R9J-Discuss- Transgender Health Care Insurance Coverage In FY 2014-15i\u1 lAlr,'i t&f ACFj
City oI Miomi Beoch, I /00 Ccnveniion Cenier Drive, Miomi Beoch, Ft 33139, www. miomibeochfl.gov
COMMISSION MEMORANDUM
Mayor Philip Levine and Members the C Commission
City Manager Jimmy L. Morales
June 11, 2014
SUBJECT: DiscussionRegardinglncludi Transgender Health Care lnsurance
Coverage as a Benefit of Employment in Fiscal Year (FY) 2O1N'15
Backqround
ln 201 3, the City of Miami Beach self-submitted its application for a Municipal Equality
lndex Score and earned the maximum number of points available, 100; the only City in
Florida to merit the distinction with Tampa coming in a distant second with 89 points.
The Equality Federation lnstitute of the Human Rights Campaign Foundation, which
awards the Municipal Equality lndex Score, has announced that a requirement in 2014 is
transgender-inclusive health care benefits.
Anticipated lncrease in Health Care lnsurance Premiums for Benefit Plan Year
2014t15
The City of Miami Beach benefits consultant, Gallagher Benefit Services (Gallagher), is
prolecting that costs for the current levels of health care coverage provided by the City's
plans will increase by 7.5o/o in fiscal and plan years 2014115 irrespective of the
recommendation to add transgender health care coverage. The projection is based the
current national inflation trend of a plan's total cost of 8% and the current cost of the
City's plans. As the costs associated with the City's medical plans are running lower
than the national trend, the projected increase for the upcoming plan year is also
predicted to be lower.
Benefits Associated With lncludinq Transqender Health Care !nsurance Goveraqe
as a Benefit of Emplovment
A September 201 3, survey of employers done by Jody L. Herman, Ph.D., Manager of
Transgender Research at the Williams lnstitute, University of California, School of Law,
found that employers reported very low costs, if any, from adding transition-related
coverage to their health benefits plans or from actual utilization of the benefit after it was
added.
The goal of her study was to identify the number of surgeries and their related costs.
The study was limited to US residents treated in the country. During this time period,
1,170 transsexuals underwent surgery. At the time of her study, nationally, the average
cost for male to female surgery was $10,400 and the average cost for female to male
surgery was $17,000. These figures are based on 740 male to female surgeries and 430
female to male surgeries, providing an average combined cost of $12,900 per surgery.
TO:
FROM:
DATE:
Agenda nem RQd
oate 6'l/'/{971
Commission Memorandum
Discussion Regarding lncluding Transgender Health Care lnsurance Coverage as a Benefit of Employment in Fiscal Year
(FY) 2014t15
June 1 1, 2013
Page 2
As a result, at the time she conducted her study, the actual cost impact to provide
transgender health insurance coverage benefits could be projected at $.173 per year,
per participant at a national level. Of this cost, $.08 or more could be contributed to
services currently covered by many health care plans such as hormone therapy, doctor
office visits and psychological therapies resulting in a total impact to health care plan
costs of $.093 per year per participant.
Employers who participated in her survey reported that providing transition-related
health care coverage benefited them in a variety of ways. They reported that they
provided coverage in order to: make them competitive as an employer within their
industries and help them with the recruitment and retention of their employees; reflect
their corporate values, including equality and fairness; provide for the healthcare needs
of their employees and improve employee satisfaction and morale; and demonstrate
their commitment to inclusion and diversity.
Via LTC 174-2014 (attached) on May 23, 2014, the Administration recommended that
based on all the information at hand the City include transgender health care benefits in
its self-funded medical plans effective with the new plan year.
