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HomeMy WebLinkAboutExhibit 2RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B SECTION C DEVELOPMENT OF PER CAPITA COSTS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B DEVELOPMENT OF INITIAL PER CAPITA COSTS By offering health insurance coverage to employees, retirees and their dependents, the Employer assumes the responsibility for the cost of claims incurred by the members of the plan, subject to re -insurance limits. These costs are partially offset by contributions from employees and retirees and by Medicare. While the total premium amounts developed for funding, COBRA and for member contributions for covering employees and pre -Medicare retirees and their dependents are the same without regard to the age or gender of the member, the true costs of medical and prescription coverage in any given year, depend on these factors. As the ages of employees, retirees and dependents in the covered population increase, so do their costs of benefits. These true actuarial costs per person are called Per Capita Costs. The Per Capita Costs used in this actuarial valuation have been developed for members covered under the plan administered by the City. Monthly Per Capita Cost By Age/Sex Sample Not Medicare -Eligible Sample Medicare -Eligible Ages Male Female Ages Male Female 45 $ 367.19 $ 480.71 65 $ 490.84 $ 452.00 50 496.77 562.87 70 566.18 509.11 55 649.28 667.39 75 628.56 557.83 57 714.00 714.00 80 673.94 594.06 60 815.67 784.04 85 700.89 615.34 64 949.41 880.01 90 707.37 618.94 Amounts of Per Capita Costs illustrated above have been developed by employing the morbidity tables discussed below. The table shows select values of age -grading factors reflecting rates at which medical costs increase with age of the member. These percentages are separate from the annual overall trend in health care rates, which operates to increase costs independent of and in addition to the Aging Factors. For example, in any single year, a group of 56-year old males are expected to cost 4.96% more than a group of 55-year old males. Medical/Rx Cost Increase By Age Age Male Female Age Male Female 30 1.86% 0.81% 65 3.23% 2.62% 35 4.45% 1.32% 70 2.41% 2.08% 40 6. 1 1 % 2.23% 75 1.67% 1.50% 45 6.40% 3.02% 80 1.02% 0.92% 50 5.87% 3.40% 85 0.47% 0.39% 55 4.96% 3.45% 90 0.00% 0.00% 60 4.17% 3.03% 95 0.00% 0.00% The total cost expected (for the self -insured plan) for all plan members was allocated by age/sex, based upon the age/sex distribution of those plan members and the morbidity tables above. This procedure resulted in a table of age/sex-specific initial Per Capita Costs for the coming year. These costs were developed based on the benefits provided by the City's health plan as of October 1, 2008. The graphs below illustrate the expected monthly Per Capita Costs (PCC) applicable to current retirees and their spouses in the coming year. The average premium charged to a retiree for the current year is also shown. For ages 65 and over, the PCC shown reflects the current mix of enrollment into Medicare Parts A and B. For clarity, premium applicable to a spouse is not presented on the graph. The spread between the Per Capita Cost RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B and the premium actually collected from retiree is the expected monthly cost incurred by the Employer when providing medical coverage to a particular retiree. $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $- Expected Monthly Per Capita Cost Retired General Employees and Firefighters on the Next Valuation Date 1K 1r. at.X 1K A JK �C JIC JF. XXXXXXXXXXX10KX;ICXXXXXXXX)KX 50 55 60 65 70 75 80 85 90 Member's Current Age t Male PCC --A--Female PCC - 5(— Retiree Premium In the development of the PCC amounts, retirees and dependents age 65 and older are assumed to be Medicare - eligible. The "% of Total Claims Paid by Medicare" is an assumption regarding whether the plan or Medicare pays as primary for Medicare -eligible retirees and dependents. According to the Summary of Substantive Plan Provisions, as of October 1, 2008 the plan does require Medicare -eligible members to enroll in Medicare Part B. Furthermore, we are recognizing the fact, that healthy retirees are less likely to select the medical coverage when required to pay a full blended premium. The impact of this phenomenon is usually less when retirees are offered direct subsidies and continuation of medical coverage is more common among retirees. This adjustment is made through application of the "Antiselection Load" presented below. Another adjustment accounts for the fact that retirees incur on average more claims than their active counterparts. Some of the employees decide to retire simply because of health problems. So retirees often have a higher morbidity status and have more time and interest in their health when compared to individuals who are at same age and sex and who are still actively employed. This is reflected through "Retirement Status Load". These adjustments are summarized below: Factors used in PCC Development % of Claims Paid by Medicare 50% Antiselection Load 0% Retirement Status Load 10% The Monthly Per Capita Costs (PCC) by age and sex represent the costs of coverage after taking out deductibles, coinsurance, co -pays, and Medicare payments, but before applying any monthly retiree contributions (premiums) charged for coverage. Medicare Part D subsidy, if any, has not been given any explicit consideration, since it may not be used to offset the OPEB obligation. Amounts for each age/sex combination for this Valuation were developed based on census data for the retired participants of the Health Care Plan and on the claim amounts incurred by the same retired participants and their dependents. The RFC NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B number of subscribers included in the Actuarial Valuation may be slightly different from the number used to develop the Per Capita Costs. The present distribution of subscribers for this purpose is summarized below. Number of Subscribers Coverage Active/Cobra Retirees Single 416 367 Family/Spouse 586 384 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B SECTION D ACTUARIAL ASSUMPTIONS AND METHODS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B METHODS - ECONOMIC/DEMOGRAPHIC ASSUMPTIONS Actuarial Valuation Date: October 1, 2008 for employee and retiree population purposes, for development of per capita cost purposes and for valuation purposes. Actuarial Cost Method: Entry Age Normal Cost Method with an increasing Normal Cost pattern consistent with the salary increase assumptions. Amortization Period and The Unfunded Actuarial Accrued Liability, as calculated pursuant to the Method: Individual Entry Age Actuarial Cost Method, is amortized as a level percent of payroll over a 28 year period. The assumed rate of payroll growth is 4%. GASB Statement No. 45 requires that any such payroll growth assumption be based upon no increase in the number of active employees covered by the plan. Investment Discount Rate: Mortality Tables: Rates of Termination from Active Employment: Since there are currently no invested plan assets held in trust to finance the OPEB obligations, the investment return discount rate is the long-term expectation of investment return on assets held in City funds pursuant to its Investment Policy. The City has selected 4.25% compounded annually. Mortality tables are used to measure the probabilities of participants dying before and after retirement. These are developed based on the said RP-2000 as projected from the year 2000 using Projection Scale AA. The mortality table is set forward 5 years for employees retiring under the disability provisions. This is a more recent mortality table than used by the pension boards and their actuaries. These rates do not apply to participants eligible to retire and do not include separation on account of death and disability. Termination rates are used to measure the probabilities of participants terminating employment for other reasons. Termination rates used in this actuarial valuation are based on tables used by pension actuaries for the Fire Fighters' and Police Officers' Retirement Trust (FIPO). The following table shows termination rates for select ages: Rates of Separation from Active Membership % Becoming Disabled Within Next Year Sample Ages Service Under 5 years 5 years or more 20 2.40% 1.92% 0.085% 25 2.40% 1.92% 0.130% 30 2.40% 1.92% 0.180% 35 2.40% 1.92% 0.285% 40 1.80% 1.44% 0.390% 45 1.20% 0.96% 0.800% 50 0.00% 0.00% 1.210% 55 0.00% 0.00% 1.620% RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B Rates of Disability: Rates of Retirement: DROP Retirements: Disability rates are used to measure the probabilities of active participants becoming disabled. Disability rates used in this actuarial valuation are based on tables used by pension actuaries for FIPO. The above table shows disability rates for select ages. These rates are used to measure the probabilities of eligible members retiring during the next year. Retirement rates used in this actuarial valuation are based on tables used by pension actuaries for the Fire Fighters' and Police Officers' Retirement Trust (FIPO). % Retiring Within Next Year Years after eligible Retirement Rate 0 - 4 20.00% 5-9 25.00% 10-11 50.00% 12 and more 100.00% In Florida, DROP employees are treated as retired for most pension purposes. The retirement rates used in the pension valuations (above) are applied to obtain the expected number of retirements and DROPs occurring at a given age if eligible. However, the treatment for OPEB purposes is different. Employees in the DROP program are still considered active employees for health and life insurance purposes and therefore for OPEB purposes as well. Consequently, the actuarial model for valuing the OPEB costs and Iiabilities is different. Half of the retirements expected pursuant to the table above are expected to be actual retirements among non -DROP employees and half are employees entering the DROP program. After employees enter the DROP program, they are expected to actually retire at rates equal to a percentage of the rates presented in the table above. These percentages are as follows: Factors for Calculating Retirement Rates for DROP Participants Year in DROP % of regular rate 1 2 3 4 5 50% 70% 87% 100% N/A* * - employee must retire by the end of the 5th year in the program RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B Salary Increases: These Rates are used to measure changes in salary. Salary increase rates are shown in the following tables and are the same as used by actuaries for the respective retirement systems. Rates of salary increases (if any) presented in tables below reflect assumptions pertaining to annual salary increases due to promotion and longevity, and include general wage increases assumption of 4% per year (including general price inflation of 3.0%). ssunied Annual Salary Increases 0-6 7 8-9 10-14 15-16 17-21 22+ 10.0% 7.5% 10.0% 6.0% 6.3% 6.0% 5.0% Inflation: Long term inflation is assumed to average at 3% per year. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services HEALTH COVERAGE ASSUMPTIONS Coverage Acceptance Rates: EXHIBIT B Not everyone who retires will accept coverage and pay the required premium upon retirement. Following are the assumptions as to future Medical Coverage Acceptance Rates. Lapse rates presented below reflect the discontinuation of coverage under the City's plan. Acceptance and lapsing rates presented below result from an analysis of the choice patterns exhibited by retirees in the recent years and are assumed to continue. Acceptance and Lapsing Rate Ret Only Ret + 1 Total At Retirement (before age 65) 50% 40% 90% Annual lapsing for age 65 or older 2% 2% 2% Continuation of Survivors N/A 100% 100% Expenses: Expenses are included in the Per Capita Costs. Expected Retiree Contributions: Members are required to make monthly contributions in order to maintain their coverage. For the purpose of this Valuation a weighted average has been used with weights derived from the current distribution of members among plans offered. Such average expected retiree premium contributions for the first year are shown in the table below. Average Premium (as of Valuation Date) Member Non -Medicare Medicare Retiree Spouse $ 181.00 $ 306.00 $ 136.00 $ 157.00 Health Care Cost Trend Rates: Monthly Per Capita Costs for Medical and Rx benefits are assumed to increase each year according to the rates set forth in the following table. For example, the Per Capita Costs applicable to retirees for the year beginning on 2/1/2009 are expected to increase 9.0% over the Per Capita Costs for the calendar year 2008. The future trend in FOP retiree contributions is assumed in this Actuarial Valuation to increase at the rate of 2% per year. In the absence of any written policy confirmed in practice, the recent pattern of FOP retiree increases is assumed to continue into the future. Annual Increase Rates Year Medical/Rx Contribution Year Medical/Rx Contribution 2009 9.0% 2.0% 2016 6.0% 2.0% 2010 9.0% 2.0% 2017 5.5% 2.0% 2011 8.5% 2.0% 2018 5.0% 2.0% 2012 8.0% 2.0% 2019 5.0% 2.0% 2013 7.5% 2.0% 2020 5.0% 2.0% 2014 7.0% 2.0% 2021 5.0% 2.0% 2015 6.5% 2.0% Thereafter 5.0% 2.0% RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B MISCELLANEOUS AND TECHNICAL ASSUMPTIONS Pay Increase Timing: End of (fiscal) year. This is equivalent to assuming that reported pays represent amounts paid to members during the year starting on the valuation date. Decrement Timing: Decrements of all types are assumed to occur at the middle of the year. Eligibility Testing: Decrement Relativity: Adjustments: Decrement Operation: Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Decrement rates are treated as absolute rates of decrement. None. All decrements operate simultaneously. Disability and termination rates cease upon eligibility for normal retirement. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B DEFINITIONS OF TECHNICAL TERMS Actuarial Accrued Liability: Actuarial Accrued Liability is the actuarial present value of projected future benefits that have been accrued (or earned) by employees to date. Sometimes it's expressed as the difference between the actuarial present value of all future benefit payments and the actuarial present value of future normal costs. It is also referred to as "Accrued Liability" or "Past Service Liability". Actuarial Assumptions: These are factors for estimating expected future experience with respect to occurrences of mortality, disability, turnover, retirement, rates of investment income and salary increases, coverage acceptance, trend, aging, etc. Actuarial Cost Method: This is a mathematical budgeting procedure for allocating the dollar amount of the "actuarial present value of future benefit payments" between future normal costs and actuarial accrued liabilities. It is often referred to as the "Actuarial Funding Method" or "Actuarial Valuation Cost Method". Actuarial Present Value: Actuarial Present Value of a series of payments (or a single payment) is the amount of funds currently required to provide those payments in the future. This amount is determined by discounting future payments at predetermined rates of interest, taking into account the probability of payment. It is also referred to as "Present Value." Amortization: Amortization is a process of paying off an interest -discounted amount with periodic payments of interest and principal, (similar to paying off an installment loan) -- as opposed to paying it off with a single sum. Annual Required Contribution: (ARC): Normal Cost: Unfunded Actuarial Accrued Liability (UAAL): The ARC is the portion of the present value of projected benefits earned by employees that is attributable to the current period. Usually it is determined as the normal cost (as defined below) plus the portion of the unfunded actuarial accrued liability amortized in the current period. The ARC is an amount that is actuarially determined to ensure that, if paid on an ongoing basis, it would provide sufficient resources for future benefit payments. Normal Cost is the actuarial cost of a portion of projected future benefits allocated to the current year by the actuarial cost method. It is sometimes referred to as "Current Service Cost." UAAL is the difference between actuarial accrued liability and the actu- arial value of any plan assets. Sometimes it is referred to as "Unfunded Past Service Liability," "Unfunded Accrued Liability," or "Unfunded Supplemental Present Value." RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B SECTION E SUMMARY OF SUBSTANTIVE PLAN PROVISIONS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B SUMMARY OF SUBSTANTIVE PLAN PROVISIONS (POLICE OFFICERS) AS OF OCTOBER 1, 2008 ELIGIBILITY FOR RETIREE BENEFITS All Sworn Police Officers (including sworn Management) participating in the F.O.P. Insurance Trust who satisfy the Vesting, Disability, Early or Normal Retirement provisions of the Firefighters and Police Officers (FIPO) Retirement Plan may be eligible for certain post -employment benefits. Following are the eligibility requirements for retirement under the applicable Plans: VESTING RETIREMENT Full vesting starts after 10 years of creditable service with employee contributions retained by the Retirement Trust Fund. Separated Police Officers entitled to a vested deferred pension benefit may continue their health insurance coverage immediately upon termination and for life thereafter on the same basis as a retiree. DISABILITY RETIREMENT Members are eligible for a non -duty disability pension after 10 years of creditable service. For duty disability, there is no service credit requirement, but such duty disability must have occurred prior to age 60. DEATH BENEFITS Members are eligible for a non -duty death pension after 3 years of creditable service. For duty death, there is no service credit requirement. EARLY RETIREMENT Attainment of 20 years of creditable service. NORMAL RETIREMENT The earlier of the attainment of age 50 with 10 years of creditable service, or the time when the total of age plus at least 10 years of creditable service equals or exceeds 64. DROP RETIREMENT The Deferred Retirement Option Program (DROP) is available to members who meet the requirements for normal retirement (above). DROP membership is for no more than a four year period. OTHER POST -EMPLOYMENT BENEFITS (OPEB) The OPEB benefits include lifetime medical, prescription, vision, dental and certain life insurance coverage for the retiree and dependents as provided through the FOP Health Plan. HEALTH -RELATED BENEFITS All retiring members may continue their participation in the group health insurance plan provided through the FOP Health Plan and may choose among the same Plan options available for active members, subject to a premium payment. Dependents of retirees may be covered at the retirees' option the same as dependents of active employees, subject to a premium payment. Prescription drug and vision coverage are automatically extended to retirees and their dependents who continue coverage under any of the Medical Plan options. Retirees and their dependents who are Medicare -eligible must enroll for Parts A and B under Medicare in order to remain covered under the program. All Medical coverage is secondary to Medicare for retirees and dependents. