12-15-14 Special Meeting of La Porte City Council

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REQUEST FOR CITY COUNCIL AGENDA ITEMREQUEST FOR CITY COUNCIL AGENDA ITEM December 15, 2014December 15, 2014AppropriationAppropriation Agenda Date Requested:Agenda Date Requested: Reinsurance Reinsurance Allison Curry Allison Curry Requested By: Source of Funds:Source of Funds: Premiums Premiums Human Resources Human Resources Department: 01461445156012 01461445156012 Account Number:Account Number: Report:Resolution:Resolution:Ordinance:Ordinance: $435,000 $435,000 Amount Budgeted:Amount Budgeted: Other: $380,264.28 $380,264.28 Amount Requested:Amount Requested: Attachments :Attachments : Budgeted Item:Budgeted Item:YESYESNONO 1. Quote Comparison1. Quote Comparison 2. Claims History2. Claims History 3. Historical Large Claims 3. Historical Large Claims SUMMARY & RECOMMENDATIONSSUMMARY & RECOMMENDATIONS On October 16, 2014, a Request for Proposal for Stop Loss Reinsurance was sent to 12 different Stop Loss On October 16, 2014, a Request for Proposal for Stop Loss Reinsurance was sent to 12 different Stop Loss carriers. The City purchases stop loss insurance to protect against high claims exposure. Specific stop loss covers carriers. The City purchases stop loss insurance to protect against high claims exposure. Specific stop loss covers individual member claims in excess of $165,000. The City is reimbursed for any single claim in excess of individual member claims in excess of $165,000. The City is reimbursed for any single claim in excess of $165,000. Stop loss proposals include Aggregate insurance. Aggregate insurance covers the entire health plan $165,000. Stop loss proposals include Aggregate insurance. Aggregate insurance covers the entire health plan claims and will reimburse if claims exceed 125% of expected claims. The City had a budget amount of $435,000, claims and will reimburse if claims exceed 125% of expected claims. The City had a budget amount of $435,000, which was based on the health plan claims running approximately 30% higher than the prior fiscal year. which was based on the health plan claims running approximately 30% higher than the prior fiscal year. Of the 12 carriers that were solicited, 2 submitted proposals; and 10 vendors did not submit a proposal. Many of Of the 12 carriers that were solicited, 2 submitted proposals; and 10 vendors did not submit a proposal. Many of the non proposing vendors indicated they did not have competitive rates to provide. The two quotes for the current the non proposing vendors indicated they did not have competitive rates to provide. The two quotes for the current plan design resulted in a 9.45% premium increase and an increased maximum claims liability for the aggregate plan design resulted in a 9.45% premium increase and an increased maximum claims liability for the aggregate stop loss of 33.36%. These increases are a reflection of the claims experience during the past 12 months. The stop loss of 33.36%. These increases are a reflection of the claims experience during the past 12 months. The stop loss of 33.36%. These increases are a reflection of the claims experience during the past 12 months. The stop loss of 33.36%. These increases are a reflection of the claims experience during the past 12 months. The increase in the maximum claims liability means that the City will have exposure to potentially higher claims increase in the maximum claims liability means that the City will have exposure to potentially higher claims payments before the Aggregate insurance will reimburse the City. payments before the Aggregate insurance will reimburse the City. Currently, the CityCurrently, the Citys stop loss coverage takes effect when an individual employees stop loss coverage takes effect when an individual employees annual claims reach $165,000. s annual claims reach $165,000. The Citys benefits consultant did review quotes lowering the Specific Deductible to $150,000; however, this s benefits consultant did review quotes lowering the Specific Deductible to $150,000; however, this option resulted in an approximate 24% rate increase. As a result, it was the consultantoption resulted in an approximate 24% rate increase. As a result, it was the consultants recommendation to stay s recommendation to stay at the current $165,000 Specific Level. The 9.45% increase comes in below the budgeted 20% increase, and the at the current $165,000 Specific Level. The 9.45% increase comes in below the budgeted 20% increase, and the City would continue with Voya as the Reinsurance provider. City would continue with Voya as the Reinsurance provider. Action Required of Council:Action Required of Council: Consider approval or other action to renew the CityConsider approval or other action to renew the Citys Stop Loss Coverage with Voya at an s Stop Loss Coverage with Voya at an annual premium of $380,264.28.annual premium of $380,264.28.