Kentucky retirement systems quick access insurance rider program.

• Author: Roberts, Mark L.

Using a computer program that reduces voluminous data to simple and relevant information, retirement system counselors are able to quote accurate total premiums and compare costs of coverage options for retirees in a few minutes.

The Kentucky Retirement Systems (KRS) strives to maintain a high standard of service to its members, former state employees. The challenge facing the retirement system is to provide the desired level of service within the confines of legislative restrictions on both staff size and budget. In 1995, the retirement system faced the task of assisting its retired members in selecting insurance coverage under Kentucky's complex health care reform provisions. The system looked to technology to solve the problem of conveying complex information to its members.

A Complex New System

In 1994, the Kentucky General Assembly enacted sweeping changes to the state's health care laws. One provision created a health purchasing alliance made up of various public and private employers and groups. The intent was to consolidate medical insurance purchasing power into a single organization in the hopes of generating more competitive bids for medical insurance. The retirees covered by KRS were included in the alliance.

The alliance developed new standard plans that the 35 participating insurance carriers are required to offer. These standard plans establish specific coverage levels and are designed to simplify price comparison. Alliance members can choose from five levels of coverage, from "economy" to "enhanced," that differ in what is covered and the copayments or deductibles. Members can use optional riders, such as for dental, vision, or mental health coverage, to customize the policy to their specific needs.

The basic information concerning the standard plans and riders was mailed to KRS retirees; however, the optional insurance riders proved more problematic. While composite rates were used for the standard plans - one rate regardless of the member's age or geographic location composite rates were not used for riders. The alliance offered 14 riders associated with the five levels of coverage, six age groups, four plan types (i.e., single, couple, single parent, or family), and seven geographic regions. This totalled 40,000 separate rates; a printed set of rider rates for the entire state would fill 600 pages.

Not only was it impossible to print and distribute copies to retirees within the enrollment deadline, but retirees could not be expected to sort through 600 pages of rider rates to determine their total premium. Nor was it feasible for KRS counselors to shuffle through 600 pages to give rates over the telephone without placing retirees...