2002-07-15 Special Called Regular Meeting and Workshop Meeting

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• CITY COUNCIL WORKSHOP JULY 15, 2002 EMPLOYEE HEALTH SERVICES ~MEDICAL~ FUND -SUMMARY WHAT IS SELF-FUNDING? Self-funding • provides employers the option of allotting funds to operate a health plan for employees. The employer is responsible for a portion but not all of the claims risk. Excessive loss is avoided with the assistance of stop loss coverage. • provides employer the ability to reinsure catastrophic claims separately (through stop loss coverage) by establishing a maximum predictable level of claims costs that are the responsibility of the employer fund. A separate insurance company assumes the risk for excessive individual and aggregate claims. The insurance company establishes a minimum limit that claims cost must reach (based on previous claims history) before reimbursement is due. • provides more flexibility for plan design and financial controls than a traditional insurance plan. HOW LONG HAS THE CITY OF LA FORTE BEEN PARTIALLY SELF-FUNDED? WHAT IS THE PROCESS? The City has been partially self-funded since 1983. Medical fund revenues and expenditures are accounted for in an Internal Service Fund. Revenues are considered as: • Charges to each department's budget -pre-established equal amount per full-time employee. • Premiums paid by employees for dependent coverage -payroll deduction. • COBRA premiums paid by former employees. • Premiums paid by retirees. Expenditures are considered as: • Claims administration -fees to a Third Party Administrator (TPA). • Claims paid -actual payments for medical & Rx claims; includes any reimbursements from Stop Loss Carrier for costs of catastrophic claims. • Re-insurance premiums - to separate carrier for Stop Loss coverage. The City has been paying 100% of premiums for employees; employees have been contributing a portion for dependent coverage.