State of California M E M O R A N D U M REFERENCE CODE: 97-032 DATE: August 27, 1997 TO: Personnel Officers Personnel Transactions Supervisors Personnel Transactions Staff FROM: Department of Personnel Administration Benefits Division SUBJECT: 1997 Dental and FlexElect Open Enrollment Period CONTACT: William Page, Dental Program Coordinator (916) 324-0525, CALNET 454-0525 FAX: (916) 322-3769 OFFICE VISION: DPA(WHPAGE) INTERNET: WHPAGE@SMTP.DPA.CA.GOV This memorandum contains important information about the 1997 Dental and FlexElect Open Enrollment Period which is scheduled for September 1 through October 15, 1997. Please ensure that employees are made aware of the open enrollment period and provided assistance and necessary forms should they wish to enroll or make any changes to their dental and/or FlexElect enrollment. IMPORTANT NOTICE - STATE DENTAL PROGRAM In order to assist you in providing information on current issues relating to the State's Dental Program, a memorandum to all State employees is attached (Attachment I) which provides an update on the following issues: (1) the 1998 Delta Dental (Delta) premium rates; (2) the status of the bidding process for the State's prepaid dental plans; and (3) the status of the Delta Refund. Your assistance in ensuring that the attached employee memorandum is duplicated and distributed to each employee as quickly as possible will be greatly appreciated. DENTAL PROGRAM INFORMATION The Department of Personnel Administration (DPA) currently contracts with Delta Dental, DentiCare of California, Inc., Private Medical Care, Inc., (PMI), and Safeguard Health Plan to provide dental insurance for: (1) excluded employees; (2) represented employees in Bargaining Units 1 through 21; and (3) retirees/annuitants. Exception: Bargaining Units 6 and 13 provide dental insurance to their members through their respective union- sponsored trusts. Unit 5 offers their own indemnity dental plan, but their members may elect to enroll in the State- sponsored prepaid plans. Unit 6 - Dental Plan Changes Effective April 1, 1996, Bargaining Unit 6, California Correctional Peace Officer's Association (CCPOA) changed their indemnity dental carrier from Blue Cross to the CCPOA Primary Dental Plan. CCPOA continues to contract with Dental Net to provide prepaid dental coverage for Unit 6 employees. 1998 DELTA PREMIUM RATES The State is currently in the process of extending our contract with Delta for the 1998 calendar year. Delta has proposed a rate increase of 3.72 percent for 1998. To assist us in determining if any premium increase is warranted, DPA has secured an independent actuary to review the plan's utilization trend and Delta's proposed rate increase. Once this review is completed, we will begin rate negotiations with Delta. In addition, we will be forming an advisory group of interested parties, which will include representatives from the various bargaining unions, retiree associations, the California Public Employees' Retirement System (CalPERS) and the State Controller's Office (SCO). This advisory group will review the findings of the independent actuary and make recommendations on how any funds that may be remaining in the Delta Refund Account might be utilized to offset any Delta premium increase. While we are hopeful that we will be able to negotiate a lower rate increase with Delta, we do know that if an increase is necessary it will not exceed the 3.72 percent proposed by Delta. Attachment I contains a chart which reflects what the additional premium cost would be based on a 3.72 percent rate increase. 1998 PREPAID DENTAL CONTRACTS We are also in the final phase of the bidding process for our prepaid dental plans. We have completed our evaluations of the seven proposals received and were prepared to award the contracts to our three current prepaid carriers, DentiCare, PMI and Safeguard. However, two of the companies whose proposals were disqualified have filed protests. While there will be no change in the level of benefits for our prepaid plans and the monthly premium rates will continue to be fully paid by the State, we are unable to officially announce the prepaid carriers for 1998 until this matter is resolved by the Department of General Services. STATUS OF THE DELTA REFUND Refund checks for all active employees and those retired employees who paid a Delta copay as a retiree have been issued. We are currently in the process of working with SCO and CalPERS to refund those employees who paid a copay while in active status but who have subsequently retired. We are also working on a claim form and process to handle approximately 11,000 former employees who paid a Delta copay during the refund period but who are now separated from State service. While it is our goal to have this refund process completed as quickly as possible, it is very likely that we will be processing claims and issuing refunds to separated employees for the next 2-3 months. In addition, we are also working with other groups whose employees are not paid through the State Payroll System, but who may be entitled to a refund. Unfortunately, due to the timing of the issues described above, we are unable to provide important information that could impact enrollment or plan changes that employees may wish to make during this pen enrollment period. Employees should be advised to make their decisions based on our current dental carriers and premium rates. Once these issues have been resolved departments will be notified and we will allow employees to make necessary changes either through a special open enrollment for dental or through some other process. DENTAL AND FLEXELECT PROGRAM INFORMATION The Benefits Administration Manual (BAM) contains a variety of information regarding both the Dental and FlexElect Programs. Please refer to BAM Section 500 (Dental Program) and Section 700 (FlexElect Program). It is important that these BAM Sections, the information contained in this memorandum and the attachments listed below be thoroughly reviewed: Attachment I- Memorandum to All State Employees (Please duplicate and distribute immediately) Attachment II- Description of State-sponsored Dental Plans Attachment III- Dental Plans - Employee Cost Comparison Attachment IV- 1997 Dental Plan Premium Rates Attachment V- 1997 COBRA Group Continuation Rates DOCUMENT COMPLETION Specific open enrollment information regarding permitting event date, effective date and cutoff dates for submission of documents to SCO is provided below: Permitting Event Date:9/1/97 (Dental) Leave Blank (FlexElect) Effective Date:1/1/98 (Dental and FlexElect) Cutoff Dates for Submission of Dental and FlexElect Documents: 10/15/97 -Cutoff date for open enrollment documents to be signed and submitted by employees. 11/3/97 -Cutoff date for receipt by SCO of all open enrollment documents. 12/5/97 -Cutoff date for receipt by SCO of any documents that were returned to departments for correction. Your assistance in the following areas will be appreciated and will help to make this open enrollment period a success: (1) inform all employees of the open enrollment period, (2)duplicate and distribute the attached memorandum to all employees, (3) make appropriate Dental and FlexElect Program material available or advise employees how to obtain such material, (4) advise employees of appropriate eligibility and enrollment rules and processes; (5) assist employees in completing enrollment documents, and (6) review and submit enrollment documents by the established due dates as described above. QUESTIONS REGARDING DENTAL AND FLEXELECT OPEN ENROLLMENT Employees should be directed to contact their departmental Personnel Office if they have any questions regarding this Dental and FlexElect Open Enrollment Period. Personnel Office staff requiring assistance or clarification of the dental information contained in this memo should call William Page, Dental Program Coordinator, at (916) 324-0525 or CalNet 454-0525. Questions relating to the FlexElect Program should be directed to Janice Yates, Benefits Program Specialist, at (916) 324-0535 or CalNet 454-0535. Kathie Vaughn Chief, Benefits Division Attachments cc:SCO, Del Delgado/Linda Edwards/Sandra Young CALPERS, Gregg Kenney STRS CAHP DENTAL TRUST CCPOA DENTAL TRUST DEPARTMENT OF THE MILITARY FAIRS AND EXPOSITIONS LOS ANGELES COUNTY SUPERIOR COURT JUDGES Attachments will be distributed via mail.