06-13-16 Regular Meeting of the La Porte City Council

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&¨ ¢¨ « 3®«µ¤¢¸ 3³± ³¤¦¸ To ensure financial solvency of the health care plan, it is critical to establish and maintain appropriate risk retention levels (Stop Loss) and reserves. Individual stop loss caps the Sample Companytop loss caps the Sample Company, at a minimum, Incurred But Not Reported (IBNR) claims and a contingency reserve is established to offset high claims years. Both IBNR and contingency reserves typically range from 20% to 25% of projected paid claims. The Sample Company currently retains individual stop loss at a $125,000 specific deductible level and aggregate stop loss capping the Sample Companyof expected claims. The Sample Companyreserve is $1,250,000 or 24.6% of projected claims for fiscal year 2013 2014. Short Term Strategies: For the 2015 plan year, IPS Advisors has recommended a specific stop loss deductible range based on actuarial projections at $132,029 low end and $218,673 high end. Movement from $125,000 to $137,500 was implemented for the 2015 stop loss renewal. IPS Advisors recommended IBNR Reserve is $532,915 at year end 2014 and the total reserve cap of $1,250,000 is adequate based off projected 2014 and 2015 paid claims. Long Term Strategies: Evaluate stop loss coverage policies and limitations annually to ensure appropriate risk retention levels. Continue monitoring of total reserve amounts against projected paid claims to ensure adequacy of reserve. #®¬¯«¨ ¢¤ 3³± ³¤¦¸ Compliance with federal and local government legislation is becoming increasingly complex within the benefits industry. The ramp up of the Affordable Care Act will continue over the next several years. The most significant new requirement placed upon the Sample Company is the Employer Mandate effective January 1, 2015. The mandate requires the Sample Company to implement 30 Hour eligibility for health coverage, ensure premiums for employee-only coverage do not exceed 9.5% of W-2 earnings for the base plan (HSA Plan) and the minimum actuarial value of the base plan exceeds 60% for the base plan (HSA Plan). The Sample Company currently meets most employer mandate requirements except the eligibility requirement of 30 hours which will be adjusted from 40 hours, January 1, 2015. Legislation allows the Sample Company to establish a measurement period not to exceed 12 months to determine if an employee would meet the 30 hour eligibility for health insurance coverage. The Sample Company will implement a 12 month measurement period to offset potential liability from part-time and seasonal employment.