These are answers to frequently asked questions about our Retiree Health Insurance Plan shared with us by Governor Sean Parnell and the Division of Retirement and Benefits. Please share your concerns with NEA-ALASKA/Retired by commenting at the end of this article.
Q. Why update and re-publish the health plan booklet?
A. It is standard practice for public health plans to regularly update and publish their plan booklets. Many plans do so annually.
The Division’s historic policy goal was to publish the retiree health plan document annually. The health plan document was published in 1975, 1979, 1983, 1984, 1985, 1989, 1991, 1998, 2000, and 2003. The 2003 plan booklet had amendments added to it in 2004, 2005, 2007, 2009 and 2014.
Over the last decade, staffing changes and workload led the Division to abandon its long-standing annual publication goal.
Q. But our 2003 plan document is just fine the way it is.
A. The 2003 plan document is materially out of date. Substantial changes in the practice of health plan administration have occurred since 2003.
For instance, approximately 16 decisions have been issued by the Office of Administrative Hearings regarding the retiree health plan. Many of those decisions should be reflected in the plan document. Additionally, a large volume of unpublished benefit clarifications were issued by Division staff during this time period. In the future, the Division will publish all plan changes in the plan document.
Q. Changing the plan is not allowed–that’s a diminishment.
A. In 2003, the Alaska Supreme Court ruled that the retiree health plan could be changed, and that any coverage diminishments should be offset by coverage enhancements as measured by the impact on the entire retiree population. The Court held that the retiree plan should resemble a “mainstream” public employee health plan.
In many ways, the retiree health plan no longer resembles a mainstream plan:
the plan document is over ten years old
the plan does not have coverage for preventive care
the plan does not provide coverage for dependents to age 26
the deductible and out-of-pocket max have not been updated to reflect medical inflation
the plan has a $2 million lifetime maximum; AlaskaCare recently had a member incur $2 million of medical costs in one year
Retiree Plan FAQs
Page 2 of 3 Rev (3/2014)
the plan has recently been administered in ways that have provided coverage for treatments that may not be medically necessary
Q. The plan is required to pay for all of my health care.
A. The plan is only required to pay for “medically necessary” health care. Paying for all health care, whether medically necessary or not, could further jeopardize the finances of the plan.
Since 2003, the retiree health plan has steadily fallen behind financially. Today, the plan has a $3.8B unfunded liability. That’s over $5,000 per Alaskan. The need to administer the plan like a mainstream plan, prudently and appropriately, is more important than ever. There are 68,000 covered lives today, and thousands more will be added over the next few years. The assets of the plan need to last for at least 60 more years.
Q. The draft plan document is hard to read.
A. The 2003 plan document has been criticized for its lack of precision and clarity on a variety of issues. Many of the changes are intended to address this lack of precision and clarity. The Division will explore ways to provide explanatory documents that are more readable.
Q. Why so many changes?
A. The vast majority of changes in the draft document are wording changes intended to eliminate ambiguity.
The basic coverage of your plan has not changed:
no change to the deductible
no change to the out of pocket maximum
no change to the life-time maximum
no change to the coinsurance amounts (with the exception of transplant care)
no change to coordination of benefits
no change to the pharmacy copay
no change to medical coverages
Q. Why take the Division out of the appeal process?
A. The former four level appeal process was unnecessarily time-consuming. Moreover, there was no independent medical expertise at any level. Unacceptable backlogs had grown in the Division’s Level 3 appeal docket. The delay and lack of medical expertise was costly to members and the Plan.
The new appeal procedure is streamlined to three levels:
Level 1: Aetna
Level 2: Aetna (coverage issues); Independent Medical Review (medical issues)
Level 3: Office of Administrative Appeals
Retiree Plan FAQs
Page 3 of 3 Rev (3/2014)
Borrowing from the Affordable Care Act, if the member prevails at the Independent Medical Review level (level 2), the plan must pay immediately.
Q. But hasn’t the Division delegated its fiduciary duty to Aetna?
A. Under the historic appeal process, the third party administrator handled the level 1 and 2 appeals. The new process has improved that by requiring level 2 medical issues to be decided by an ACA-compliant Independent Medical Review Organization.
At level 3, the Division retains its fiduciary responsibility.
The goal with the streamlined appeal process is to get the member and the plan a decision, accurately and quickly.
The Division has also created a full time vendor manager position. This employee will be responsible for spot-checking the processing of claims and appeals at each level to ensure they are being processed in compliance with the plan booklet.