From
Lisa Norris, Human Resources Director
Title
Insurance Fund Monthly Review
Presenter
Lisa Norris, Human Resources Director
Recommended Action
Review Only
Analysis
This analysis covers the experience in the Employee Insurance Fund through December 2016:
Employee Insurance Fund Summary (Attachment, pages 1 and 2):
As we close the 1st quarter of the 2016-2017 fiscal year, and end the benefit plan year as of December 31, 2016, there is some good and bad news. The good news is that the operating balance as of December 31, 2016 for the Insurance Fund is positive - ending at $176,410 (Attachment 1, orange column, row 52). However, using projections with claims as they are at year end, we are projecting to be at an imbalance by
-$224,313 (column 4, row 52). Attachment 2 reflects the month-to-month review for the current fiscal year. As you can see, December produced a high month of claims, but less than November, reaching $1,186,269. Run-off claims will continue to reflect through January, so we won't have an accurate picture of the plan year until February or March following the calendar year claims are processed in full. As a reminder, we did increase deductibles beginning in January, so we may see some claims savings from that plan change. While year-end projections are very unpredictable at this point, we have used the highest running monthly average for claims (reflected in column 7 and highlighted in light red) to project out the remaining 9 months of claims. This estimates us to come in over the active projection by year-end, but under in retiree expenses.
Another notable item on the fund summary is that our administrative fees reduced substantially (row 23). This was in part achieved resultant from the efforts of the North Texas Coalition, the City of Dallas bidding their Claims Administration Services, and naming all coalition cities in that proposal. As a result, Cigna came in very low and is just as strong of a provider as UHC. When we threatened UHC to move to that contract via interlocal agreement to the same arrangement as Dallas had with Cigna, they substantially reduced their fees to keep us as a long-standing client. They also guaranteed those fees for renewal years 2018 and 2019 and provided additional wellness dollars equal to $30,000 per year. Our 2016 fees ran about $534,049 per year, and under the new contract will run us about $250,000 annually (for a full twelve months under the new rate). Because we pay 3 months (Oct-Dec 2016) at the old rates and see savings at the new rates for only 9 months, our expected cost this year is projected to be about $328,850.)
UHC Information (Attachment, pages 3-5): These slides provide insight into the detailed claims impact over time of our costs and high cost claimants.
Financial Consideration
The current budget is approved and no financial consideration is necessary at this time until additional claims data based on future months can be reviewed.