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HomeMy WebLinkAbout4K - Group Employee Health Insurance Benefits AGENDA #: PREPARED BY: SUBJECT: DATE: INTRODUCTION: BACKGROUND: DISCUSSION: STAFF AGENDA REPORT 4K RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF MINNESOTA SERVICE COOPERATIVE JOINT POWERS AGREEMENT FOR GROUP EMPLOYEE HEALTH INSURANCE BENEFITS OCTOBER 20, 1997 The purpose of this agenda item is for the City Council to consider approval of a joint powers agreement to provide group health insurance benefits for City of Prior Lake employees through a governmental unit cooperative program. Our present health insurance has been provided for the past three years through PEIP (Public Employees Insurance Program) which is a state plan administered under a third party agreement with Sedgwick Noble Lowndes. This program included Medica Premier, HealthPartners and BCMS Blue Plus which provides 90% of all health insurance contracts within the State of Minnesota (per LMCIT statistics). Prior to this time period our health insurance was underwritten by Blue Cross Blue Shield for five years from 1989 until 1994. Before the City received its renewal premium quote from PEIP, which was scheduled to increase by nearly 43% from an average of $492.69 per month for the three carriers to $703.56, an Insurance Committee was formed that consisted of a cross section of employees. The purpose of the Insurance Committee was to review health insurance coverage from a cost effective standpoint. (see attached memorandum dated September 5, 1997) and make a recommendation to the City Manager. The city contributes $405.00 per month in 1997 towards family coverage and 100% for single coverage for health insurance so basically the entire proposed cost increase would be the responsibility of the employee. But the City also has a vested interest because if a more favorable plan could be purchased the single rate could be reduced which would provide a dollar savings to the City of Prior Lake. In examining the various plan options, the Minnesota Service Cooperatives Cities/County Group Insurance Pool offered the best rates and the widest area network coverage with respect to specialty doctors, clinics and hospitals. The specific insurance plan is 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H:\AGENDA\A9710.00C AWARE GOLD through Blue Cross Blue Shield. Their premium quote for health insurance rates came in at the following amounts: BCBS Aware Gold Plan Family Premium $458.49 Single Premium $170.11 VERSUS PEIP Insurance Program Medica Premier HealthPartners BCMS Blue Plus Family Premium $685.07 $710.74 $714.88 Single Premium $228.33 $235.86 $237.22 As is evident above there is a significant savings not only to the employees but to the City in the area of paying single premiums. Presently of the 63 employees twenty seven (27) have elected single coverage. On average this would reduce the city's share of health insurance in 1997/98 by $20,635.00. Stability in rates and health care providers were also two important objectives that will be achieved by changing plans to the Minnesota Service Cooperative Cities/Counties Insurance Pool as our rates will hold firm for the remainder of 1997 and all of 1998. In addition our health insurance premiums will be cut by 13% in 1999 due to a reduction in administrative cost associated with the initiation process which will help to offset any future premium increase. Therefore the city should experience favorable health insurance premium rates at least until the year 2000. The Minnesota Service Cooperative Insurance Pool is comprised of over 100 governmental units, mostly cities and counties and they are extremely popular in outstate Minnesota and are becoming the preferred choice of more and more metro cities. Both Shakopee and Savage cities are considering participation at this time too. To join this insurance pool it is necessary for the city to enact the enclosed joint powers agreement. Our city attorney has reviewed the document which incorporates a number of recommended changes from her office that have been agreed to by the cooperative service and incorporated into the joint powers agreement. The basic purpose of the agreement is to authorize the cooperative to negotiate health insurance premium rates on behalf of its members and to create a large enough pool so that claims can be distributed so that the exposure of an individual governmental unit can be somewhat limited in an effort to control premium rates. Because our renewal with PEIP was scheduled for October 1 st, our participation in the service cooperative has been tendered subject to H:\AGENDA\A9710.00c Council approval of the joint powers agreement in order to avoid the large health insurance premium hike proposed by PEIP. The enrollment process has occurred however the City is not bound by its election until authorization occurs by the City Council. ALTERNATIVES: 1. A motion and second to approve the "Joint Powers Agreement for Group Employee Benefits" with the Minnesota Service Cooperative Cities/Counties and Other Governmental Unit Insurance Program. 2. Take no action at this time and direct the staff to provide additional information. FINANCIAL IMPACT: Placing the city's group health insurance with the Minnesota Service Cooperative will result in lowering the out of pocket insurance cost to the individual employees while also reducing the City of Prior Lake' financial obligation by approximately $20,000 compared to the alternative of continuing with the State of Minnesota sponsored PEIP plan. RECOMMENDATION: Alternative 1. Staff would recommend that the City Council enter into the joint powers agreement which would approve the enrollment of the City of Prior Lake into the Blue Cross Blue Shield Aware Gold Plan for health insurance coverage for the eligible employees of the City of Prior Lake. ACTION REQUIRED: Adopt a motion and a second to approve the "Joint Powers Agreement for Group Employee Benefits" with the Minnesota Service Cooperative Cities/Counties and Other Governmental Unit