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B RETIREE CONTRIBUTIONS FOR MEDICAL/PRESCRIPTION/VISION BENEFITS. All future retirees are expected to pay the required premium in order to continue coverage for themselves and/or their dependents after retirement. Coverage for children of retirees is available (until their limiting age). However, for measuring the long term costs, the relatively few children covered by retirees coupled with the short duration of their coverage remaining results in costs that are not material in the long term. Consequently, only spouses are included in the chart below. Rates presented in the table are the monthly amounts required from the retiree for continuing coverage. Premiums Paid by Retirees through January 312010 Plan Non -Medicare Retiree Medicare Retiree Retiree Spouse Retiree Spouse EPO $ 177.50 $ 295.50 $ 131.50 $ 140.50 POS $ 182.50 $ 314.50 $ 136.50 $ 159.50 Premiums Paid by Retirees as of February 1, 2010 Plan Non -Medicare Retiree Medicare Retiree Retiree Spouse Retiree Spouse EPO $ 195.05 $ 313.05 $ 149.05 $ 158.05 POS $ 200.05 $ 332.05 $ 154.05 $ 177.05 GRANDFATHERED MANAGEMENT PERSONNEL PREMIUM CONTRIBUTIONS Certain members of Management Personnel covered under the FOP Health Plan who retired on or before January 6, 2003 have parts or all of their premiums (above) paid indirectly by the City. The amount charged, if any, to these retirees is subject to individual arrangements and depends on the total service credited and the date of retirement. All other sworn Management Personnel covered under the F.O.P Trust who retire after January 6, 2003 are subject to the premium table above. DISABLED RETIREES PREMIUM CONTRIBUTIONS. Members eligible for disability retirement are subject to premium payments the same as all regular retirees. An exception is made to officers who had sustained catastrophic injuries in the line of duty. Premiums for health coverage of such officers, their spouses and any dependent children will be paid by the City as prescribed by the Florida Statute Section 112.19(2)(h)1 (first introduced as the Alu-O'Hara Public Safety Act). SURVIVORSHIP BENEFITS Covered dependents of retirees are eligible to continue Medical/Rx coverage upon the death of the retiree. Covered dependents of an active employee are eligible to continue coverage provided the active member's beneficiary is been eligible for some form of monthly retirement income on account of the employee's death. Such dependents would be required to continue paying a premium applicable to dependents. No benefit (other than COBRA coverage) is offered to a surviving beneficiary of an active employee who is not eligible for monthly retirement income at the time of death. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B LIFE INSURANCE Retirees may continue their participation in the group term life insurance plan provided through the City after retirement, with the face value not to exceed $15,000 at the time of retirement. Starting at age 61, the benefit grades off to reach 50% of the initial benefit amount at age 65 (10% per year) and remains at that level for the rest of the retiree's lifetime. Currently, the cost to the retiree is $0.60 per $1,000 of the face value and $0.12 per $1,000 for Accidental Death and Dismemberment component. DENTAL PLAN Retirees and their dependents are eligible to participate in Dental Plan provided by the F.O.P. Union and administered through the F.O.P. Insurance Trust. Like active employees, retirees are required to pay a full group blended premium. Consequently, dental benefits are not Employer -provided in any sense and are not considered as other post -employment benefits for purposes of GASB Statement No. 45. COBRA BENEFITS Former employees, retirees and dependents may be eligible for extended benefits under COBRA, regardless of the terms of the employer's other post -employment benefits. COBRA benefits are not considered as other post - employment benefits for the purposes of GASB Statement No. 45. FUNDING VEHICLE Benefits are funded through the F.O.P. Insurance Trust from contributions made by City of Miami and members of the Plan. However, such Trust does not likely qualify under GASB rules as a "trust or equivalent arrangement". TERMINATION AND AMENDMENT The post -employment benefits are extended to retirees and continued at the discretion of the Trustees of the F.O.P. Insurance Trust, which reserves the right (subject to State Statute, collective bargaining agreements and agreement with City of Miami) to change or terminate benefits and to change contributions required from retirees in the future as circumstances change. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B APPENDIX GASB DISCLOSURES RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B Required Actuarial Information (GASB STATEMENT NO. 45) Employer FYE September 30 2010 2009 2008 Normal Cost (service cost for one year) $ 16,005,169 $ 12,946,874 $ 12,946,874 Amortization of Unfunded Actuarial Accrued Liability 14,051,927 11,968,966 11,508,621 Interest on Normal Cost and Amortization 1,277,427 1,894,942 2,122,890 Annual Required Contribution (ARC) 31,334,523 26,810,782 26,578,385 Net OPEB Obligation (N00) at beginning of year 42,312,854 21,668,339 - Annual Required Contribution (ARC) 31,334,523 26,810,782 26,578,385 Interest on NO0 1,798,296 920,904 - Adjustment to ARC (1,560,664) (772,571) - Annual OPEB Cost (Expense) 31,572,155 26,959,115 26,578,385 Estimated* Employer Contributions (7,613,473) (6,314,600) (4,910,046) Increase (decrease) in NO0 23,958,682 20,644,515 21,668,339 NO0 at end of year 66,271,536 42,312,854 21,668,339 Actuarial Valuation Date 10/1/2008 10/1/2006 Actuarial Value of Assets (a) $0 $0 Fiscal Year Ending 9/30/2010 9/30/2009 9/30/2008 Schedule of Funding Progress Actuarial Accrued Liability (AAL) - Unfunded AAL Entry Age (UAAL) (b) (b - a) S373,130,546 $373,130,546 $333,517,656 $333,517,656 Funded Ratio Covered Payroll (a / b) (c) UAAL as a Percentage of Covered Payroll ([b-a]/c) 0.00% $71,788,414 519.76% 0.00% $57,596,525 579.06% Schedule of Employer Contributions Annual OPEB Cost S31,572,155 S26,959,115 $26,578,385 Estimated Employer Contribution* S7,613,473 $6,314,600 $4,910,046 Percentage of Annual OPEB Cost Net OPEB Contributed Obligation 24.11% 23.42% 18.47% $66,271,536 $42,312,854 $21,668,339 * The Employer Contribution and Net OPEB Obligation for the year ending 9/30/2010 are estimates. Refer to page F-3 for an explanation of how to develop the Actual Employer Contribution. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B Required Actuarial Information (GASB STATEMENTS NO. 43 & 45) Reporting Year 2010 2009 2008 Contribution rate 10.6% 10.5% 8.5% Actuarial valuation date 10/01/2008 10/01/2006 10/01/2006 Annual OPEB cost $31,572,155 $26,959,115 $26,578,385 Contributions made $7,613,473 $6,314,600 $4,910,046 Actuarial cost method Entry Age Entry Age Entry Age Amortization method Level % closed Level % closed Level % closed Remaining amortization period 28 years 29 years 30 years Asset valuation method Unfunded Unfunded Unfunded Actuarial assumptions: Investment rate of return * 4.25% 4.25% 4.25% Projected salary increases * 5.0% - 10.0% 4.0% - 8.8% 4.0% - 8.8% Payroll growth assumptions 4.0% 4.0% 4.0% Initial Per Capita Cost trend rate 9.0% 11.5% 11.5% Ultimate Per Capita Cost trend rate 5.0% 5.0% 5.0% * Includes general price inflation at 3.0% 3.0% 3.0% RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B DEVELOPMENT OF ACTUAL EMPLOYER CONTRIBUTION The total net Employer Contribution reduces the Annual OPEB Cost. The net result is added to the previous year's Net OPEB Obligation to obtain the new Net OPEB Obligation reported in the Statement of Net Assets as a long term liability. The process of developing the Employer Contribution for the year ending September 30, 2010 is illustrated in the following chart. Refer to the discussion on the following pages for step-by-step instructions of developing the cost of coverage through the self -insured plan. Developmentof Employer: Contribution forYearrEnding September 30,201U 1. Age -Adjusted Premiums Paid on Behalf of Retirees 2. Retiree/spouse Premiums Collected for Fully -Insured Coverage 3. Self -Insured Medical/Rx Retained Costs (estimate only)* 4. Retiree/spouse Premiums Collected for Self -Insured MedicallRx 5. Total Employer Contribution (1 - 2 + 3 - 4) $ 67,422 $ 37,843 $ 10,663,554 $ 3,079,660 $ 7,613,473 * Cost of benefits provided through the self -insured component needs to be calculated according to the procedure outlined in following pages. Costs and premiums related to fully insured payments can be used as presented in the table without any adjustments. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B DEVELOPMENT OF ACTUAL EMPLOYER CONTRIBUTION The OPEB Plan is based on the self -insured health insurance and fully -insured life insurance plan. According to GASB 45 and its Implementation Guide, the Employer Contribution for the self -insured component is based on actual claims for covered retirees and their dependents for the fiscal year (2008-2009 Comprehensive Implementation Guide Q&A 8.21.4). The Employer Contribution for the fully insured component is based on the age/sex-adjusted premiums for covered retirees and their dependents. SELF -INSURED COMPONENT For the self -insured health plan, the following diagram and explanation illustrate the steps in developing the actual Employer Contribution, as the actual claims and other costs for retirees and their dependents offset by the actual retiree premiums paid. Claims Paid PLUS Adjustment to Incurred PLUS op -Loss (S-.L) Pt etruuins PLUS Ret Claims IBNR MINUS dated S-L-Reimbursein Aihnitt :it)ettS S-LReinnbursernents Receivable A. Actual Claims Paid. Obtain the actual claims paid for retirees and their dependents during the current fiscal year. The health plans' third party administrator or claims payer should be able to provide this information. B. Adjustment to Incurred. Add the increase in retiree IBNR to the retiree paid claims. 1. Obtain the total dollar amount of the IBNR held as a liability on your books as of the end of the last fiscal year (for the whole self -insured health plan). 2. Obtain the actual claims paid for all covered members during the last fiscal year. 3. Obtain the total IBNR % (IBNR as % of Paid Claims) by dividing B 1 by B2. 4. Obtain the actual claims paid for retirees and their dependents during the last fiscal year. The health plans' third party administrator or claims payer should be able to provide this information. 5. Obtain the approximate dollar amount of the retiree IBNR at the end of the last fiscal year by multiplying B3 by B4. 6. Obtain the approximate dollar amount of the retiree IBNR at the end of the current fiscal year by multiplying B3 by A. 7. The increase in the retiree IBNR is B6-B5. C. Stop -Loss Premiums. Obtain the stop -loss premiums paid for retirees and their dependents (not the grand total of stop -loss premiums) for the current fiscal year. Use the premiums rates multiplied by the retiree counts for the year. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B D. Administrative Expenses. Obtain the retiree allocable share of administrative expenses paid for the current fiscal year. Fees which are expressed per person can be multiplied by the retiree counts. Flat fees can be allocated to retiree cots using any reasonable method such and by head counts or claims. E. Associated S-L Reimbursement. 1. If any of the retiree claims included in Actual Claims Paid (Item A above) were reimbursed to the Employer by the stop -loss insurance carrier during the current fiscal period, they should be included here as Associated S-L Reimbursements and treated as a subtractive item in the formula. This way, excess claims which are reimbursed are not included in the net resulting Employer Contribution. 2. If any of the retiree claims included in Actual Claims Paid (Item A above) were reimbursed or expected to be reimbursed to the Employer by the stop -loss insurance carrier after the close of the fiscal year but prior the end of the next fiscal year, they too should be included here as an Associated S-L Reimbursement. It is presumed that such a reimbursement would be treated as a receivable on the books of the Employer as of the end of the current fiscal year under the concept of short term differences. After these steps are followed to obtain the Employer Contribution, be sure to offset this amount with the dollar amount of contributions paid by retirees or other health trust on their behalf (e.g., HIS or VEBA) for medical coverage. Do not include, in this offset, any retiree contributions for life insurance. That will be covered in the next section on Employer Contribution for fully insured components. This net result represents the Employer Contribution for the self -insured component of the total program. FULLY INSURED COMPONENT For the fully insured life insurance plan, the Employer Contribution is the age/sex-adjusted premium for the coverage. This may not be the same as the group rate paid by the employer if retirees are covered under the same policy as active employees. We already calculated the age/sex-adjusted premiums for life insurance for those expected to be retired for the fiscal year indicated. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT B DISCLOSURES FOR FISCAL YEAR ENDING 9/30/2011 GASB allows for performing actuarial valuation biennially with results applicable to two reporting years (per paragraph 12 of GASB Statement 45). However, a new fully compliant valuation would need to be performed if significant changes have occurred since the previous valuation that affect the valuation results, including significant changes in benefit provisions, the size or composition of the membership, or other factors that impact long-term actuarial assumptions through the reporting date. Refer also to Q&A 8.17.5 of the 2008-2009 Comprehensive hnplementation Guide. In the absence of such changes, following disclosures can be used in your 2010/2011 fiscal year reporting. Please note that Employer Contribution made for the FYE September 30, 2010 was not known at the time this report was produced and estimate is being used. Consequently, as indicated in the table below, Net OPEB Obligation for the year ending 9/30/2010 as well as entries derived from this figures are mere estimates. Required Actuarial Information (GASB STATEMENT NO. 45) Employer FYE September 30 2011 2010 2009 Normal Cost (service cost for one year) $ 16,900,319 $ 16,005,169 $ 12,946,874 Amortization of Unfunded Actuarial Accrued Liability 14,614,004 14,051,927 11,968,966 Interest on Normal Cost and Amortization 1,339,359 1,277,427 1,894,942 Annual Required Contribution (ARC) 32,853,682 31,334,523 26,810,782 Net OPEB Obligation (NO0) at beginning of year 66,271,536 42,312,854 21,668,339 Annual Required Contribution (ARC) 32,853,682 31,334,523 26,810,782 Interest on NO0 2,816,540 1,798,296 920,904 Adjustment to ARC (2,531,878) (1,560,664) (772,571) Annual OPEB Cost (Expense) 33,138,344 31,572,155 26,959,115 Estimated* Employer Contributions (8,818,605) (7,613,473) (6,314,600) Increase (decrease) in NO0 24.319,739 23.958,682 20,644,515 NOO at end of year 90,591,275 66,271,536 42,312,854 Fiscal Year Ending 9/30/2011 9/30/2010 9/30/2009 Schedule of Employer Contributions Annual OPEB Cost $33,138,344 $31,572,155 $26,959,115 Estimated Employer Contribution* S8,818,605 $7,613,473 $6,314,600 Percentage of Annual OPEB Cost Net OPEB Contributed Obligation 26.61 % 24.11% 23.42% $90,591,275 $66,271,536 S42,312,854 * The Employer Contribution for the years ending 9/30/2010 and 9/30/2011 are estimates. Refer to pages F-3 through F-5 above for an explanation of how to develop the Actual Employer Contribution. Consequently, adjustments to Net OPEB Obligation for the year ending 9/30/2011 (Adjustment to ARC, Interest on NOO) are estimates as well. RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C GRSGabriel Roeder Smith & Company Consultants & Actuaries CITY OF MIAMI, FLORIDA OTHER POST -EMPLOYMENT BENEFITS FOR CITY EMPLOYEES OTHER THAN POLICE OFFICERS ACTUARIAL REPORT FOR YEAR ENDING SEPTEMBER 30, 2010 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C GRS Gabriel Roeder Smith & Company Consultants & Actuaries One East Broward Blvd. Suite 505 Ft. Lauderdale, FL 33301-1872 954.527.1616 phone 954.525.0083 fax www.gabrielroeder.com December 22, 2010 Mr. Gary Reshefsky Director of Risk Management City of Miami '1'14 S.W. 2nd Ave. Miami, FL 33130-1910 Re: GASB Statement No. 45 Actuarial Valuation of Other Post -Employment Benefits (OPEB) Dear Mr. Reshefsky: Gabriel Roeder Smith & Company (GRS) has been engaged by the City of Miami to perform an Actuarial Valuation of certain Other Post -Employment Benefits (OPEB) provided to its retiring employees (excluding Police Officers). OPEBs provided to retiring City Police Officers are the subject of a separate Report. We are pleased to present herein the results pertaining to benefits provided to employees other than Police Officers. The Valuation was performed as of October 1, 2008 (applicable to the City's fiscal year ending September 30, 2010) and covers the subsidies for medical (including prescription drug) and life insurance benefits provided to City retirees. No other OPEBs were recognized. The actuarial calculations were prepared for the purpose of complying with the requirements of Statement No. 45 of the Governmental Accounting Standards Board (GASB) and have been made on a basis consistent with our understanding of these accounting standards. Determinations of the liability associated with the benefits described in this Report for purposes other than satisfying the City's financial reporting requirements may produce significantly different results. This Report may be provided to parties other than the City of Miami only in its entirety and only with the permission of the City. All actuarial calculations were performed on the basis of the Substantive Plan and the Actuarial Assumptions and Methods, as set forth in the respective sections of this Report. The Valuation was performed on the basis of employee, retiree and financial information supplied by the City officials. Although we did not audit this information, it was reviewed for reasonableness. The undersigned is a member of the American Academy of Actuaries and meets the Qualification Standards of the Academy of Actuaries to render the actuarial opinion herein. We will be pleased to answer any questions pertaining to the Valuation and to meet with you to review this Report. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY James J. Rizzo, ASA, MAAA Senior Consultant & Actuary Piotr Krekora, ASA, MAAA Senior Actuarial Analyst RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C TABLE OF CONTENTS SECTION TITLE PAGE A EXECUTIVE SUMMARY A-1 B SUMMARY OF ACTUARIAL VALUATION RESULTS 1. SUMMARY OF ACTUARIAL VALUATION RESULTS B-1 2. 20 -YEAR PROJECTION OF UNFUNDED CASH FLOW B-2 3. 10 -YEAR PROJECTION OF NET OPEB OBLIGATION B-3 4. AGE AND SERVICE TABLES B-4 C DEVELOPMENT OF INITIAL PER CAPITA COSTS C-1 D ACTUARIAL ASSUMPTIONS AND METHODS 1. METHODS AND DEMOGRAPHIC/ECONOMIC ASSUMPTIONS D-1 2. HEALTH COVERAGE ASSUMPTIONS D-4 3. MISCELLANEOUS AND TECHNICAL ASSUMPTIONS D-5 4. DEFINITION OF TECHNICAL TERMS D-6 E SUMMARY OF SUBSTANTIVE PLAN PROVISIONS E-1 APPENDIX A GASB DISCLOSURES F-1 GRSGabriel Roeder Smith & Company RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SECTION A EXECUTIVE SUMMARY RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C EXECUTIVE SUMMARY The Governmental Accounting Standards Board (GASB) issued Statement No. 45 to set forth rules for how governmental employers should account for Other Post -Employment Benefits (OPEBs). This Accounting Standard is effective for fiscal years beginning after December 15, 2006 for governments that were "Phase 1" governments for the purpose of implementing Statement No. 34. The City of Miami (City) has implemented GASB Statement No. 45 since the '07-'08 fiscal year. The results presented herein are applicable to the year ending September 30, 2010. This Actuarial Valuation and Report covers the OPEBs provided on behalf of current and future retirees of the City of Miami other than Police Officers. A separate report will be prepared for benefits offered to retiring Police Officers. The Substantive Plan provisions for the OPEBs subject to this valuation are described in the Section at the end of this Report entitled "Summary of Substantive Plan Provisions." GASB'S RATIONALE The issuance of GASB Statement Nos. 43 and 45 marks another major step in GASB's movement toward full accrual accounting for all governmental entities which issue government -wide financial statements according to generally accepted accounting principles. Prior to implementation, the costs of OPEBs had been reflected in the majority of governmental financial statements on a pay-as-you-go basis of accounting. The subsidy provided by the City had been recorded as an expense only after employees retire, and then only one year at a time as the subsidy is paid. Statement No. 45 views the subsidy for retiree medical benefits as a form of compensation which must be accrued on the books of the City during an employee's working life, rather than waiting until the employee's service to the City has been completed and he or she has retired. So GASB requires the lifetime value of that subsidy to be expensed over the working career of the employees. DIRECT SUBSIDIES The City currently has a stated policy of providing health coverage at a discounted premium to retired Firefighters, General Employees and Elected Officers as well as their dependents. This exceeds the minimum required of Florida governmental employers per Ch. 112.08, F.S. Details regarding the premiums charged can be found the section entitled "Summary of Substantive Plan Provisions". IMPLICIT RATE SUBSIDY Health coverage is provided to employees and retirees (other than Police Officers) as well as to their dependents through the self -insured plan administered by the City of Miami (City Plan). It may appear, at first glance, that the City's subsidy for retiree coverage is limited to the difference between the published total premium and the amount paid by retirees. However, the published premiums are based on a blending of the experience among younger active employees and older retired employees. Since the older retirees actually have higher costs, this means that the City is further subsidizing the cost of the retiree coverage because it pays all or a significant portion of that premium on behalf of the active employees. GASB No. 45 calls this the "implicit rate subsidy". Even though it appears that there is no City subsidy of retiree coverage beyond the premium discount, there really is, and it is not an insignificant amount. A group of 60-year-old retirees can easily cost three times as much as a group of 35-year-old active employees with the City paying an "average" premium for active employees' coverage. The City, therefore, has assumed an obligation to pay for that implicit subsidy for the covered lifetime of the current retirees (and their dependents), and for the covered lifetime of the current employees (and dependents) after they retire in the future. GRSGabriel Roeder Smith & Company A-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Measuring the current year's subsidy and projecting it (for all Firefighters, General Employees and Elected Officers) for decades into the future and making an allocation of that cost to different years, is the subject of this Actuarial Valuation and Report. FUNDED AND UNFUNDED PLANS According to GASB Statement No. 45, certain expense and liability numbers will need to be included in the City's Comprehensive Annual Financial Report (CAFR). However, GASB is not requiring the City to actually advance -fund the OPEB Plan by forming a Trust and pre -funding the obligation like pension benefits. That may be advisable, and it is still an option available to the City, whether to pre -fund or not to pre -fund; but it is not a requirement. Currently, the City's subsidy to OPEB benefits is unfunded. There is no separate Trust Fund or equivalent arrangement into which the City makes contributions to advance -fund the obligation, as it does for its pension plans. The ultimate direct and implicit subsidies provided over time are financed directly by general assets of the City, which are invested in short-term fixed income instruments according to its current investment policy. Consequently and for the City's unfunded OPEB Plan, according to GASB Statement No. 45, the interest discount rate used to calculate the present values and costs of the OPEB must be the long-range expected return on such short-term fixed income instruments. The City selected an interest discount rate of 4.25% for this purpose. However, if the OPEB Plan were advance -funded and if its assets were invested in a reasonable mix of stocks and bonds, like pension funds, then a much higher interest discount rate may be used, say, 7% to 8%. This would result in a substantially lower Annual OPEB Cost and a substantially lower Unfunded Actuarial AccruedLiability than if 4.25% were used. ACTUARIAL ASSUMPTIONS In any long-term Actuarial Valuation (such as for Pensions and OPEBs), certain demographic, economic and behavioral assumptions are made concerning the population, the investment discount rates and the benefits provided. These Actuarial Assumptions form the basis for the actuarial model which is used to project the future population, the future benefits provided, and the future contributions collected. The demographic assumptions used for projecting the future population for this OPEB Valuation were essentially the same as those used to project the future populations for the Firefighters' and Police Officers Pension Plan, the General Employees' and Sanitation Employees' Retirement Trust and the Elected Officers Retirement Trust which were prepared as of the same Valuation Date. The investment discount rate assumption is used to discount the projected net OPEB benefits to a present value. This and other related present values are used to calculate the Annual OPEB Cost that will be expensed in the City's financial statements and the Unfunded Actuarial Accrued Liability disclosed in the statements as well. It would be instructive to review the Section of this Report titled, "Actuarial Assumptions and Methods" for details of all the relevant Actuarial Assumptions used in this Valuation. ACTUARIAL COST METHODS GASB Statement No. 45 allows flexibility to governmental employers in the use of various actuarial cost methods. Several such acceptable actuarial cost methods were investigated. The goal was to recommend to the City the most acceptable and appropriate actuarial cost method. Liabilities and OPEB Costs for the City's Plan were developed using various actuarial cost methods, such as under the Entry Age Normal Cost Method, the Frozen Entry Age Normal Cost Method, the Aggregate Cost GRSGabriel Roeder Smith & Company A-2 RFC) NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Method and the Projected Unit Credit Normal Cost Method. Furthermore, the Normal Costs and the amortization of any Unfunded Actuarial Accrued Liabilities were calculated using both level dollar and level percent of expected pay. The results presented herein have been derived using the Entry Age Actuarial Cost Method with an amortization of the Unfunded Actuarial Accrued Liability as a level percent of expected payroll. Thisis the most common such method used for government Pension valuations (and likely so for OPEB valuations) and spreads the costs evenly as a percent of pay throughout the collective careers of those in the covered workforce. SUMMARY (EXCLUDING POLICE OFFICERS) Following is a summary of the key results of this Actuarial Valuation for Other Post Employment Benefits offered to retiring City employees (excluding Police Officers) covered under the health and life plans administered by the City. More details can be found on following pages. Please refer to the following section for an explanation of how these numbers will be reflected in the City's financial statements. As of October 1, 2008 October 1, 2006 October 1, 2006 Actuarial Accrued Liability $ 148,725,390 $ 146,802,156 $ 146,802,156 Actuarial Value of Assets - - - Unfunded Actuarial Accrued Liability 148,725,390 146,802,156 146,802,156 For FYE 9/30/2010 9/30/2009 9/30/2008 Annual Required Contribution 12,477,343 10,888,680 10,786,386 Per Covered Active Employee 5,182 4,799 4,754 As % of Expected Payroll 7.0% 8.1% 8.3% Annual OPEB Cost 12,540,416 10,926,498 10,786,386 Employer Contribution Toward the OPEB Cost (5,282,534) (5,220,141) (5,261,988) Addition to Net OPEB Obligation (N00) 7,257,882 5,706,357 5,524,398 Net OPEB Obligation (N00) 18,488,637 11,230,755 5,524,398 ACCRUED LIABILITY AND ANNUAL OPEB COST The Unfunded Actuarial Accrued Liability represents an actuarial measurement of the obligation that has "accrued" so far, based on the promise that has been made to current retirees and to current employees. This will be displayed in the Notes to Financial Statements and Required Supplementary Information within the City's CAFR. The Annual OPEB Cost is the amount that is expensed for the year. Since the City's OPEB plan is currently unfunded, the offset to that expense comes from actual subsidies paid on behalf of the current retirees and their dependents for the current year. This offset is called the actual Employer Contribution and equals the total actual claims and other costs incurred by the retirees and their dependents for the year (net of any stop -loss reimbursements received and receivable with respect to those claims and net of the retiree's own premium contribution payments for the year). Refer to the Appendix for a step-by-step formula for the development of the GRS Gabriel Roeder Smith & Company A-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C actual Employer Contribution to use for offsetting against the Annual OPEB Cost. The figure for the Employer Contribution and the Net OPEB Obligation in the table above are merely estimates. The cumulative difference between the Annual OPEB Cost for the year and the Employer Contribution for the year is called the Net OPEB Obligation. This is the amount of the expense charged for the year (per GASB No. 45) which was not yet offset by Employer Contributions. The Net OPEB Obligation will be reflected as a liability in the Statement of Net Assets of the City's annual financial statement. It flows right to the balance sheet, and remains there and accumulates each year until fully paid off by future Employer Contributions. CHANGES IN COSTS AND LIABILITIES In most typical situations, the liability and contribution requirements for ongoing plans tend to increase from year to year if all the assumptions are met. Compared to the previous Valuation, the Unfunded Actuarial Accrued Liability and the Annual OPEB Cost in this Valuation increased less than expected. Detailed analysis of root causes of all changes in costs and liabilities is beyond the scope of this report. Below we list few primary drivers contributing to the changes. We did not measure the impact of each individual change and the order does not have any particular significance:. Cost containment measures: Changes in health plan benefit provisions are expected to result in a 13% overall decrease in cost of coverage for the year beginning 1/1/2011. Although these changes become effective after the end of the reporting year, the changes are reflected herein as they have been adopted and communicated before the end of the fiscal year. This had a decreasing effect on the -cost and liability. Change in covered population: Number of retirees currently receiving post employment benefits did not change significantly since the prior valuation (1,113 in this valuation compared to 1,114 in the prior one). This has a decreasing effect on the results as we had expected a small increase in the number of covered retirees. At the same time, the number of active employees with medical coverage increased from 2,269 to 2,408 while we typically do not expect any changes in active population. The overall impact of population changes is difficult to assess without more detailed analysis. Changes in cost of coverage: The average cost of coverage for the entire plan increased from $703 per subscriber per month (as expected for the year beginning 1/1/2006) to $840 for the year beginning 1/1/2008. This is lower than the projected cost of $870. This had a potentially decreasing effect on the cost and liability but is partially offset by the lag in premium increases. The combined effect of slower than expected cost increases paired with even slower increases in retiree contributions is unclear without more detailed analysis. Changes in medical cost trends: We have revised the assumed trend of Medical/Rx cost increases. First year trend was assumed in the prior Valuation to be 11.5% followed by 11% for the second year and decreasing .5% each subsequent year to the ultimate value of 5%. We are revising trend for the year beginning 1/1/2009 to be 10% (down from previously assumed 10.5%), followed by 6.8% for the next year (to reflect actual experience that was better than previously expected) and followed by 8.5% for the year beginning 1/1/2011 with a .5% decrease in the trend rate each successive year until reaching an ultimate annual trend rate of 5.0% per year. This has a decreasing effect on the cost and liability. The trend rate for the year beginning 1/1/2011 reflects only the general inflation of medical costs and is more than offset by cost reduction from the plan design changes mentioned above. Changes in medical coverage elections: We have revised certain assumptions pertaining to retiree coverage elections after reviewing recent data. We are now assuming that 60% of retiring employees GRSGabriel Roeder Smith & Company A-4 RFQ NO 26D247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C will elect to continue coverage into retirement - this is an increase from 50% assumed in