Cost of Transqender Benefits
The city and county of San Francisco were among the first to include transgender health
benefits, as a pilot program, in their self-funded health insurance coverage plans. The
program was designed to collect actuarial data related to the actual cost of coverage for
transgender medical benefits. The program began by including a one year enrollment
requirement with individual coverage capped at $50,000. (The Patient Protection and
Affordable Care Act of 2010 eliminated all coverage caps.) This benefit was based on
similar coverage provided by the Canadian province of British Columbia. Using an
estimate of 35 eligible plan members, they increased their employees' and retirees'
monthly premium by $t.ZO per month. Between July 2001 and July 2004, the plan
collected $4.3 million in additional premiums; however, the plan incurred only seven
surgical claims for a total payout of $156,000.
ln 2004, the one year waiting period was eliminated and the individual coverage cap was
raised to $75,000. Additionally, the benefit became available through the city and county
HMO plans which until then had only covered hormone and psychological therapies.
Even with the elimination of the waiting period, an increase in their medical plan's
coverage maximum and the addition of surgical coverage through their fully insured
HMO plans, the employees'and retirees'premiums were reduced from $1.70 to $1.16
per month. Between July 2001 and August 2005, the city and county had collected $5.6
million in additional premium and paid out $183,000 for 1 1 claims. Due to the low cost
impact to the city's and county's medical plans, both self-funded and fully insured, the
additional monthly premium charged to employees and retirees was eliminated.
Additionally, cost data has led the HMOs to no longer separately rate the transgender
benefit, and the fully insured HMO plans are now treating it as they do any other medical
procedure.
City staff asked Gallagher to provide an actuarial cost of adding transition-related
coverage to the plans offered by the City. Three key areas were identified for coverage,
hormone therapy, psychological therapy and surgery (those surgeries deemed medically
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Commission Memorandum
Discussion Regarding lncluding Transgender Health Care lnsurance Coverage as a Benefit of Employment in Fiscal Year
(FY) 2014/15
June 11,2013
Page 3
necessary for the individual to function in society that correct, not enhance physical
appearance).
Currently, the City's medical plans provide coverage for hormone and psychological
therapies. ln projecting the plans' annual costs, this coverage is already considered in
the actuarial calculations used to project the plans' costs. When considering covering
these therapies for transgender participant, there is no need to include them in the
calculations as those therapies are already considered a plan liability throughout the
year and are included the plan's predicted annual costs.
The Gallagher actuary responded indicating that the three coverage areas, hormone
therapy, psychological therapy and surgical procedures allowing the individual to
function normally in society, were consistent with what they had identified through their
research as medically necessary procedures and should be provided as a covered
benefit under the plans. With the plans' current coverage of both hormone and
psychological therapy, the only actuarial impact to the plan would be for those medically
necessary procedures.
Based on the research data, including published studies, Gallagher determined that in
most years the Clty would not incur any claims, with an average of one claimant every 3
to 4 years. On average, Gallagher would expect a cost of about $9,000 per year, which
is a blend of the years with no claims and a year with an estimated cost of $30,000.
Additionally, the actuary believes it extremely unlikely that the plan would ever have
more than two claims in any one year. Based on these assumptions, the expected
annual cost average over a four year period with the occurrence of one claim would be
approximately $9,000, which is 0.05% of projected plan costs lor FY 2014115. With two
claims is any given plan year, the cost is still only 0.3% of the pro,lected annual cost for
the FY 2014115 plan year.
Cosmetic procedures such as permanent facial hair removal, including laser treatments
and/or electrolysis on the face, neck and body, and voice and communication therapy to
help individuals develop verbal and non-verbal communication skills facilitating comfort
with their gender identity would not be covered and would not impact the City's costs.
Given these findings, the Gallagher actuary did not foresee any significant increase in
the cost of the City's medial plans and does not recommend any changes to the City's
premium costs should transgender health care coverage be included in plan coverage.
Gallagher has indicated that the additional cost to provide coverage for transgender care
is below the threshold considered credible for changing rates.
Time is of the essence regarding discussion and direction since on October 1,2014,the
benefit plan year moves from the calendar to the fiscal year, which means that open
enrollment will take place this summer.
