June-July 2015

TRS-ActiveCare rates rise across the board for 2015‒16

The Teacher Retirement System of Texas recently announced new 2015‒16 plan rates for its three health insurance plans: TRS-ActiveCare 1-HD, TRS-ActiveCare Select, and TRS-ActiveCare 2. The rates of all three PPOs will rise by at least 7 percent, on average.
 
Looking at the plans in more detail, TRS-ActiveCare 1-HD and TRS-ActiveCare Select rates increased 5 percent for participants in the “Employee Only” plan. While all other coverage tiers, such as spouse and family, increased 7.5 percent. For example, “Employee and Family” participants on TRS-ActiveCare 1-HD will see an annual increase of $1,032; the same tier for Select will see an annual increase of $1,116. Plan deductibles were not changed from 2014‒15 levels.
 
TRS-ActiveCare Select was introduced by Aetna last year as a middle-of-the-road plan between TRS-ActiveCare 1-HD and TRS-ActiveCare 2. Aetna took over administration of TRS-ActiveCare plans and benefits in September 2014.

TRS-ActiveCare 2 saw the largest increases of the PPOs. Participants in the “Employee Only” plan will see rates climb more than 10 percent. The other coverage tiers are increasing approximately 14 percent, on average. “Employee and Family” participants will see an annual increase of more than $2,300.

TRS-ActiveCare 2 rates for “Employee Only” coverage were mostly steady from 2003 through 2008 but have increased every year since then. Although TRS-ActiveCare 1-HD has only been around since 2009, its “Employee Only” monthly premium has increased nearly every year, except last year.


(Click chart for larger view)
 
HMOs offered under TRS-ActiveCare experienced varied rate increases. Allegian participants will see the lowest increases, approximately 3 percent on average, while Scott & White participants will see the largest average increase (11 percent). FirstCare participants will see increases of 7 percent on average.
 
It is a similar story nationwide. Health care insurers across the U.S. expect sharper premium increases through 2015 and 2016, according to the Society for Human Resource Management regarding the Spring Healthcare Trend Survey from Wells Fargo Insurance. The survey of more than 65 insurance companies nationwide finds that medical claim costs have risen 7.9 percent for PPOs and 7.2 percent for HMOs in 2015, key indicators of coming premium rate increases.

PPACA affordability issues

The rate increase has rendered the least costly TRS plan “unaffordable” for the lowest-paid employees in some districts under the Patient Protection and Affordable Care Act (ACA). The premium increase caused the minimum wage for affordability to jump from $8.10 to $9.33 per hour, using the rate of pay safe harbor, in districts that make the minimum maintenance-of-effort contribution ($225 per hour). We’ve written about the ACA’s affordability penalty in earlier issues of HR Exchange.
 
The affordability penalty would only apply if the district pays the minimum $225 maintenance-of-effort contribution to the health insurance costs of workers earning less than $9.33 per hour. School districts that pay more than the minimum can use the Affordability Calculator in the HR Library to determine whether the lowest wage they pay passes the affordability test.
 
It’s important to note that districts do not have to make the same maintenance-of-effort contribution to health insurance costs for all employees. District contributions may be at different rates as long as they treat everyone in the same category the same way and do not contribute more for the health insurance of the highest paid employees.
 
For example, a district could contribute $241 per month for all employees making less than $9.33 cents per hour. Alternatively, a district could contribute $241 per month for all custodians and child nutrition employees. Either option would ensure that they meet the ACA’s affordability rules.