the prior Valuation. We have also changed our approach to modeling coverage lapsing. In the prior Valuation, we used a single lapse rate of 50% applied at age 65. Retirees older than 65 were assumed to continue their coverage for the remainder of their lifetime. We are now assuming that retirees would be subject to coverage lapsing every year upon attaining age 65 at the rate of 2% each year. This had an increasing effect on the results of the valuation. Changes in demographic assumptions: We have also revised certain demographic assumptions to reflect changes made by the actuaries of the respective pension plans. In addition, we have changed mortality rates from those employed by the pension actuaries to reflect more current mortality tables and to reflect some improvement in longevity in the years to come. Finally, we changed our modeling of retirement rates for employees in the DROP program to be different from the model used for pension purposes. - These changes had an increasing effect on the cost and liability. As can be seen from this summary of changes, there were offsetting factors at work to change the results from the last full valuation to this one. The net effect was a modest increase in plan liabilities and the plan's accounting expense. CITY OF MIAM1 CAFR The figures, above, would be integrated into the City's govemment-wide financial statements. These figures will need to be allocated across relevant proprietary funds and down to each function/program. Any reasonable allocation method should be acceptable. Since a separate Valuation Report is prepared for OPEBs for Police Officers, those results will need to be integrated and combined with these. GRSGabriel Roeder Smith & Company A-5 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SECTION B. SUMMARY OF ACTUARIAL VALUATION RESULTS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C ACTUARIAL VALUATION RESULTS as of October 1, 2008 for Other Than Police Officers Total Medical Rx Total Retirees' Net Employer Costs Premiums Life Insurance Costs Number of Participants Covered Active Participants 2,408 2,408 1,775 2,408 Retired Participants 1,113 1,113 328 1,113 Total Participants 3,521 3,521 2,103 3,521 Expected Payroll of Active Participants $ 177,589,195 $ 177,589,195 112,327,665 $ 177,589,195 Actuarial Present Value of Benefits Active Participants 295,460,692 (160,183,797) 1,103,334 136,380,229 Retired Participants 177,281,079 (95,405,102) 2.201,363 84,077,340 Total Participants 472,741,771 (255,588,899) 3,304,697 220,457,569 Actuarial Accrued Liability (Entry Age Normal Cost Actuarial Method) Active Participants 141,477,068 (77,497,729) 668,711 64,648,050 Retired Participants 177,281,079 (95,405,102) 2,201,363 84,077,340 Total Participants 318,758,147 (172,902,831) 2,870,074 148,725,390 Actuarial Value of Assets - - - - Unfunded Actuarial Accrued Liability (EANC) 318,758,147 (172,902,831) 2,870,074 148,725,390 Annual Required Contribution of the Employer (ARC) for YE 9/30/10 (Entry Age Normal Cost Actuarial Method) Normal Cost 13,565,770 (7,265,802) 67,776 6,367,744 28-Year Amortization of UAAL 12,004,288 (6,511,442) 108,085 5,600,931 Interest (to 9/30/10) 1,086,727 (585,533) 7,474 508,668 Annual Required Contribution for FYE 9/30/10 $ 26,656,785 $ (14,362,777) $ 183,335 $ 12.477,343 Per Active Participant $ 11,070 $ (5,965) $ 103 $ 5,182 As % of Expected Payroll 15.0% (8.1%) 0.2% 7.0% Annual OPEB Cost for FYE 9/30/10 ARC 12,477,343 Interest on NO0 S477,307 Adjustment to ARC ($414,234) Total Annual OPEB Cost for FYE 9/30/10 8 12,540,416 Net Employer Contr. for FYE 9/30/10 (for crediting against Annual OPEB Cost) $ 5.282,534 Addition to Net OPEB Obligation at 9/30/10 $ 7.257,882 Net OPEB Obligation at 10/1/09 $ 11,230,755 Net OPEB Obligation at 9/30/10 $18,488,637 Note: The number of participants shown in the right -most column is the number with either medical coverage or life insurance or both. GRS Gabriel Roeder Smith & Company B-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C TWENTY-YEAR PROJECTION OF UNFUNDED CASH FLOW (ALL COVERED PARTICIPANTS EXCLUDING POLICE OFFICERS) Premiums collected from employees and retirees account only for a fraction of the cost of the health care benefits provided. The table and a graph below illustrate, based on a closed group projection, how the cost of the benefits is distributed between the Employer and the retirees. These projected benefits are solely for those among the current employees and retirees, without regard for benefits that might become payable to those who have not yet been hired. Ignoring new hires for the purpose of these projections is acceptable because those new hires are not likely to add much to the subsidies' cash flow until after about 20 years anyway. Year Total Benefits Expected Retirees Premiums Expected Net Employer Subsidy Expected 2010 $ 12,356,717 $ 7,074,183 $ 5,282,534 2015 16,002,683 9,134,039 6,868,644 2020 19,908,362 11,020,679 8,887,683 2025 23,914,773 13,026,757 10,888,016 2030 27,735,909 15,037,052 12,698,857 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- 2010 Total Annual Cost of Retirees' Coverage (in Thousands) 2015 2020 2025 ()Net Employer Subsidy Expected ° Retirees Premiums Expected 2030 GRSGabriel Roeder Smith & Company B-2 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C TEN-YEAR PROJECTION OF NET OPEB OBLIGATION (ALL COVERED PARTICIPANTS EXCLUDING POLICE OFFICERS) All results presented in this report assume no advance -funding of this OPEB Plan. It assumes the current operation of the Plan continues without change. The graphics and table below illustrate how the Net OPEB Obligation and the Annual OPEB Cost are expected to grow over the next 10 years assuming no advance - funding (i.e., no change in operation). The projections below are made in a manner so as to simulate an open group forecast. That is, they approximate what the forecast would produce if it included the effect of new hires after the Valuation Date (October 1, 2008). This gives a more realistic picture of how the Net OPEB Obligation will grow over time, without going through the added time and expense of a true open group forecast. The Net OPEB Obligation will be presented as a liability in the Statement of Net Assets. Year Total Annual OPEB Cost at Fiscal Year End Current Net Employer Subsidy Annual Net OPEB Shortfall Net OPEB Obligation at Fiscal Year End 2010 $ 12,540,416 $ 5,282,534 $ 7,257,882 $ 18,488,637 2011 13,167,508 4,963,623 8,203,885 26,692,522 2012 14,077,255 5,239,401 8,837,854 35,530,376 2013 14,728,856 5,889,608 8,839,248 44,369,624 2014 15,928,808 6,438,496 9,490,312 53,859,936 2015 16,596,628 6,868,644 9,727,984 63,587,920 2016 17,942,734 7,309,285 10,633,449 74,221,369 2017 18,608,053 7,706,536 10,901,517 85,122,886 2018 20,165,048 8,088,343 12,076,705 97,199,591 2019 20,794,024 8,511,622 12,282,402 109,481,993 2020 22,632,778 8,887,683 13,745,095 123,227,088 $140 $ 1 2 0 $100 $80 $60 $40 $20 $- Expected Net OPEB Obligation and Annual OPEB Cost (in Millions) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 OPEB Shortfall =Net Employer Cost et OPEB Obligation GRSGabriel Roeder Smith & Company B-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C AGE/SERVICE DISTRIBUTION FOR PLAN PARTICIPANTS Age Years of Service to Valuation Date - General Employees 0-5 6-9 10-14 15-19 20-24 25-29 30&Up Total 0 - 14 - - - - - - - - 15 - 19 - - - - - - - - 20 - 24 52 - - - - - - 52 25 - 29 130 25 - - - - - 155 30 - 34 104 64 12 - - - - 180 35 - 39 83 84 43 7 - - - 217 40 - 44 92 69 36 27 24 3 - 251 45 - 49 57 78 32 34 50 39 4 294 50 - 54 62 56 23 23 44 35 5 248 55 - 59 38 41 26 25 22 24 7 183 60 - 64 32 40 10 9 13 12 5 121 65 - 69 9 9 15 7 4 1 1 46 70 - 74 5 10 2 2 - 1 2 22 75 - 99 - 2 2 - 1 - 1 6 Total 664 478 201 134 158 115 25 1,775 Age Years of Service to Valuation Date - Elected Officials 0-5 6-9 10-14 115-19 20-24 25-29 30&Up Total 0 - 14 - - - - - - - - 15 - 19 - - - - - - - - 20 - 24 - - - - - - - - 25 - 29 - - - - - - - - 30 - 34 - - - - - - - - 35 - 39 - - - - - - - - 40 - 44 1 - 1 - - - - 2 45 - 49 1 - - - - - - 1 50 - 54 - 1 - - - - - 1 55 - 59 - - - - - - - - 60 - 64 - 1 1 - - - - 2 65 - 69 - - - - - - - - 70 - 74 - - - - - - - - 75 - 99 - - - - - - - - Total 2 2 2 - - - - 6 The shaded inner areas represent current eligibility for Early or Normal Retirement. GRSGabriel Roeder Smith & Company B-4 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Years of Service to Valuation Date - Firefighters Age 0-5 6-9 10-14 15-19 20-24 25-29 130&Up Total 0 - 14 - - - - - - - - 15 - 19 - - - - - - - - 20 - 24 31 - - - - - - 31 25 - 29 60 10 - - - - - 70 30 - 34 31 60 8 - - - - 99 35 - 39 13 47 16 7 - - - 83 40 - 44 2 24 11 28 16 1 - 82 45 - 49 - 2 11 33 52 28 - 126 50 - 54 - 1 10 4 28 41 10 94 55 - 59 - - 8 - 4 16 13 41 60 - 64 - - - - 1 - - 1 65 - 69 - - - - - - - - 70 - 74 - - - - - - - - 75 - 99 - - - - - - - - Total 137 144 64 72 101 86 23 627 The shaded inner areas represent current eligibility for Early or Normal Retirement. Current Retirees Age Group Male Female Total 0 - 39 - - - 40 - 44 - - - 45 - 49 14 12 26 50 - 54 58 41 99 55 - 59 135 56 191 60- 64 139 60 199 65 - 69 150 47 197 70 - 74 91 36 127 75 - 79 82 28 110 80 - 84 47 43 90 85 - 89 20 32 52 90 - + 9 13 22 Total 745 368 1,113 GRSGabriel Roeder Smith & Company B-5 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SECTION C DEVELOPMENT OF PER CAPITA COSTS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DEVELOPMENT OF INITIAL PER CAPITA COSTS By offering health insurance coverage to employees, retirees and their dependents, the Employer assumes the responsibility for the cost of claims incurred by the members of the plan, subject to re -insurance limits. These costs are partially offset by contributions from employees and retirees and by Medicare. While the total premium amounts developed for funding, COBRA and for member contributions for covering employees and pre -Medicare retirees and their dependents are the same without regard to the age or gender of the member, the true costs of medical and prescription coverage in any given year, depend on these factors. As the ages of employees, retirees and dependents in the covered population increase, so do their costs of benefits. These true actuarial costs per person are called Per Capita Costs. The Per Capita Costs used in this actuarial valuation have been developed for members covered under the plan administered by the City. Monthly Per Capita Cost By Age/Sex Sample Not Medicare -Eligible Sample Medicare -Eligible Ages Male Female Ages Male Female 45 $ 310.62 $ 406.66 65 $ 415.22 $ 382.36 50 420.24 476.16 70 478.95 430.67 55 549.25 564.57 75 531.72 471.89 57 604.00 604.00 80 570.11 502.53 60 690.01 663.25 85 592.91 520.54 64 803.14 744.43 90 598.39 523.58 Amounts of Per Capita Costs illustrated above have been developed by employing the morbidity tables discussed below. The table shows select values of age -grading factors reflecting rates at which medical costs increase with age of the member. These percentages are separate from the annual overall trend in health care rates, which operates to increase costs independent of and in addition to the Aging Factors. For example, in any single year, a group of 56-year old males are expected to cost 4.96% more than a group of 55-year old males. Medical/Rx Cost Increase By Age Age Male Female Age Male Female 30 1.86% 0.81% 65 3.23% 2.62% 35 4.45% 1.32% 70 2.41% 2.08% 40 6.11% 2.23% 75 1.67% 1.50% 45 6.40% 3.02% 80 1.02% 0.92% 50 5.87% 3.40% 85 0.47% 0.39% 55 4.96% 3.45% 90 0.00% 0.00% 60 4.17% 3.03% 95 0.00% 0.00% The total cost expected for retirees and spouses was allocated by age/sex, based upon the age/sex distribution of those plan members and the morbidity tables above. This procedure resulted in a table of age/sex-specific initial Per Capita Costs for the coming year. These costs were developed based on the benefits provided by the City's health plan as of October 1, 2008. The graphs below illustrate the expected monthly Per Capita Costs (PCC) applicable to current retirees and their spouses in the coming year. The average premium charged to a retiree for the current year is also shown. For ages 65 and over, the PCC shown reflects the current mix of enrollment into Medicare Parts A and B. For clarity, premium applicable to a spouse is not presented on the graph. The spread between the Per Capita Cost GRsGabriel Roeder Smith & Company C-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C and the premium actually collected from retiree is the expected monthly cost incurred by the Employer when providing medical coverage to a particular retiree. Expected Monthly Per Capita Cost Retired General Employees and Firefighters on the Next Valuation Date $900 $800 $700 $600 • • • $500+ k! $400 $300 )()1C y(X)K 7K X X X X )K X X X )101010100010100( $200 $100 $- 50 55 60 65 70 75 80 85 90 Members Current Age tMalePCC tFemalePCC In the development of the PCC amounts, retirees and dependents age 65 and older are assumed to be Medicare - eligible. The "% of Total Claims Paid by Medicare" is an assumption regarding whether the plan or Medicare pays as primary for Medicare -eligible retirees and dependents. According to the Summary of Substantive Plan Provisions, as of October 1, 2008 the plan does require Medicare -eligible members to enroll in Medicare Part B. In order to smooth fluctuations and increases the credibility of the claim data used for annual projections, initial per capita costs have been developed based on a weighting of three years of experience. The following table illustrates development of an average claim cost (before allocation of administration and reinsurance costs) per retiree for the calendar year along with adjustment factors. Weighting factors have been chosen in order to assign more significance to the more recent experience. 2008 2007 2006 Unadjusted Annual Claim Cost per Retiree Cumulative Trend Trend Adjusted Annual Claim Cost per Retiree Weighting Factor 7,809 100.0% 7,809 50.0% $ 9,732 111.0% $ 10,802 33.3% $ 8,380 123.2% $ 10,324 16.7% Smoothed Annual Claim Cost per Retiree $9,226 Furthermore, we are recognizing the fact, that healthy retirees are less likely to select the medical coverage when required to pay a full blended premium. The impact of this phenomenon is usually less when retirees are offered direct subsidies and continuation of medical coverage is more common among retirees. This adjustment is made through application of the "Antiselection Load" presented below. Another adjustment accounts for the fact that retirees incur on average more claims than their active counterparts. Some of the employees decide to retire simply because of health problems. So retirees often have a higher morbidity status and have more time GRS Gabriel Roeder Smith & Company C-2 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C and interest in their health when compared to individuals who are at same age and sex and who are still actively employed. This is reflected through "Retirement Status Load". These adjustments are summarized below: Factors used in PCC Development °A) of Claims Paid by Medicare Antiselection Load Retirement Status Load 50% N/A* N/A* *Not applicable since PCC developed from retiree only experience. The Monthly Per Capita Costs (PCC) by age and sex represent the costs of coverage after taking out deductibles, coinsurance, co -pays, and Medicare payments, but before applying any monthly retiree contributions (premiums) charged for coverage. Medicare Part D subsidy, if any, has not been given any explicit consideration, since it may not be used to offset the OPEB obligation. Amounts for each age/sex combination for this Valuation were developed based on census data for the retired participants of the Health Care Plan and on the claim amounts incurred by the same retired participants and their dependents. The number of subscribers included in the Actuarial Valuation may be slightly different from the number used to develop the Per Capita Costs. The present distribution of subscribers for this purpose is summarized below. Number of Subscribers Coverage HMO POS Active Retirees Under 65 Retirees 65+ Active Retirees Under 65 Retirees 65+ Single 741 254 162 265 38 235 Family/Spouse 1,199 158 133 257 20 59 GRSGabriel Roeder Smith & Company C-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SECTION D ACTUARIAL ASSUMPTIONS AND METHODS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C METHODS - ECONOMIC/DEMOGRAPHIC ASSUMPTIONS Actuarial Valuation Date: October 1, 2008 for employee and retiree population purposes, for development of per capita cost purposes and for valuation purposes. Actuarial Cost Method: Entry Age Normal Cost Method with an increasing Normal Cost pattern consistent with the salary increase assumptions. Amortization Period and The Unfunded Actuarial Accrued Liability, as calculated pursuant to the Method: Individual Entry Age Actuarial Cost Method, is amortized as a level percent of payroll over a 28 year period. The assumed rate of payroll growth is 4%. GASB Statement No. 45 requires that any such payroll growth assumption be based upon no increase in the number of active employees covered by the plan. Investment Discount Rate: Mortality Tables: Rates of Termination from Active Employment: Since there are currently no invested plan assets held in trust to finance the OPEB obligations, the investment return discount rate is the long-term expectation of investment return on assets held in City funds pursuant to its Investment Policy. The City has selected 4.25% compounded annually. Mortality tables are used to measure the probabilities of participants dying before and after retirement. These are developed based on the said RP-2000 as projected from the year 2000 using Projection Scale AA. The mortality table is set forward 5 years for employees retiring under the disability