TRS-ActiveCare offers the stability of a fully insured product at a self-funded price. But what exactly does that mean, and how can it affect education employers? This page is meant to help give you the full picture.
TRS-ActiveCare is Competitive
We wanted to know where we stand in the market. We looked at 141 health plans across 39 employers outside of TRS-ActiveCare in the 2020-21 plan year. Our main takeaways were:
- Most of these employers contribute more to their employees' monthly premiums. Employers decide how much to pay towards their employees’ premiums and that varies across the state.
- The total cost of plans – employee premium, district contribution, employees cost of services – for TRS-ActiveCare are in the middle or below average of outside plans.
- Among the lowest cost outside plans, TRS-ActiveCare Primary has below average costs.
If a plan is significantly cheaper than TRS-ActiveCare, pay close attention to what it does not cover. These questions for brokers can help guide those conversations.
If you currently offer TRS-ActiveCare and alternative coverage, but plan to leave TRS-ActiveCare, your costs may differ significantly once you bear the risk of all your participants.
Watch our Your Future, Your Way webinar to hear TRS leadership share more on the points above. That conversation starts at 8:19. You can also review accompanying graphs in the webinar slides.
TRS-ActiveCare Has No Additional Costs to Employers
With TRS-ActiveCare, what employers contribute to TRS per month is all they pay. There are no other fees, and no penalties. And because TRS has such low administrative costs, 96% of employer contributions pay for medical and prescription claims.
When a non-participating employer lists a $0 premium for employees, that isn’t the entire picture. And district contributions vary. Some contribute much more to their participant’s premiums than others.
Keep in mind: According to the U.S. Bureau of Labor Statistics, medical care services have increased by 86.8% since the inception of TRS-ActiveCare (2003) to 2021. The statutory amount of $225 no longer pays for what it did in 2003. If it kept up with inflation, the minimum contribution would now be $335.
The 2020 TRS Health Benefits Report (page 9) shows how TRS has kept health care costs down when other self-insured Texas employers see costs rise.
The following added costs are common for alternate health plans. Click on each box to read specific details:
- Claims Costs
If you self-fund your plan, you pay for medical and prescription claims directly from your budget. This can be unpredictable.
TRS' data shows medical claims vary significantly each year for individual employers. But in TRS-ActiveCare as a whole, the law of large numbers shows we'll always have a similar number of high-cost claims.
If you have a high-cost year, it can impact your overall budget. It can also mean an increase to employee premiums for the next plan year and possibly beyond. When considering a co-op with other districts, you may want to ask what their claims experience looks like.
If you're considering leaving, be sure to request your claims data. This will give you an idea of your health care costs over the last 36 months. You can also read more about self-funding here.
Claims for your employees could also be more volatile. SB 1264 protects participants from balance-billing if they're in a state-funded health plan. If you use a market plan – self-funded or fully-insured – your participants could now receive "surprise bills."
- Specialty Drug Costs
Many plans offered alongside TRS-ActiveCare lack specialty drug coverage. Some might offer it at an added price, making your plan more expensive. If you don't elect the coverage, either you or the employee can be on the hook for expensive, but lifesaving, medications.
Here are a few examples of commonly used specialty drugs. This is what they cost out-of-pocket for a 30-day supply:
- Stelara (Crohn’s Disease): $50,805.72
- Cosentyx (psoriasis): $12,456.60
- Humira (arthritis, Crohn’s Disease, and psoriasis): $12,538.18
- Enbrel (rheumatoid arthritis): $6,753.96
- Xolair (asthma): $3,136.82
With TRS-ActiveCare, these are subject to a deductible, coinsurance, and a maximum out-of-pocket. This significantly reduces costs. Especially when you consider that TRS' maximum out-of-pocket thresholds are lower than even one 30-day supply of the listed medications.
See what these drugs would cost for your employees on each TRS-ActiveCare plan with CVS' drug cost estimator.
Over half of TRS' prescription costs come from less than two percent of participants who take specialty drugs.
If you're currently offering alternative coverage and leave TRS-ActiveCare, you'll need to consider these costs.
- Broker Costs
Broker commissions for large employers in Texas exceeded $8 per member per month in 2018 (Kaiser Family Foundation). If your district has 1,000 employees enrolled, that adds nearly $100,000 in expenses that don't focus on education.
- Administrative Costs
You’ll need to hire more staff or pay to outsource work to implement and manage your health program. This includes positions like benefits, communications and financial staff.
You may also need risk managers, health insurance consultants, and specialized legal counsel. According to Glassdoor, the average annual salary for a Risk Manager in Texas is $104,280. That’s money that could otherwise go towards employee premiums or existing staff salaries.
There are also certain administrative costs related to legislation, which TRS-ActiveCare currently covers for you.
For example, the SB 1264 bill includes mediation and arbitration of medical bills. There are fees associated with the process. Whether you self-fund a plan OR purchase a privatized fully-insured product, you’ll now be responsible for those fees.
- Stop-Loss Costs
Stop-loss insurance is used for high-cost or catastrophic claimants. It’s a type of insurance that’s in addition to your health insurance. They’ll calculate what they think you’ll pay in high-cost claims. Then, charge that cost and another 30% to cover administrative costs and profits.
Overall, stop-loss premiums could make up 10% to 20% of total plan costs, depending on what deductibles you choose. And choosing the lower deductible so that stop-loss kicks in for claims sooner just means higher costs in your premiums.
Just like most car insurance, you’re not rewarded for not having a claim. You may receive little to no reimbursement depending on your stop-loss plan. That’s money that could have gone towards premium contributions.
Stop-loss insurance also typically comes in the form of reimbursement. So, if you have a $1M claim that kicks in your stop-loss, you still pay from your own budget first.
For your employees, stop-loss can single them out if they’re consistently a high-cost claimant. You can be responsible for paying for more of their claims than other employees.
TRS-ActiveCare Won’t Penalize You
With other market plans, your pricing is based only on your individual claims. This may seem like a good thing on the surface. But just like car insurance, if you get into a wreck, your rates can change drastically.
TRS' large risk pool means we can closely estimate the number of high-cost claimants per plan year — they have stayed steady over time. Each year, about 25% of our paid medical expenses come from participants with claims over $150,000 (does not include prescription costs). We plan for those costs when we set total premiums and spread it across all participants.
However, with a smaller risk pool, even one employee developing a chronic illness or having a catastrophic health event has serious implications. A broker can perceive you as riskier to insure. That may come in the form of a premium raise, or it can be a bill.
With TRS-ActiveCare, these scenarios do not exist. You don’t have added costs if you have a high-risk claimant.
Give Your Feedback
Do you have questions about what you read, or want to give feedback? Email us at HealthCareComm@trs.texas.gov or reach out to your District Ambassador.