers have their own, in-house programs. These have the advantage of providing care and case managers more direct access to providers, but there are benefits to hiring an independent outside vendor to provide these management services. After a careful evaluation of your claims and utilization experience in conjunction with the programs available, CMC actuaries and consultants can help you determine which program, or combination of programs, may best suit your needs.

Many employers have or wish to implement initiatives to help their employees and retirees live healthier lifestyles. Choices range from so-called smoker penalties, to reduced contributions for completion of a Health Risk Assessment, to interdepartmental competitions for weight-loss or miles-walked.

While most employers feel the need to "do something" in this area, most of these programs come with an up-front cost (either in hard dollars or in staff commitment) that is quantifiable, but come with benefits that are less quantifiable. While it is difficult to argue against programs that lead to healthier employees and retirees, care needs to be taken so ensure that the limited resources available for these programs benefits your employees and retirees as much as possible, while at the same time reducing future claims costs.

CMC actuaries and consultants can conduct a careful analysis of demographic and claims data to help you determine the most effective way to help your employees and retirees lead healthier lives.

The Medicare Modernization Act of 2003 (MMA) authorized subsidy payments to sponsors of qualified retiree prescription drug plans. These Retiree Drug Subsidies (RDS) were designed to encourage employers currently providing their retirees prescription drug benefits to continue to do so.

The MMA also authorized Prescription Drug Plans (PDPs) that are offered by private insurers as the main method of delivering prescription drug benefits to the Medicare population.

Many of our clients have elected the RDS option. We are experienced and qualified to provide any and all support necessary for you to complete the RDS application process from start to finish. This type of project includes:

• Creation and submission of eligibility data
• Completing the Attestation of Actuarial Equivalence needed to qualify for the RDS
• On-going submissions and updates of claims and eligibility data
• Year-end reconciliation needed to "close the books" by truing up projected RDS payments with what actual RDS payments should have been for the year.

However, many clients are instead enrolling their retirees in one or more PDPs, and dropping prescription drug coverage from their own self-funded plans for retirees. In many cases, the difference in providing the coverage in your own self-funded plan and paying the PDP premium is greater than the RDS payments. This often results in retirees receiving the same benefits, but at a lower net cost to both the employer and the retiree.

Additionally, under GASB 43/45, future RDS payments cannot be valued as a direct offset to future liabilities. While RDS payments deposited directly in an OPEB trust are counted as assets and contributions under GASB 43/45, this still results in a significant departure in how future RDS payments are valued under current FASB statements. Covering your retirees in a PDP can result in a net reduction in assumed future claims costs and therefore also can result in a reduction in your OPEB liability.

However, a careful comparison and evaluation of all alternatives is needed to make the best decision for your plan and retirees. CMC actuaries have conducted many such analyses for state and local governmental plans and employers.

Providing your employees and retirees access to benefits on a group basis is an effective way for them to purchase additional coverage (i.e., life and disability buy-ups, etc.) or have access to benefits that would otherwise be more costly for them to purchase on an individual basis (i.e., auto insurance, basic legal services, etc.).

CMC actuaries and consultants have the experience and industry contacts to help you offer your employees additional benefits on a voluntary basis.

Whether you want to provide a wide range of benefits, or just need to establish a Section 125 plan in order to offer a Flexible Spending Account, we have the skills and experience to help.

With added employee plan choices comes additional financial uncertainty for the plan and employer. Therefore, it is necessary that plan choices and employee/retiree contributions be designed so that risk and employer costs can be stable on a year-to-year basis.

CMC actuaries and consultants have the skills and experience needed to help you design a cafeteria program that provides the choice your employees want and the economy you need.

Having enough providers in your medical, dental and vision networks is not enough. Having quality providers that are geographically accessible to your employees is more important. Access for retirees is also an important consideration. For example, a staff model HMO or a strong in-state or local provider network may be the best design for your active employees, but a more national approach is often needed to meet the needs of your retirees.

Whether you just want to evaluate your current network, or are looking to expand, change or replace your network, CMC actuaries and consultants have the experience and skills needed to ensure your provider network is the one best suited for your benefits program.