provisions. This is a more recent mortality table than used by the pension boards and their actuaries. These rates do not apply to participants eligible to retire and do not include separation on account of death and disability. Termination rates are used to measure the probabilities of participants terminating employment for other reasons. Termination rates used in this actuarial valuation are based on tables used by pension actuaries for the General Employees' and Sanitation Employees' Retirement Trust (GESE), the Fire Fighters' and Police Officers' Retirement Trust (FIPO) and the Elected Officers retirement Trust (EORT). The following table shows termination rates for select ages: Rates of Separation from Active Membership Sample Completed years of Service (GESE) Service (FIPO) EORT Ages 0 1 2 3 4 5 or more under 5 5 or more any svc 20 12.00% 10.50% 9.00% 7.20% 6.00% 5.30% 2.40% 1.92% 0.00% 25 12.00% 10.50% 9.00% 7.20% 6.00% 4.60% 2.40% 1.92% 0.00% 30 12.00% 10.50% 9.00% 7.20% 6.00% 4.00% 2.40% 1.92% 0.00% 35 12.00% 10.50% 9.00% 7.20% 6.00% 3.40% 2.40% 1.92% 0.00% 40 11.40% 9.90% 8.40% 6.60% 5.20% 2.60% 1.80% 1.44% 0.00% 45 10.80% 9.30% 7.80% 6.00% 4.80% 2.00% 1.20% 0.96% 0.00% 50 10.20% 8.70% 7.20% 5.40% 4.20% 1.30% 0.00% 0.00% 0.00% 55 9.90% 8.40% 6.90% 5.10% 3.90% 1.00% 0.00% 0.00% 0.00% GRSGabriel Roeder Smith & Company D-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Rates of Disability: Salary Increases: Disability rates are used to measure the probabilities of active participants becoming disabled. Disability rates used in this actuarial valuation are based on tables used by pension actuaries for GESE, FIPO and FORT. The following table shows disability rates for select ages: Sample Ages % Becoming Disabled Within Next Year GESE FIPO EORT 20 0.050% 0.085% 0.000% 25 0.050% 0.130% 0.000% 30 0.080% 0.180% 0.000% 35 0.100% 0.285% 0.000% 40 0.120% 0.390% 0.000% 45 0.150% 0.800% 0.000% 50 0.200% 1.210% 0.000% 55 0.280% 1.620% 0.000% These Rates are used to measure changes in salary. Salary increase rates are shown in the following tables and are the same as used by actuaries for the respective retirement systems. Rates of salary increases (if any) presented in tables below reflect assumptions pertaining to annual salary increases due to promotion and longevity, and include general wage increases assumption of 4% per year (including general price inflation of 3.0%). Service Assumed Annual Salary Increases Fire GESE EORT 0 - 6 10.0% 6.0% 0.0% 7 7.5% 6.0% 0.0% 8 - 9 10.0% 6.0% 0.0% 10-14 6.0% 6.0% 0.0% 15-16 6.3% 6.0% 0.0% 17-21 6.0% 6.0% 0.0% 22+ 5.0% 6.0% 0.0% Inflation: Long term inflation is assumed to average at 3% per year. GRS Gabriel Roeder Smith & Company D-2 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services Rates of Retirement: EXHIBIT C These rates are used to measure the probabilities of eligible members retiring during the next year. Retirement rates used in this actuarial valuation are based on tables used by pension actuaries for the General Employees' and Sanitation Employees' Retirement Trust (GESE) and the Fire Fighters' and Police Officers' Retirement Trust (FIPO). Rates of retirement used for General and Sanitation employees have also been applied to employees who are not covered under any of the City's pension plans. Elected Officers covered under the Elected Officers Retirement Trust are assumed to retire at the end of the term when they are fully vested. % Retiring Within Next Year GESE FIPO EORT Retirement Retirement Years after Retirement Years after Retirement Age Rate Age Rate eligible Rate eligible Rate 45 10.00% 60 18.00% 0 10.00% 0 100.00% 46 10.00% 61 18.00% 1 10.00% 47 10.00% 62 18.00% 2 10.00% 48 10.00% 63 18.00% 3 10.00% 49 10.00% 64 18.00% 4 10.00% 50 15.00% 65 16.00% 5 25.00% 51 15.00% 66 16.00% 6 25.00% 52 15.00% 67 16.00% 7 25.00% 53 15.00% 68 16.00% 8 25.00% 54 15.00% 69 16.00% 9 25.00% 55 26.00% 70 100.00% 10 100.00% 56 18.00% 11 100.00% 57 18.00% 12 100.00% 58 18.00% 59 18.00% GRS Gabriel Roeder Smith & Company D-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DROP Retirements: In Florida, DROP employees are treated as retired for most pension purposes. The retirement rates used in the pension valuations (above) are applied to obtain the expected number of retirements and DROPs occurring at a given age if eligible. However, the treatment for OPEB purposes is different. Employees in the DROP program are still considered active employees for health and life insurance purposes and therefore for OPEB purposes as well. Consequently, the actuarial model for valuing the OPEB costs and liabilities is different. Half of the retirements expected pursuant to the table above are expected to be actual retirements among non -DROP employees and half are employees entering the DROP program. After employees enter the DROP program, they are expected to actually retire at rates equal to a percentage of the rates presented in the table above. These percentages are as follows: Factors for; Calculating Retirement DROP=Partici Rates for ants I % of regular rate Year in DROP _ ' 1 50% 2 70% 3 87% 4 100% 5 N/A* * - employee must retire by the end of the 5th year in the program GRSGabriel Roeder Smith & Company D-4 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services HEALTH COVERAGE ASSUMPTIONS Coverage Acceptance Rates: EXHIBIT C Not everyone who retires will accept coverage and pay the required premium upon retirement. Following are the assumptions as to future Medical Coverage Acceptance Rates. Lapse rates presented below reflect the discontinuation of coverage under the City's plan. Acceptance and lapsing rates presented below result from an analysis of the choice patterns exhibited by retirees in the recent years and are assumed to continue. Acceptance and Lapsing Rate Ret Only Ret + 1 Total At Retirement (before age 65) 40% 20% 60% Annual lapsing for age 65 or older 2% 2% 2% Continuation of Survivors N/A 50% 50% Expenses: Expenses are included in the Per Capita Costs. Expected Retiree Contributions: Members are required to make monthly contributions in order to maintain their coverage. For the purpose of this Valuation a weighted average has been used with weights derived from the current distribution of members among plans offered. Such average expected retiree premium contributions for the first year are shown in the table below. Average Premium (as of Valuation Date) Member Non -Medicare Medicare Retiree Spouse $ 387.00 $ 459.00 $ 260.00 $ 338.00 Health Care Cost Trend Rates: Monthly Per Capita Costs for Medical and Rx benefits are assumed to increase each year according to the rates set forth in the following table. For example, the Per Capita Costs applicable to retirees for the year beginning on 1/1/2009 are expected to increase 10.0% over the Per Capita Costs for the calendar year 2008. These trends rates reflect the general health cost inflation and do not account for plan design changes effective January 1, 2011 resulting in approximately 15% reduction of the cost of benefits for retirees under the age of 65 and approximately 24% reduction in costs of coverage for retirees eligible for Medicare benefits Annual Increase Rates Year Medical/Rx Contribution Year Medical/Rx Contribution 2009 10.0% 2.0% 2016 6.0% 6.0% 2010 6.8% 6.8% 2017 5.5% 5.5% 2011 8.5% 8.5% 2018 5.0% 5.0% 2012 8.0% 8.0% 2019 5.0% 5.0% 2013 7.5% 7.5% 2020 5.0% 5.0% 2014 7.0% 7.0% 2021 5.0% 5.0% 2015 6.5% 6.5% Thereafter 5.0% 5.0% GRS Gabriel Roeder Smith & Company D-5 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C MISCELLANEOUS AND TECHNICAL ASSUMPTIONS Pay Increase Timing: End of (fiscal) year. This is equivalent to assuming that reported pays represent amounts paid to members during the year starting on the valuation date. Decrement Timing: Decrements of all types are assumed to occur at the middle of the year. Eligibility Testing: Decrement Relativity: Adjustments: Decrement Operation: Eligibility, for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Decrement rates are treated as absolute rates of decrement. None. All decrements operate simultaneously. Disability and termination rates cease upon eligibility for normal retirement. GRS Gabriel Roeder Smith & Company D-6 RFO NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DEFINITIONS OF TECHNICAL TERMS Actuarial Accrued Liability: Actuarial Assumptions: Actuarial Cost Method: Actuarial Present Value: Amortization: Annual Required Contribution: (ARC): Normal Cost: Unfunded Actuarial Accrued Liability (UAAL): Actuarial Accrued Liability is the actuarial present value of projected future benefits that have been accrued (or earned) by employees to date. Sometimes it's expressed as the difference between the actuarial present value of all future benefit payments and the actuarial present value of future normal costs. It is also referred to as "Accrued Liability" or "Past Service Liability". These are factors for estimating expected future experience with respect to occurrences of mortality, disability, turnover, retirement, rates of investment income and salary increases, coverage acceptance, trend, aging, etc. This is a mathematical budgeting procedure for allocating the dollar amount of the "actuarial present value of future benefit payments" between future normal costs and actuarial accrued liabilities. It is often referred to as the "Actuarial Funding Method" or "Actuarial Valuation Cost Method". Actuarial Present Value of a series of payments (or a single payment) is the amount of funds currently required to provide those payments in the future. This amount is determined by discounting future payments at predetermined rates of interest, taking into account the probability of payment. It is also referred to as "Present Value." Amortization is a process of paying off an interest -discounted amount with periodic payments of interest and principal, (similar to paying off an installment loan) -- as opposed to paying it off with a single sum. The ARC is the portion of the present value of projected benefits earned by employees that is attributable to the current period. Usually it is determined as the normal cost (as defined below) plus the portion of the unfunded actuarial accrued liability amortized in the current period. The ARC is an amount that is actuarially determined to ensure that, if paid on an ongoing basis, it would provide sufficient resources for future benefit payments. Normal Cost is the actuarial cost of a portion of projected future benefits allocated to the current year by the actuarial cost method. It is sometimes referred to as "Current Service Cost." UAAL is the difference between actuarial accrued liability and the actu- arial value of any plan assets. Sometimes it is referred to as "Unfunded Past Service Liability," "Unfunded Accrued Liability," or "Unfunded Supplemental Present Value." GRSGabriel Roeder Smith & Company D-7 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SECTION E SUMMARY OF SUBSTANTIVE PLAN PROVISIONS RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SUMMARY OF SUBSTANTIVE PLAN PROVISIONS (OTHER THAN POLICE OFFICERS) AS OF OCTOBER 1, 2008 ELIGIBILITY FOR RETIREE BENEFITS All full time employees (other than Police Officers) of the City of Miami, who satisfy the Vesting, Disability, Early or Normal Retirement provisions of the applicable Retirement Plans may be eligible for certain post - employment benefits. Following presents the eligibility requirements for retirement under the City's four Retirement Plans: Fire Fighters' and Police Officers' Retirement Trust (FIPO), General Employees' And Sanitation Employees' Retirement Trust (GESE), Elected Officers' Retirement Trust (EORT), and the 401(a) Defined Contribution Retirement Plan. VESTING RETIREMENT Firefighters and General Employees: Full vesting starts after 10 years of creditable service with employee contributions retained by the respective Funds. Elected Officers: Full vesting starts after 7 years of service as an elected official. However, with respect to all four groups, there are no OPEB benefits available after termination of employment, unless employee satisfies eligibility requirements for any other retirement benefits listed below. DISABILITY RETIREMENT Firefighters and General Employees: Members are eligible for a non -duty disability pension after 10 years of creditable service. For duty disability, there is no service credit requirement. For Firefighters, such duty disability must have occurred prior to age 60. Elected Officials: No pension benefits are payable for disability benefits. DEATH BENEFITS Firefighters and General Employees: Members are eligible for a non -duty death pension after 3 years of creditable service. For duty death, there is no service credit requirement. Elected Officers: No monthly retirement or survivor benefits are payable in the event of death. EARLY RETIREMENT Firefighters and General Employees: Attainment of 20 years of creditable service. Elected Officers: No pension benefits are payable for early retirement. NORMAL RETIREMENT Firefighters: The earlier of the attainment of age 50 with 10 years of creditable service, or the time when the total of age plus at least 10 years of creditable service equals or exceeds 64. General Employees: Earlier of attainment of age 55 with 10 years of creditable service, or the time when the total of age plus creditable service equals or exceeds 70. Elected Officers: Attainment of age 55 after serving 7 years as an Elected Officer, provided no longer serving as an Elected Officer. GRS Gabriel Roeder Smith & Company E-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DROP RETIREMENT Firefighters and General Employees: The Deferred Retirement Option Program (DROP) is available to Members at the earlier of the attainment of age 50 with 10 years of creditable service, or the time when the total of age plus at least 10 years of creditable service equals or exceeds 64 (for Firefighters)or 70 (for General Employees). DROP membership is for no more than a four year period for Firefighters and three years for General Employees. Executives: Not applicable to Executives' retirement plan. Elected Officers: No DROP feature is available to Elected Officers. Executives participating in the 401(a) Defined Contribution Retirement Plan are eligible for the OPEB benefits described herein under the same age/service criteria as any other similarly situated employee covered under GESE or FIPO, as the case may be. OTHER POST -EMPLOYMENT BENEFITS The OPEB benefits include lifetime medical, prescription, vision, dental and certain life insurance coverage for the retiree and dependents the same as is provided to similarly situated active employees of the City. HEALTH -RELATED BENEFITS All retiring employees of City may continue their participation in the group health insurance plan sponsored by the City and may choose among the same Medical Plan options available for similarly situated active employees of the City, but may be subject to a premium payment. Dependents of retirees may be covered at the retirees' option the same as dependents of active employees, subject to a premium payment. Prescription drug and vision coverage are automatically extended to retirees and their dependents who continue coverage under any of the Medical Plan options. All future retirees and their dependents who are Medicare -eligible are not required to enroll for Parts A and B under Medicare in order to remain eligible for coverage under the program. The City Plan's medical coverage is secondary to Medicare only for Medicare -covered expenses. RETIREE CONTRIBUTIONS FOR MEDICAL/PRESCRIPTION/VISION BENEFITS All retirees must pay the required premium presented below in order to continue coverage for themselves and/or their dependents after retirement. The stated policy is that the premium contribution required from retirees is 75% of the respective group rate (considering Medicare and pre -Medicare as separate groups) but not more than the maximum imposed under Ch. 112.0801, F.S. The City has made an exception to this policy for retirees eligible for Medicare by charging a lower premium than developed in accordance with this policy. The following charts present the recent and current premium contributions required to be paid by retirees for continued coverage. Premiums Paid by Retirees as of January 1, 2008 Plan Non -Medicare Retiree Medicare Retiree Retiree Only Retiree and Spouse Retiree Only Retiree and Spouse HMO $ 371.83 $ 818.59 $ 172.96 $ 464.20 POS $ 480.80 $ 1,037.64 $ 363.44 $ 817.75 GRS Gabriel Roeder Smith & Company E-2 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Premiums Paid by Retirees as of January 1, 2009 Plan Non -Medicare Retiree Medicare Retiree Retiree Only Retiree and Spouse Retiree Only Retiree and Spouse HMO $ 390.78 $ 826.55 $ 198.90 $ 533.83 POS $ 486.91 $ 1,085.85 S 418.13 S 940.80 Premiums Paid by Retirees as of January 1, 2010 Plan Non -Medicare Retiree Medicare Retiree Retiree Only Retiree and Spouse Retiree Only Retiree and Spouse HMO $ 416.17 $ 905.39 $ 210.83 $ 566.86 POS $ 529.36 $ 1,175.81 $ 387.19 $ 871.19 Premiums Paid by Retirees as of January, 1, 2011 Plan Non -Medicare Retiree Medicare Retiree Retiree Only Retiree and Spouse Retiree Only Retiree and Spouse POS $ 416.17 $ 905.39 $ 210.83 $ 566.86 PLAN CHANGES AFTER THE VALUATION DATE In the effort to contain the cost of providing health benefits to employees and retirees of the City of Miami, the City implemented cost -saving measures effective January 1, 2011. One of the key changes was elimination of the HMO options from available coverage choices. This change, combined with other modifications of the benefits structure had significant impact on the cost of retiree health coverage. Although the changes become effective after the close of the reporting year, we are reflecting them in this report because they have