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973
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Letter to Commission
Transgsnder Health lnsurance Benef its
l\iiay 23,2014
Page 3
Gost of Transqender Benefits
The city and county of San Francisco were among the first to include transgender health
benefits, as a pilot program, in their self-funded health insurance coverage plans. The
program was designed to collect actuariai data related to the actual cost of coverage for
transgender medical benefits. The program began by including a one year enroliment
requirement with individual coverage capped at $50,000. rhis benefit was based on
similar coverage provided by the canadian province of British columbia. Using an
estimate of 35 eligible plan members, they increased their employees' and reilrees'
monthly premium by $1 .70 per month. Between July 2001 and July 2004, the plan
collected $4,3 million in additional premiums; however, the plan incurred only seven
surgical claims for a total payout of 9156,000.
ln 2004, the one year waiting period was eliminated and the individual coverage cap was
raised to $75,000. Additionally, the benefit became available through the city and county
HMo plans which until then had only covered hormone and psychological therapies.
Even with the elimination of the waiting period, an increase in their medical plan's
coverage maximum and the addition of surgical coverage through their fully insured
HMO plans, the employees' and retirees' premium was reduced from $,1 .70 to 91.16 per
month. Between July 2001 and August 2005, the city and county had collected 95.6
million in additional premium and paid out $183,000 for 11 claims. Due to the low cost
impact to the city's and county's medical plans, both self-funded and fully insured, the
additional monthly premium charged to employees and retirees has been eliminated.
Additionally, cost data has led the HMos to no longer separately rate the transgender
benefit, and the fully insured HMo plans are now treating it as they do any other medical
procedure.
The most recent study regarding the cost of these benefits was conducted from 2001
through 2008 by Dr. Mary Ann Horton, who is an active diversity advocate, leader, and
researcher and has been recognized for her contributions in creating equality in the
workplace for lransgender, bisexual, lesbian and gay individuals. The goal of her study
was to identify the number of surgeries and their related costs. The study was limited to
US residents treated in the country. During this time period, 1,170 transsexuals
underwent surgery. At the time of her study, nationally, the average cost for male to
female surgery was $10,400 and the average cost for female to male surgery was
$17,000. These figures are based on 740 male to female surgeries and 430 female to
male surgeries, providing an average combined cost of g12,g0O per surgery.
As a result, at the time she conducted her study, the actual cost impact to provide
transgender health insurance coverage benefits could be projected at $.173 per year,
per participant at a national level. of this cost, $.08 or more could be contributed to
services currently covered by many health care plans such as hormone therapy, doctor
office visits and psychological therapies resulting in a total impact to health care plan
costs of $.093 per year per participant.
The City's benefits consultant, Gallagher Benefit Services (Gallagher), has determined
that the addition of transgender benefits to the City's medical health insurance plans
would not result in a significant cost to the City as the majority of services recommended
by WPATH are currently covered benefits under the plan. Additionally, the relatively low
cost of the reassignment surgery, in addition to the low prevalence of those seeking it,
would have a minimal cost impact.
We ore mnnittd b gcwidig *collan public s*vice od srrlory n oll vrla llve, w: ord prcr',t it out vifuont, trapicnl, higoric $, r,aJnity.
976
Letter to Commission
Transgender Health lnsurance Bon6fits
May 23,2014
Page 4
Recommendation
Based on the benefits associated with providing the coverage, the Gounty and City of
San Francisco's experience and Gallagher's projections, it is recommended that the City
include the coverage in its self-funded medical plans effective in the new plan year,
which is scheduled to begin October 1,2014.
If you have any questions or need additional information, please do not hesitate to reach
out to me.
JLM/KGB/SC-T
We ore connittd b prcviding eyrcelbll pJblic servbe onl nlety to oll who live, vnrk ond phy h out vhront, topit)xl, histotic cDnnuntl.
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