Risk that is not measured cannot be properly managed. Therefore, the first step in managing risk is to measure it. CMC actuaries have a wide range of tools available and the expertise necessary to measure risk among your various plan options, and for the program as a whole. Demographic and claims-based analyses are equally important. Claims-based analysis can, at the most basic level, be performed on utilization reports, but to get a more accurate picture, an episode-based risk analysis of the claims data should be conducted.

Once a proper risk profile is established (based on demographics and claims), then changes to the program can be recommended, if any are needed. It also is important to set employee/retiree contributions such that the "proper" plan elections are made by employees/retirees. That is, if a plan option is designed and priced for low-risk members, then contributions should be attractive to those members.

Also, it is generally desirable to have relatively stable enrollments from year-to-year. This enables predictive budgeting. Stable plan designs and contributions (or at least stable differentials between plan options) can ensure this occurs. Establishing that the risk profile matches that of the target membership provides added confidence that plan elections are "proper" and will remain stable.

However, if new plan options are introduced, or current plan options are significantly altered, then it is important that migration to the new options, and between the legacy options is properly modeled. CMC actuaries and consultants have the experience necessary to properly measure your risk, develop useful risk profiles, recommend any needed program changes and accurately predict any enrollment migration that may subsequently occur.

While costs associated with chronic conditions or catastrophic events are fairly easy to measure, costs associated with increased sick leave utilization and reductions in productivity are much harder to quantify.

CMC actuaries and consultants can help you take stock of your care and disease management programs and evaluate how well they work in conjunction with the return- and stay-at-work components of your disability programs.

While most of our clients deliver Long-Term Disability (LTD) and Long-Term Care (LTC) benefits on an insured basis (and often on a voluntary basis as well, for LTC), we work with several state-level plans that have sufficient membership to self-insure their LTD and/or LTC programs. This puts CMC in a unique position to help you determine if your program is a candidate for self-insured status and, if so, to determine the proper funding rates, reserves and OPEB liability, and required contribution(s) under GASB.

In either case, we have the experience and expertise needed to ensure your administrator or carrier is effectively and efficiently delivering benefits to your employees.

Many public employees are in retirement systems and plans that did not require they pay into Social Security and therefore, upon disability, there may be a significant portion of this population who will not receive Social Security income benefits. Since most commercial LTD plans are priced under the assumption that Social Security will provide a benefit that can be used to offset the employer-provided gross benefit, this can create unexpectedly high benefit levels. CMC has the public sector experience to ensure these situations are considered in the design phase and are factored in to the pricing and funding analysis to ensure proper reserves and assets are generated by the contributions.

Due to the short-term nature of the benefits, employers will routinely self-insure their STD programs. We have experience in designing and funding STD programs, big or small, that effectively coordinate with the LTD and LTC programs to ensure there is no gap in coverage between programs and that benefits are consistent from one program to another.

A periodic review of how your program is being administered is important to spot discrepancies before they become ongoing problems or to provide peace of mind that all is running as it should. This is true for internal practices as well as those "farmed-out" to outside administrators.

CMC actuaries and consultants can help verify that, for example, the membership files you send to your administrators are accurate and that all covered members meet your plan's criteria. We also can provide an independent third party review of your claims administrator(s) to ensure claims are being processed in compliance your contract(s). We have experience auditing medical, prescription drug, dental, vision and all other claims and benefit administrators.

When you have concerns or an interest in the potential impact of proposed legislation on your plan, CMC is available to testify on your behalf before legislative bodies and committees. We are known for our ability to clearly explain complex concepts and alternatives and help you prevent the negative impact of unintended, or unforeseen, consequences.

Actions considered by Congress and by your state legislature can significantly impact the future of your plan and how you serve your active participants and retirees. CMC helps you understand the consequences of pending legislation, so you can plan now for future changes.

Legislation can have an unintended, or unforeseen, impact. For example, legislation that affects retirement patterns can have a significant impact on your OPEB results as well as on the financing and delivery of your active employee and retiree health and other benefits.

CMC actuaries and consultants are available to help you determine the magnitude of any direct, or indirect, effects of proposed legislation.