been adopted and communicated to retirees during the fiscal year. EXECUTIVE AND ELECTED OFFICERS RETIREE CONTRIBUTIONS FOR MEDICAL/PRESCRIPTION/VISION BENEFITS Executives and Elected Officers retired prior to December 31, 2006 have varying policies in place for determining the amount of retiree premium contribution required for coverage. The amounts charged, if any, to these retirees are subject to individual arrangements and may depend on the total service credited and the date of retirement. All Executives and Elected Officers retired on or after December 31, 2006 are subject to the stated policy and the premium contribution table above. PART-TIME AND TEMPORARY EMPLOYEES HEALTH BENEFITS City of Miami provides MedicalfRx benefits to part time and temporary employees through a separate (fully insured) group plan. However, no benefits are available to such retiring employees and, consequently, these benefits are not considered as other post -employment benefits for purposes of GASB Statement No. 45. DISABLED RETIREES PREMIUM CONTRIBUTIONS. Members eligible for disability retirement are subject to premium payments the same as all regular retirees. An exception is made to Firefighters who had sustained catastrophic injuries in the line of duty. Premiums for health coverage of such Firefighters, their spouses and any dependent children will be paid by the City as prescribed by the Florida Statute Section 112.19(2)(g)1 (first introduced as the Alu-O'Hara Public Safety Act). GRSGabriel Roeder Smith & Company E-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C SURVIVORSHIP BENEFITS Covered dependents of retirees (Firefighters, General Employees, Executives, and Elected Officers) are eligible to continue coverage upon the death of the retiree. Covered dependents of an active employee (Firefighters, General Employees, Executives, and Elected Officers) are eligible to continue coverage provided the active employee was, at the time of death, eligible for Normal or Early Retirement (as described above). Such dependents would be required to continue paying a premium applicable to dependents. No benefit (other than COBRA coverage) is offered to surviving dependents of other active employees. LIFE INSURANCE Retirees receiving pension benefits from General Employees' And Sanitation Employees' Retirement Trust (GESE) may continue their participation in the group term life insurance after retirement with the face value not to exceed $35,000 at the time of retirement. Starting at age 61, the benefit grades off to reach 50% of the initial benefit amount at age 65 (10% per year) and remains at that level for the rest of the retiree's lifetime. The cost to the retiree is $.50 per $1,000 of the face value. Retiring Executives are not eligible for that benefit unless receiving a monthly pension from GESE, in which case they would be subject to the same rules as retired General Employees. Life Insurance is available to retired Firefighters through the plan sponsored by the local IAFF office and is not Employer -provided. Elected Officers are not eligible for group Life Insurance after retirement. DENTAL PLAN Retirees and their dependents are eligible to participate in the City's group dental Plan. However all active employees and retirees are required to pay a full group blended premium. Consequently, dental benefits are not Employer -provided in any sense and are not considered as other post -employment benefits for purposes of GASB Statement No. 45. COBRA BENEFITS Former employees, retirees and dependents may be eligible for extended benefits under COBRA, regardless of the terms of the employer's other post -employment benefits. COBRA benefits are not considered as other post - employment benefits for the purposes of GASB Statement No. 45. FUNDING VEHICLE There is no separate trust through which benefits for retirees are funded. No assets are currently accumulated or earmarked for this purposes. All approved benefits are paid from the City's general assets when due. TERMINATION AND AMENDMENT The post -employment benefits are extended to retirees and continued at the discretion of the City which reserves the right (subject to State Statutes and collective bargaining agreements) to change or terminate benefits and to change contributions required from retirees in the future as circumstances change. GRSGabriel Roeder Smith & Company E-4 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C APPENDIX GASB DISCLOSURES RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Required Actuarial Information (GASB STATEMENT NO. 45) Employer FYE September 30 2010 2009 2008 Normal Cost (service cost for one year) $ 6,367,744 $ 4,859,177 $ 4,859,177 Amortization of Unfunded Actuarial Accrued Liability 5,600,931 5,268,298 5,065,670 Interest on Normal Cost and Amortization 508,668 761,205 861,539 Annual Required Contribution (ARC) 12,477,343 10,888,680 10,786,386 Net OPEB Obligation (NOO) at beginning of year 11,230,755 5,524,398 - Annual Required Contribution (ARC) 12,477,343 10,888,680 10,786,386 Interest on NO0 477,307 234,787 - Adjustment to ARC (414.234) (196,969) - Annual OPEB Cost (Expense) 12,540,416 10,926,498 10,786,386 Employer Contributions Made (5,282,534) (5,220,141) (5,261,988) Increase (decrease) in NO0 7.257,882 5,706.357 5.524.398 NOO at end of year 18,488,637 11,230,755 5,524,398 Actuarial Valuation Date 10/1 /2008 10/1/2006 Actuarial Value of Assets (a) $0 $0 Fiscal Year Ending 9/30/2010 9/30/2009 9/30/2008 Schedule of Funding Progress Actuarial Accrued Liability (AAL) - Entry Age (b) $148,725,390 $146,802,156 Unfunded AAL (UAAL) (b - a) $148,725,390 $146,802,156 UAAL as a Percentage of Covered Funded Ratio Covered Payroll Payroll (a l b) (c) ([b - a] / c) 0.00% $170,785,202 87.08% 0.00% $129,892,623 113.02% Schedule of Employer Contributions Annual OPEB Cost $12,540,416 $10,926,498 $10,786,386 Employer Contribution $5,282,534 $5,220,141 $5,261,988 Percentage of Annual OPEB Cost Net OPEB Contributed Obligation 42.12% 47.78% 48.78% $18,488,637 S11,230,755 $5,524,398 * Note: The Employer Contribution for the years ending September 30, 2010 was based on retirees' claim experience during that year and premiums actually collected. Refer to pages F-3 through F-S for details and a description of the procedure used in that calculation. GRSGabriel Roeder Smith & Company F-1 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C Required Actuarial Information (GASB STATEMENTS NO. 43 & 45) Reporting Year 2010 2009 2008 Contribution rate 3.0% 3.9% 4.1% Actuarial valuation date 10/01/2008 10/01/2006 10/01/2006 Annual OPEB cost $12,540,416 $10,926,498 $10,786,386 Contributions made $5,282,534 $5,220,141 $5,261,988 Actuarial cost method Entry Age Entry Age Entry Age Amortization method Level % closed Level % closed Level % closed Remaining amortization period 28 years 29 years 30 years Asset valuation method Unfunded Unfunded Unfunded Actuarial assumptions: Investment rate of return * 4.25% 4.25% 4.25% Projected salary increases * 3.5% - 10.0% 4.0% - 8.8% 4.0% - 8.8% Payroll growth assumptions 4.0% 4.0% 4.0% Initial Per Capita Cost trend rate 10.0% 11.5% 11.5% Ultimate Per Capita Cost trend rate 5.0% 5.0% 5.0% * Includes general price inflation at 3.0% 3.0% 3.0% GRsGabriel Roeder Smith & Company F-2 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DEVELOPMENT OF ACTUAL EMPLOYER CONTRIBUTION The total net Employer Contribution reduces the Annual OPEB Cost. The net result is added to the previous year's Net OPEB Obligation to obtain the new Net OPEB Obligation reported in the Statement of Net Assets as a long term liability. The process of developing the Employer Contribution for the year ending September 30, 2010 is illustrated in the following chart. Refer to the discussion on the following pages for step-by-step instructions of developing the cost of coverage through the self -insured plan. eyelopment of Employer Contribution for Year Ending=September 30, 2010, .. 1. Age -Adjusted Premiums for Life Insurance Paid on Behalf of Retirees 2. Retiree/spouse Premiums Collected for Life Insurance 3. Self -Insured MedicallRx Retained Costs* a) Claims Paid $ 10,456,038 b) Adjustment to Incurred $ 784,203 c) Administrative Expenses and Stop -Loss Premiums Paid $ 982,800 d) Stop -Loss Reimbursement** $ - e) Total Self -Insured Medical/Rx Retained Costs 4. Retiree/spouse Premiums Collected for Self -Insured MedicaURx 5. Total Employer Contribution (1 - 2 + 3e - 4) $ 133,676 $ 30,518 $ 12,223,041 $ 7,043,665 $ 5,282,534 * Cost of benefits provided through the self -insured component has been calculated according to the procedure outlined in following pages. Costs and premiums related to fully insured payments (if any) can be based on the actuarial model without any adjustments. ** Information pertaining to Stop -Loss Reimbursements for retirees' claims paid during the FYE September 30, 2010 was not available at the time this report was prepared. GRS Gabriel Roeder Smith & Company F-3 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DEVELOPMENT OF ACTUAL EMPLOYER CONTRIBUTION The OPEB Plan is based on the self -insured health insurance and fully -insured life insurance plan. According to GASB 45 and its Implementation Guide, the Employer Contribution for the self -insured component is based on actual claims for covered retirees and their dependents for the fiscal year (2008-2009 Comprehensive Implementation Guide Q&A 8.21.4). The Employer Contribution for the fully insured component is based on the age/sex-adjusted premiums for covered retirees and their dependents. SELF -INSURED COMPONENT For the self -insured health plan, the following diagram and explanation illustrate the steps in developing the actual Employer Contribution, as the actual claims and other costs for retirees and their dependents offset by the actual retiree premiums paid. Chit PLUS Adjustment to IncutTed PLUS -Loss (S- L) 1't animus PLUS Ret C7aiins IBNR'' MINUS Associated S-L-Reitnbut•semeatts min Expenses S-L Reiinbnrseinents Receivable A. Actual Claims Paid. Obtain the actual claims paid for retirees and their dependents during the current fiscal year. The health plans' third party administrator or claims payer should be able to provide this information. B. Adjustment to Incurred. Add the increase in retiree IBNR to the retiree paid claims. 1. Obtain the total dollar amount of the IBNR held as a liability on your books as of the end of the last fiscal year (for the whole self -insured health plan). 2. Obtain the actual claims paid for all covered members during the last fiscal year. 3. Obtain the total IBNR % (IBNR as % of Paid Claims) by dividing B 1 by B2. 4. Obtain the actual claims paid for retirees and their dependents during the last fiscal year. The health plans' third party administrator or claims payer should be able to provide this information. 5. Obtain the approximate dollar amount of the retiree IBNR at the end of the last fiscal year by multiplying B3 by B4. 6. Obtain the approximate dollar amount of the retiree IBNR at the end of the current fiscal year by multiplying B3 by A. 7. The increase in the retiree IBNR is B6-B5. C. Stop -Loss Premiums. Obtain the stop -loss premiums paid for retirees and their dependents (not the grand total of stop -loss premiums) for the current fiscal year. Use the premiums rates multiplied by the retiree counts for the year. GRSGabriel Roeder Smith & Company F-4 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C D. Administrative Expenses. Obtain the retiree allocable share of administrative expenses paid for the current fiscal year. Fees which are expressed per person can be multiplied by the retiree counts. Flat fees can be allocated to retiree cots using any reasonable method such and by head counts or claims. E. Associated S-L Reimbursement. 1. If any of the retiree claims included in Actual Claims Paid (Item A above) were reimbursed to the Employer by the stop -loss insurance carrier during the current fiscal period, they should be included here as Associated S-L Reimbursements and treated as a subtractive item in the formula. This way, excess claims which are reimbursed are not included in the net resulting Employer Contribution. 2. If any of the retiree claims included in Actual Claims Paid (Item A above) were reimbursed or expected to be reimbursed to the Employer by the stop -loss insurance carrier after the close of the fiscal year but prior the end of the next fiscal year, they too should be included here as an Associated S-L Reimbursement. It is presumed that such a reimbursement would be treated as a receivable on the books of the Employer as of the end of the current fiscal year under the concept of short term differences. After these steps are followed to obtain the Employer Contribution, be sure to offset this amount with the dollar amount of contributions paid by retirees or other health trust on their behalf (e.g., HIS or VESA) for medical coverage. Do not include, in this offset, any retiree contributions for life insurance. That will be covered in the next section on Employer Contribution for fully insured components. This net result represents the Employer Contribution for the self -insured component of the total program. FULLY INSURED COMPONENT For the fully insured life insurance plan, the Employer Contribution is the age/sex-adjusted premium for the coverage. This may not be the same as the group rate paid by the employer if retirees are covered under the same policy as active employees. We already calculated the age/sex-adjusted premiums for life insurance for those expected to be retired for the fiscal year indicated. GRS Gabriel Roeder Smith & Company F-5 RFQ NO 260247 Health Benefit Consulting Services & Actuarial Services EXHIBIT C DISCLOSURES FOR FISCAL YEAR ENDING 9/30/2011 GASB allows for performing actuarial valuation biennially with results applicable to two reporting years (per paragraph 12 of GASB Statement 45). However, a new fully compliant valuation would need to be performed if significant changes have occurred since the previous valuation that affect the valuation results, including significant changes in benefit provisions, the size or composition of the membership, or other factors that impact long-term actuarial assumptions through the reporting date. Refer also to Q&A 8.17.5 of the 2008-2009 Comprehensive Implementation Guide. In the absence of such changes, following disclosures can be used in your 2010/2011 fiscal year reporting. Please note that Employer Contribution made for the FYE September 30, 2011 was not known at the time this report was produced. Consequently, as indicated in the table below, Net OPEB Obligation for the year ending 9/30/2011 are mere estimates. Required Actuarial Information (GASB STATEMENT NO. 45) Employer FYE September 30 2011 2010 2009 Normal Cost (service cost for one year) $ 6,729,557 $ 6,367,744 $ 4,859,177 Amortization of Unfunded Actuarial Accrued Liability 5,824,968 5,600,931 5,268,298 Interest on Normal Cost and Amortization 533,567 508,668 761,205 Annual Required Contribution (ARC) 13,088,092 12,477,343 10,888,680 Net OPEB Obligation (N00) at beginning of year 18,488,637 11,230,755 5,524,398 Annual Required Contribution (ARC) 13,088,092 12,477,343 10,888,680 Interest on NOO 785,767 477,307 234,787 Adjustment to ARC (706,351) (414,234) (196,969) Annual OPEB Cost (Expense) 13,167,508 12,540,416 10,926,498 Employer Contributions Made* (4,963,623) (5,282,534) (5,220,141) Increase (decrease) in NOO 8,203,885 7,257,882 5,706,357 NOO at end of year 26,692,522 18,488,637 11,230,755 Fiscal Year Ending 9/30/2011 9/30/2010 9/30/2009 Schedule of Employer Contributions Amount Annual OPEB Cost Contributed* $13,167,508 $12,540,416 $10,926,498 $4,963,623 $5,282,534 $5,220,141 Percentage of Annual OPEB Cost Net OPEB Contributed Obligation 37.70% 42.12% 47.78% $26,692,522 $18,488,637 $11,230,755 * The Employer Contribution and Net OPEB Obligation for the year ending 6/30/2011 are estimates. Refer to page F-3 above for an explanation of how to develop the Actual Employer Contribution. GRSGabriel Roeder Smith & Company F-6 RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services SUMIVIARY OF BENEFITS Your CIGNA HealthCare Indemnity plan Features that Add Value • The CIGNA HealtbCare 24-Hour Health Information LinesM connects you to trained nurses and a library of hundreds of recorded programs on important health topics 24 hours a day, seven days a week, from anywhere in the U.S. ■ CIGNA Healthy Rewards® includes special offers on programs and services designed to enhance your health and wellness. Just call 1.800.870.3470 or visit our web site at www.ciana.com ■ Prescription drug coverage is a part of your plan. With national and independent pharmacies participating across the country, you can have your prescription filled ' wherever you go. CIGNA Tel -Drug gives you quick, convenient delivery of your medications right to your home, Quality Service Is Part of Quality Care . ■ Service is at the heart of everything we do. Our goal is to give you: fast, accurate answers; responsive, courteous and professional assistance; and ease and convenience in finding the information you need to manage your health. ■ www.cigna.com— Visit our interactive Web site to learn more about your plan and get health information, 24 hours a day. Once you enroll, register for myCIGNA.corn, our convenient, secure web site that combines helpful 'easy -to - use tools with personalized benefits information to help you make the most of your plan. ■ We Speak Many LanguagessM We offer Language Line Services so that you can talk with us in 150 different languages. Just call Customer Service and ask for an interpreter to assist you. EXHIBIT D CIGNA It's Your health When you choose CIGNA HealthCare, you can take advantage of our health and wellness programs: ■ Preventive care services for your children through age 15 and any additional preventive care benefits described in the Benefits Highlights. ■ CIGNA We11 Informed provides members with customized medical and wellness information to help them make healthier choices, better understand a diagnosis or treatment, and manage their health. The program includes personalized letters and other educational information to help you improve your health. Only you, your doctor and CIGNA have access to this information. • • The CIGNA HealthCare Healthy Babies® program provides you with information to help you have a healthy pregnancy and a healthy baby. Freedom of Choice ■ You can choose any licensed doctox, specialist or hospital. However, you are required to pay a deductible each year and then a percentage of each bill after the deductible is paid. ■ The provider may bill you far the difference between the billed charge and the allowed amount under your benefit plan, in addition to applicable deductibles and coinsurance amounts. ■ Once the out-of-pocket as shown in the benefit summary is reached, the plan pays 100% of eligible charges for the remainder of the year. For City of Miami Retiree Plan Participants (Out -of -Area) Page 1 INDEMNITY-2009 1 FL RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services EXHIBIT D :BENEFIT °HIGHLIGHTS .; ' Physician Services Primary Care Physician (PCP) Office Visit ,Specialty Physician Office Visit Consultant and Referral Physician Services Nate: ONGYN physician i.r considered a Specialist Physician 30% of charges*; 30% of charges* if only x-ray and/or lab services performed and billed . 30% of charges*; 30'% of charges* if only x-ray and/or lab services performed and billed 30% of charges* 30% of charges* 30% of charges* 30% of charges* Allergy Treatment/Injections - PCP or Specialty Physician Allergy Serum (dispensed by physician in office) Second Opinion Consultations (provided on voluntary basis) .S'urgery Performed in the Physician's Office PCP or Specialty Physician Preventive Care Routine Preventive Care for Children through age /S (including routine immunizations) 1:Yrnmuniza4ians f/outine. Preventive Care for Children and Adults from age /6 (excluding routine irnnrunizations) Unlimited maximum per calendar year 30% or charges, no plan deductible; 30% of charges* if only x-ray and/or lab services performed and billed o,. ono plan deductible 30% of charges*; 30% of charges* if only x-ray and/or lab scrvices— performed and billed Mammograms, PSA, Pap Test Note: Preventive care related services and diagnostic related 30% of charges* if billed by an independent diagnostic facility or outpatient hospital 30% of charges* for the associated wellness exam services are paid at the same level of benefits as other x-ray and lab services, based on place of service. Inpatient Hospital Services includes: Semi -Private Room and Board Diagnostic/Therapeutic Lab and X-ray Drugs and Medication Operating and Recovery Room Radiation Therapy and Chemotherapy Anesthesia and Inhalation Therapy tvfRls, MRAs, CAT Scans, PET Scans, etc. $300 deductible per admission, plus 30% of charges* °recertification required Inpatient Hospital Doctor's Visits/Consultations Inpatient Hospital Professional Services 30% of charges* 30% of charges* Outpatient Facility Services .:Operating Room, Recovery Room, Procedure Room and Treatment 'Room including: Diagnostic/Therapeutic Lab and X-rays /anesthesia and Inhalation Therapy Physician & Outpatient Professional Services 30% of charges* 30% of charges* Laboratory and Radiology Services (includes preadmission testing) Physician's Office Outpatient Hasp tat Facility Emergency Room/Urgent Care Facility (billed by facility as part of the Emergency Roont/Urgent Care visit) . Independent X-Ray and/or Lab Facility Independent X-Ray and/or Lab Facility (in conjunction with an Emergency Room visit) 30% of charges* 30% of charges* No'charge 30% of charges* No charge . Page 2 INDEMNITY-2009 / FL RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services EXHIBIT D Advanced Radiological Imaging :(M]Us, MR/is, CAT Scans, PET Scans, etc:) Outpatient Facility Emergency Room (billed by facility as part of the Emergency Room visit) Physician's Once ' 30% of charges*, No charge ' 30% of charges* . Short -Tenn Rehabilitative Therapy'and Spinal Manipulation Services —(includes physical, speech, occupational spinal • manipulation, pulmonary rehab & cognitive therapy) ;180 days maximum per calendar year for all therapies combined • Note.: therapy sessions provided as part of Home Health Care 30% of charges*; 30% of charges* if only x-ray and/or.lab services performed and billed. 30% of charges* accumulate to the Short -Terra Rehab Therapy maximum. Outpatient -Cardiac Rehabilitation . up to 36 days maximum per calendar year. Emergency and Urgent Care Services Physician's Office -PCP or Specialty Physician Hospital Emergency Room Outpatient Professional Services (Radiology, Pathology and Emergency Room Physician) Urgent Care or Outpatient Facility Ambulance 30% of charges*; 30% of charges* if only x-ray and/or lab services performed and billed. $75 deductible (waived if admitted) and plan deductible** No charge* . S75 deductible (waived if admitted) and plan deductible** 30% of charges* , ** Services must follow emergency/urgent care guidelines as defined by the City of Miami handbook Maternity Care Services Initial Office Visit to Confirm Pregnancy Note: OB/GYNphysician is considered a Specialist Physician 30% of charges*; 30% of charges* if only x-ray and/or lab• services performed and billed. 30% of charges* 30% of charges* $300 deductible per admission, plus 30% of charges*, Precertifi_cation required A11 subsequent Prenatal Visits, Postnatal Visits and Physician's Delivery Charges (total maternity fee) Office Visits not included in the total maternity fee performed by OB :or Specialty Physician Delivery - Facility (Inpatient Hospital/Birthing Center Charges) Inpatient Services at Other Health Care Facilities Skilled Nursing, Rehabilitation Hospital and Sub -Acute Facilities 180 days maximum per calendar year combined for all facilities listed 30% of charges*, Precertification required Home Health Services- Includes outpatient private duty nursing when approved as medically necessary Unlimited days maximum per calendar year, .16 hour maximum oer day 30% of charges* . rage 3 LNDEMNITY-2009 / FL RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services Family Planning Services Office Visits (tests, counseling) (Subject to the preventive care dollar maximum) Vasectomy/Tuba! Ligation (excludes reversals) inpatient Facility, Outpatient Facility 'Physician's Services — Inpatient or Outpatient Physician's Office Infertility Services Nate: Coverage will he provided for the treatment of an underlying Medical condition up to the point an infertility condition is rliagnosctl. Services will be covered as any other illness EXHIBIT D 30% of charges*; 30% of charges* if only x-ray and/or lab services performed and billed. S30(1 deductible per admission, plus 30% of charges`, I'recertification required 30% of charges* 30% of charges* 30% of charges*; 30% of charges* i f only x-ray and/or lab services performed and billed. Not covered TMJ-Surgical and Non -Surgical -case -by -case basis. Always excluder appliances d orthodontic treatment. Subject to medical necessity. :, Physician. '.c Offic Inpatient Facility Outpatient Facility Physician's Services Mental Health Inpatient —Unlimited maximum per calendar year Outpatient Mental Health (includes Individual, Group Therapy and Intensive Outpatient services) — Unlimited maximum per calendar year Physician's Office Outpatient Facility 30% of charges'; 30% of charges* if only x-ray and/or lab services performed and billed. $300 deductible per admission, plus 30% of charges*, Preccrtification required 30% of charges* 30% of charges* $300 deductible per admission, plus 30% of charges*; precertif:cation required 30% of charges* 30% of charges* Substance Abuse Inpatient — Unlimited maximum per calendar year Outpatient Substance Abuse (includes Individual and Intensive Outpatient services) — Unlimited maximum per calendar year Physician's Office Outpatient Facility Durable Medical Equipment Unlimited maximum per calendar year F.arternal Prosthetic Equipment Unlimited maximum tier calendar year $300 deductible per admission, pius 30% of charges*, precertification required 30% of charges* 30% of charges* 30% of charges* 30% of charges* Vision Care No charge up to the following maximum amounts each 24 months: Eye Exam: Single Lenses: Bifocal Lenses: Trifocal Lenses: Contact Lenses Frames: $75 $20 $30 S40 $75 $30 Palle 4 INDEMNITY-2009 / FL RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services EXHIBIT D .BENEFIT :HIGHLIGHTS Prescription Drugs 'CIGNA Pharmacy Retail Druz Projram :Generic drugs on the Prescnption Drug List for a 30-day supply Brand Name drugs designated as preferred on the Prescription Drug List with no Generic equivalent for a 30-day supply CIGNA Tel-Druj Malt Order Drab Proerani Generic drugs on the Prescription Druglist for a 90-day supply Brand Name drugs designated as preferred on the Prescription Drug :List with no Generic equivalent for a 90-day supply Out -of -Network PJ,armacv Coinsurance 'OTHER BENEFIT INFORMATION Calendar'Year Deductible Individual Family Maximum 4Caleudar Year Out -of -Pocket Maximum ^ 1ndividusl Family Maximum Coinsurance $1-5 copayment per prescription/refill S25 copayment per prescription/refill $30 copayment per prescription/refill $50 copayment per prescription/refill '30% of charges • • S300 $900 $1,000 excludes plan deductible Not applicable CIGNA HealthCare pays 70% of eligible charges. You pay 30% of charges after plan deductible. Precertifrcation -Inpatient — PHS (required for all inpatient admissions) if bite Maximum Participant must obtain approval for inpatient admission ; subject to penalty/reduction or denial for non-compliance Unlimited Pre-existinc Condition Limitation Yes , *Services are subject to calendar year deductible and nraxintrrm reimbursable charge limitations. Providers may bill the oretnber the difference 'between their billed charge and the rnaxirnrun reimbursable charge as determined by the benefit plan. Once the out-of-pocket maximum is reached, the plan pays 100% of eligible charges for the remainder of the plan year, including Mental Health and Substance Abuse services. • All 'inpatient hospital admissions require Preadmission Certification and Continued Stay Review. Failure to.obtain. Preadmission Certification and/or Continued Stay Review may result in non-compliance penalties and/or reduction of benefits. Call the toll free number on your CIGNA HealthCare ID card. • Coverage for pre-existing conditions will not be covered under this plan unless continuously insured for one year. Case Management ''Coordinated by CIGNA HealthCare. This is a service designed to provide assistance to a patient who is at risk of developing medical complexities or for whom a health incident has precipitated a need for rehabilitation or additional health care support. The program strives to attain a balance ''between quality and cost effective care while maximizing the patient's quality of life. • Benefit Exclusions. These are examples of the exclusions in your plan. The complete list of exclusions is provided in your Certificate or Summary Plan Description. To the extent there may be differences, the terms of the Certificate or Summary Plan Description control. 1. Any service or supply not described as covered in the Covered Expenses section of the plan. 2. Any medical service or device that is not medically necessary. • 3. Treatment of an illness or injury which is due to war or care for military service disabilities treatable through governmental services. 4. Any services and supplies for or in connection with experimental, investigational or unproven services. 5. Dental treatment of the teeth, gums or structures directly supporting the teeth, however, charges made for services or supplies provided for or in connection with an accidental injury to sound natural teeth are covered provided a continuous course of dental treatment is started within 6 months of the accident 6. Medical and surgical services, initial and repeat, intended for the treatment or control of obesity. However, treatment of clinically severe obesity, as defined by the body mass index (BMI) classifications of the National Heart, Lung and Blood Institute (NHLBI) guideline is covered only at approved centers if the services are demonstrated, through existing peer -reviewed, evidence -based, scientific literature and scientifically based guidelines, to be safe and effective for treatment of the condition. Clinically severe obesity is defined by the NHLBI as a BMI of 40 or greater without comorbidities, or 35-39 with comorbidities. The following are-specifically-exclude/di-medical and_surgicalservices.toaltrr appearances or physical changes that are the result of any surgery performed for the management of obesity or clinically severe (morbid) obesity; and weight loss programs or treatments, whether prescribed or recommended by a physician or under medical supervision. Poge 5 INDEMNITY-2009 / FL RFC) NO 260247 Health Benefits Consulting Services and Actuarial Services Benefit Exclusions continued: EXHIBIT D 7. Unless otherwise covered as a basic benefit, reports, evaluations, physical examinations, or hospitalization not required for health reasons, including but not limited to employment, insurance or government licenses, and court ordered, forensic, or custodial evaluations. 8. Court ordered treatment or hospitalizations. 9. infertility services, infertility drugs, surgical or medical treatment programs for infertility, including in vitro fertilization, gamete intrafallopian transfer (GIFT), zygote intrafaliopian transfer (ZIFT), variations of these procedures, and any costs associated with thc collection, washing, preparation or storage of sperm for artificial insemination (including donor fees). Cryoprescrvation of donor sperm and eggs arc also excluded from coverage. ID. Any services, supplies, medications or drugs for the treatment of male or female sexual dysfunction. [ASO only select or deselect item] I I. Medical and hospital care and costs for thc child au Dependent, unless this infant child is otherwise eligible under the plar,. 12. Therapy or treatment intended primarily to improve or maintain general physical condition or for the purpose of enhancing job, school, athletic or recreational performance. 13. Consumable medical supplies oilier than ostomy supplies and urinary catheters. 14. Private hospital rooms and/or private duty nursing except as provided under the Home Health Services provision. 15. Artificial aids, including but not limited to hearing aids, semi -implantable hearing devices, audiant bone conductors, bone anchored hearing aids, corrective orthopedic shoes, arch supports, elastic stockings, garter belts, corsets, dentures and wigs. 16. Eye exercises and surgical treatment for the correction of a refractive error, including radial keratotomy. 17. Non-prescription drugs and investigational and experimental drugs, except as provided in the plan. I B. Routine foot cart, however, services associated with foot care for diabetes and peripheral vascular disease arc covered when medically necessary. 19. Gcnetic`screenuig or pre -implantation genetic screening. 20. Fees associated with the collection or donation of blood or blood products. 21. Cost of biologicals that arc immunizations or medications for the purpose of travel, or to protect against occupational hazards and risks. 22. All nutritional supplements and formulae are excluded, except infant formula necdcd for the treatment of inborn errors of metabolism. 23. Services for or in connection with an injury or illness arising out of, or in the course of, any employment for wage or profit. 24. Expenses incurred for medical treatrent for a person age 65 or older, who is covered under the plan as a retiree, or his dependent, when payment is denied by the Medicare plan because treatment was not received from a participating provider of the Medicare plan. 25. Expenses incurred for medical treatment when payment is denied by the'primary plan because treatment was not received from a participating . provider of the primary plan. 26. The following services are excluded from coverage regardless of clinical indications: Massage Therapy; Cosmetic Surgery and Therapies; Macromastia or Gynecomastia Surgeries; Surgical Treatment of Varicose Veins; Abdorninoplasty/Panniculectomy; Rhinoplasty; Blepharoplasty; Redundant Sldn Surgery; Removal of Skin Tags; Acupressure; Craniosacral/cranial therapy; Dance Therapy, Movement Therapy; Applied Kinesiology; Rolfing; Prolotherapy; Transsexual Surgery; Non -medical counseling or ancillary services; Assistance in thc activities of daily living; Cosmetics; Personal or Comfort Items; Dietary Supplements; Health and Beauty Aids; Aids or devices that assist with non-verbal communications; Treatment by Acupuncture; Dental implants for any condition; Telephone Consultations; E-mail & Internet Consultations; Telemedicine; Health Club Membership fees; Weight Loss Program fees; Smoking Cessation Program fees; Reversal of male and female voluntary sterilization procedures; and Extracorporeal Shock Wave Lithotripsy for musculoskeletal and orthopedic conditions. These Are Only the Highlights As you can see, the plan is designed to combine in-depth coverage with cost-effective prices. This summary contains highlights only and is subject to change. The specific terms of coverage, exclusions and limitations including legislated benefits are contained in the Summary Plan Description or Insurance Certificate. This plan is insured and/or administered by Connecticut General Life Insurance Company, a CIGNA Company. "CIGNA", "CIGNA HealthCare" and the "Tree of Life" logo are registered service marks of CIGNA Intellectual Property, Inc., licensed for use by CIGNA Corporation and its operatingsubsidiaries. All products and services are provided exclusively by such operating subsidiaries and not by CIGNA Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Tel -Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Intracorp, and HMO or service company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans are offered by CIGNA Healthcare of Arizona, Inc. In California, HMO plans are offered by CIGNA Healthcare of California,_Inc. and Great -West Healthcare of California, Inc. In Connecticut, HMO plans are offered by CIGNA HealthCare of Connecticut, Inc. In Virginia, HMO plans are offered by CIGNA HealthCare Mid -Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HealthCare of North Carolina, Inc. All other medical plans in these states are insured or administered by Connecticut General Life Insurance Company. Catalog Number: BSIVI38838 (10/2009) (06) ©2009 CIGNA J t'age 6 INDEMNITY-2009 / FL RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services SUMMARY OF BENEFITS Connecticut General Life Insurance Co. Your CIGNA HealthCare Point of Service Open Access plan Features that Add Value • ,• Your plan offers -the convenience of referral -free access to doctors, and the option to select a personal Primary Care Physician (PCP), as your source for routine care and guidance when you need specialized care. As your needs change, so may your choice of doctors. That's why you can change your PCP for any reason. • The CIGNA HealthCare 24-Hour Health Information Lnes'' connects you to, frained nurses and a library of hundreds of recorded programs on important health topics 24 hours a day, seven -days a week, from anywhere in the U.S. • CIGNA Healthy Rewards® includes special offers on programs and services designed to enhance your health and wellness. Just call 1.800.870.3470 or visit our web site at www.cigna.corn. • Prescription drug coverage is a part of your plan. With national and independent pharmacies participating across the country, you can have your prescription filled wherever you go. CIGNA Home Delivery Pharmacy gives you quick, convenient delivery of your medications right to your home. • Our Guest Privileges program brings your CIGNA HealthCare benefits along when you temporarily relocate or send kids to schools away from home. Call CIGNA HealthCare Member Services to learn more. • CIGNA Behavioral Health offers you access to professional consultation over the phone to help you with problems that affect you, your family, or your work. • CIGNA Behavioral Advantage emphasizes the mind -body connection. The program provides support from medical and mental health case managers, as well as a number of tools and resources, to help you take control of your health and wellness. Quality Service Is Part of Quality Care • Service is at the heart of everything we do. Our goal is to give you: fast, accurate answers; responsive, courteous and professional assistance; and ease and convenience in finding the information you need to mans ge your health. • www.cigna.com — Visit our interactive Web site to learn more about your plan and get health information, 24 hours a day. Once you enroll, register for myCIGNA.com, our convenient, secure web site that combines helpful easy -to -use tools with personalized benefits information to help you make the most of your plan. • We Speak Many Languages. We offer Language Line Services so that you can talk with us m 150 different languages. Just call Member Services, and ask for an interpreter to assist you. EXHIBIT D CIGNA It's Your Health When you choose CIGNA HealthCare, you can take advantage of our health and wellness programs • Preventive care services for every covered family member. • Your PCP can serve as your first contact for care, advice and direction. He/she will recommend specialists and coordinate follow up care. When you need to see a participating specialist — no referral is required. Just make the appointment and go! • CIGNA Wen Informed provides members with customized medical and wellness information to help them make healthier choices, better understand a diagnosis or treatment, and manage their health. The program includes personalized letters and other educational information to help you improve your health. Only you, your doctor and CIGNA have access to this information. • CIGNA Well -Aware for Better Health® can help you manage certain chronic conditions. • The CIGNA HealthCare Healthy Babies® program provides you with information to help you have a healthy pregnancy and a healthy baby. And there's no copayment for prenatal care office visits after the first visit that confirms you're pregnant. • The CIGNA Comprehensive Oncology Programs"' promotes cancer prevention and early detection through personalized care management, educational tools, benefit counseling, and other resources. You Can Depend on CIGNA HealthCare • Quality comes first. We select participating providers carefully. And we make sure you have a wide range of doctors and specialists to choose from. • Emergency and urgent care are coveredwherever you go, worldwide, 24 hours a day. Urgent care centers can take care of your urgent care needs, and you pay a lower copayment It's Your Choice • When your PCP coordinates your care and you visit network providers, you get access to quality care and lower out-of-pocket costs. Your plan also offers the freedom to choose the providers you prefer — even if they aren't part of the network. Your benefits are higher when you see participating providers, but you're still covered for visits to other providers. Participating providers charge a discounted rate for CIGNA members. If you use a non -network provider, the provider may bill you for the difference between the billed charge and the allowed amount under your benefit plan, in addition to applicable (higher than in -network) deductibles and coinsurance amounts. For Employees of City of Miami Network Point of Service Open Access - ASO RFQ NO 260247 • Health Benefits Consulting Services and Actuarial Services EXHIBIT D Patient Protection and Affordable Care Act Required Notices Direct Access to Obstetricians and Gynecologists You do not need prior authorization from the plan or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology. The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre -approved treatment plan, or procedures for making referrals. For a list of participating health care professionals who specialize in obstetrics or gynecology, visit www.mvcigna.com or contact customer service at the phone number listed on the back of your ID card. Selection of a Primary Care Provider Your plan may require or allow the designation of a primary care provider. You have the right to designate any primary care provider who participates in the network and who is available to accept you or your family members. If your plan requires designation of a primary care provider, CIGNA may designate one for you until you make this designation. For information on how to select a primary care provider, and for a list of the participating primary care providers, visit ww-w.mvcigna.com or contact customer service at the phone number listed on the back of your ID card. For children, you may designate a pediatrician as the primary care provider. RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services BENEFIT HIGHLIGHTS IN -NETWORK EXHIBIT D OUT -OF -NETWORK Physician Services Primary Care Physician (PCP) Office Visit Specialty Physician Office Visit Consultant and Referral Physician Services Note: OB/GYNphysician is considered a Specialist $25 copayment per office visit; No charge if only x-ray and/or lab services are performed and billed $40 copayment per office visit; No charge if only x-ray and/or lab services are performed and billed $25 or $40 copayment per office visit or actual charge, whichever is less No charge $25 or $40 copayment per office visit $25 or $40 copayment per office visit 40% of charges** 40% of charges** 40% of charges** 40% of charges** 40% of charges** 40% of charges** Physician Allergy Treatment/Injections — PCP or Specialty Physician Allergy Serum (dispensed by physician in office) Second Opinion Consultations (provided on voluntary basis) Surgery Performed in the Physician's Office — PCP or Specialty Physician Preventive Care Routine Preventive Care — Adult Care (including Immunizations) Well Baby, Well Child Care (to age 18) Well Woman (ages 18 and up) (including Immunizations) Note: Well Woman OB/GYNvisits are subject No charge, no plan deductible No charge, no plan deductible No charge, no plan deductible • No charge Covered in -network only 40% of charges, no plan deductible 40% of charges** Covered in -network only to the specialty physician's office visit copay. Immunizations Preventive Mammograms, PSA, Pap Test Diagnostic Mammograms, PSA, Pap Test (Note: Diagnostic Related Services are subject to the No charge (for the procedure itself) No charge Note: No charge, no plan deductible per 40% of charges** 40% of charges** • Note: The associated wellness plans. laboratory & radiology benefit; based on place of service) office visit for the associated wellness exam exam is not covered Inpatient Hospital Services including: Semi -Private Room and Board Diagnostic/Therapeutic Lab and X-ray Drugs and Medication Operating and Recovery Room Radiation Therapy and Chemotherapy Anesthesia and Inhalation Therapy 20% of charges* 40% of charges**, Precertification required . Inpatient Hospital Doctor's Visits/Consultations Inpatient Hospital Professional Services 20% of charges* 20% of charges* `40% of charges** 40% of charges** Outpatient Facility Services Operating Room, Recovery Room, Procedure Room and Treatment Room including: Diagnostic/Therapeutic Lab and X-rays Anesthesia and Inhalation Therapy Physician and Outpatient Professional Services 20% of charges* 20% of charges* 40% of charges** 40% of charges** Laboratory and Radiology Services (includes preadmission testing) Physician's Office Outpatient Hospital Facility Emergency Room Facility (billed by facility as part of the Emergency Room visit) IndependentX-Ray and/or Lab Facility Independent X-Ray and/or Lab Facility (in conjunction with an Emergency Room visit) No charge 20% of charges* for facility charges; 20% of charges* for outpatient professional chaa es No charge No charge No charge 40% of charges** 40% of charges** No charge; 40% of charges** No charge Advanced Radiological Imaging (MRls, MRAs, CAT Scans, PET Scans, etc.) Inpatient Facility Outpatient Facility Emergency Room Physician's Office 20% of charges* 20% of charges* No charge No charge 40% of charges** 40% of charges**. No charge 40% of charges** RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services BENEFIT HIGHLIGHTS IN -NETWORK EXHIBIT D OUT -OF -NETWORK Short -Term Rehabilitative Therapy and Chiropractic Services — (includes physical, speech, occupational, chiropractic, pulmonary rehab & cognitive therapy) —180 days maximum per contract year# for all therapies combined Note: therapy sessions provided as part of Home Health $25 or $40 copayment per office visit; No charge if only x-ray and/or lab services are performed and billed. $25 or $40 copayment per office visit 40% of charges** 40% of charges** Care accumulate to the Short -Term Rehab Therapy maximum. Outpatient Cardiac Rehabilitation Up to 36 days maximum per contract year# . Emergency and Urgent Care Services Physician's Office — PCP or Specialty Physician Hospital Emergency Room Outpatient Professional Services (Radiology, Pathology and Emergency Rom Physician) Urgent Care Facility or Outpatient Facility Ambulance $25 or $40 copayment per office visit; No charge if only x-ray and/or lab services performed and billed. $200 copayment per visit, waived if admitted No charge $50 copayment per visit, waived if admitted 20% of charges* Maternity Care Services Initial Office Visit to Confirm Pregnancy All subsequent Prenatal Visits, Postnatal Visits and Physician's Delivery Charges (total maternity fee) Office Visits not included in the total maternity fee performed by OB or. Specialty Physician Delivery Facility (Inpatient Hospital/Birthing Center Charges) $25 or $40 copayment for initial office visit 20% of charges* $40 copayment per office visit No charge if only x-ray and/or lab services performed and billed 20% of charges* 40% of charges** 40% of charges** 40% of charges** 40% of charges**, Precertification required Inpatient Services at Other Health Care Facilities Skilled Nursing, Rehabilitation and Sub -Acute Facilities 180 days maximum per contract year for all facilities listed 20% of charges* 40% of charges**, Precertification required Home Health Services - Includes outpatient private duty nursing when approved as medically necessary, Unlimited maximum per contract year 16 hour maximum per day# No charge 40% of charges** Family Planning Services Office Visits (tests, counseling) — PCP or Specialty .Physician Vasectomy/Tubal Ligation (excludes reversals) Inpatient Facility Outpatient Facility Physician's Services —Inpatient or Outpatient Physician's Office $25 or $40 copayment per office visit; No charge if only x-ray and/or lab services performed and billed. 20% of charges* 20% of charges* . 20% of charges* $25 or $40 copayment per office visit 40% of charges** 40% of charges**, Precertification required 40% of charges** . 40% of charges** 40% of charges** RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services BENEFIT HIGHLIGHTS IN -NETWORK EXHIBIT D OUT -OF -NETWORK Infertility Services Coverage will be provided far the treatment of an underlying medical condition up to the point an infertility condition is diagnosed. Services will be covered as any other illness. Not covered Not covered Obesity/Bariatric Surgery Physician's Once Inpatient Facility Outpatient Facility .Physician'sServices — Inpatient or Outpatient $25 or $40 copayment per office visit; No charge if only x-ray and/or lab services are performed and billed. 20% of charges* 20% of charges* 20% of charges* Covered in network only Covered in network only Covered in network only Covered in -network only TMJ— Surgical and Non -surgical: case -by -care. basis. Always excludes appliances and orthodontic treatment. Subject to medical necessity. Office visits Inpatient Facility ;- a Outpatient Facility Physician's Services — Inpatient or Outpatient S25 or $40 copayment per office visit; No charge if only x-ray and/or lab services performed and billed 20% of charges* 20% of charges* 20% of charges* 40% of charges** 40% of charges**, Precertification required 40% of charges** 40% of charges** Mental Health Inpatient - Unlimited maximum per contract year Outpatient Mental Health (mcludes Individual, Group Therapy and Intensive Outpatient services) — Unlimited maximum per contract year Physician's Office 20% of charges* No charge, no plan deductible 40% of charges**, Precertification required 40% of charges** Substance Abuse Inpatient - Unlimited maximum per contract year Outpatient Substance Abuse (includes Individual, and Intensive Outpatient services) — Unlimited maximum per contract year Physician's Office 20% of charges* No charge, no plan deductible 40% of charges**, Precertification required 40% of charges** Durable Medical Equipment No charge Unlimited maximum per contract year Covered in -network only F.' ternal Prosthetic Appliances No charge Unlimited maximum per contract year Covered in -network only Vision Care Eye Exam— one exam every 12 months Reimbursement toward purchase of a pair of lenses or contact lenses every 12 months and frames every 12 months $10 copayment per exam Maximum Reimbursement Allowance: Single Vision Lenses $20 Bifocal Lenses $30 Trifocal Lenses $40 Lenticular Lenses $75 Contact Lenses $75 Frames $30 Covered in -network only Covered in -network only Covered in -network only Covered in -network only Covered in -network only Covered in -network only Covered in -network only RFQ NO 260247 Health Benefits Consulting Services and Actuarial Services BENEFIT HIGHLIGHTS IN -NETWORK EXHIBIT D OUT -OF -NETWORK Prescription .Drugs CIGNA Pharmacy Retail Drug Program Generic*** drugs on the Prescription Drug List for a 30-day supply Brand Name * * * drugs designated as preferred on the . Prescription Drug List with no Generic equivalent for a 30-day supply Brand Name*** drugs designated as non preferred on the Prescription .Drug List for a 30-day supply Self-administered Injectables (e.g., injectable drugs used to treat rheumatoid arthritis, hepatitis C, multiple sclerosis, and asthma) for a 30-day supply CIGNA Home Delivery Pharmacy Program Generic*** drugs on the Prescription Drug List for a 90-day supply Brand Name*** drugs designated as preferred on the Prescription Drug List with no Generic equivalent for a 90-day supply Brand Name*** drugs designated as non preferred on the Prescription Drug List for a 90-day supply Self-administered Injectables (e.g., injectable drugs used to treat rheumatoid arthritis, hepatitis C, multiple sclerosis, and asthma) for a 90-day supply Pharmacy Out of Pocket Maximum (Individual/Family)(Maii Order excluded) ***Designated as per generally -accepted industry sources and adopted by CG $15 copayment per prescription/refill $40 copayment per prescription/refill S60 copayment per prescription/refill 50% of charges per prescription/refill $30 copayment per prescription/refill $80 copayment per prescription/refill $120 copayment per prescription/refill 50% of charges per prescription/refill S1,000 per individual/$2,000 per family Covered in -network only Covered in -network only Covered in -network only Covered in -network only Covered in -network only . Covered in -network only Covered in -network only Covered in -network only