Insurance Program. I I.! / I I i J i f ~ Attachments I~ .. MEMORANDUM TO: FROM: RE: DATE: Frank Boyles, City Manager Insurance Committee Health Insurance Recommendation September 5, 1997 As you are aware, an insurance committee was formed consisting of members from each bargaining group and also representatives from those employees not represented by a bargaining group. The insurance committee objective is to examine our health insurance coverage to make sure we are getting the best coverage for our dollar. To date we have done the following: . Met as a committee to establish course of action . Surveyed employees to see what their priorities were with insurance . Interviewed potential health insurance carriers and third party administrators . Received price quotes for premiums . Employees completed new enrollment forms for premium determination purposes . Informed the employees regarding the plan options . Met as a committee to form our recommendation Our recommendation is to switch our health insurance coverage from PEIP to Blue Cross Blue Shield's Aware Gold plan effective 10/1/97. A summary of the plan details is attached. This plan is underwritten by the Minnesota Service Cooperatives Cities/County Group Insurance Pool. This is a state plan that will require participation via a joint power's agreement. We have made this recommendation for the following reasons: . Premiums will decrease which will result in a reduction in out of pocket costs to employees . The family premium rate will be $458.49 and the single premium rate will be $170.11 per month and will remain in effect through 12/31/98 . Our level of insurance coverage stays the same . Our network of clinics, Dr. 's, pharmacies, etc. increases substantially . We no longer need referrals to go see specialists, etc. After your final approval, the enrollment process begins with information sessions scheduled for September 16 and 23 at 10:00AM and 3:00PM for all employees to attend. The employee identification cards and BCBS Aware Gold directories will be available to be distributed to the employees during these sessions. If you have any specific questions on our process or recommendation, please contact any member of the committee. Insurance Committee Bret Woodson Duane Goldammer INSMEM.DOC9/8/97 16200 Eagle Creek Ave. S.E.. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 AN EQUAL OPPORTUNITY EMPLOYER Jeffrey Evens Greg TIlka Thomas Kahlert Ralph Teschner / Jane Gilb Jenni Tovar Randy Hofstad Greg Zollner / Fax (612) 447-4245 O'T.10.1997 3:07PM RPPLETREE INSTITUTE NO. 248 P.2/7 Revised 10/26/95 Revised 10/10/97 JOINT POWERS AGREEMENT FOR GROUP EMPLOYEE BENEFITS SOUTH~STnNESTCENTRALSER~CECOOPERATWES'MEMBER CITY AND OTHER GOVERNMENTAL UNIT INSURANCE PROGRAM This Joint Powers Agreement hereinafter referred to as "agreement", is made as of the ,19 , between Member such other members as now or hereafter become parties to this agreement, hereinafter individually called "Participant' and the SOUTHWESTNVEST CENTRAL SERVICE COOPERATIVES (SWMlC SC), hereinafter called the "SC" and/or its designee. day of I and Pursuant to M.S. 471.59, Subd. 2: It is agreed and understood that 1. the objective of this Joint Powers Agreement is to establish, procure and administer group employee benefits and financial risk management services that embody the concept of pooling risks for the purpose of stabilizing and/or reducing costs, and 2. the purpose of this agreement is to define/clarify bid procedures, rights and responsibilities, length of contract, termination guidelines, liability and the methodes) by Which parties to this agreement shall exercise theIr common power. DEFINITIONS 1. Participant - any entity or Individual that (who) has been accepted for partiCipation by the joint powers governing board. 2. Group Employee Benefits, (hereinafter referred to as "GEB") shall Include, but not be limited to, health benefits coverage, life insurance, disability Income protection, dental insurance, and flexible spending programs, and other services as directed by the Board, 3. Other Financial Risk Management Services shall Include, but not be limited to, investments, contracted legal services, property/casualty safety group, student accident, and other services as directed by the Board. 4. Board - the SC Board of Directors will serve as the joint powers governing board for the group employee benefits and financial risk management services and all associated services. This Board will be elected pursuant to the Bylaws of the se, governing election of its board of directors. If the se is abolished, the govemlng board will be that of the SC deSignee. As appropriate, the Board may designate a representative to act on its behalf. 5. Pool - the collective group ef participants in a given program or group empleyee benefits or other risk management service or aotivity. RECITALS Each of the parties enters into this agreement pursuant to: A. MSA 471.59, Sl.lbd. 1 and 10: which authorizes two or more govemmental units to exercise jointly or cooperatively powers which they possess in common, or B. M.S. 123.58; defining Service Cooperatives. Participation in programs and services provided by SC shall be discretionary (id. Subd. 4), or 0(T.10.1997 3:08PM APPLETREE INSTITUTE NO. 248 P.3/7 C. acceptance by the Board of participation by non-profit, non...govemmental units, which shall be held contractually to all terms and conditions of this agreement. II. Pursuant to M.S. 47' .59, M.S. 471.6', and M.S. Section 16.07. the Intent of this agreement is to delegate the Participant's right to purchase certain group employee benefits to the Board under the terms and conditions of this Agreement. III. The parties desire to state in this agreement that their common power shall be exercised for the pUrpose of providing financial risk management services, which may include but not be limited to: InVestments, contraoted legal servioes, property/casualty, student accident Insurance, dental, Section 125, life and health group insurance pooling, and other services as directed by the Board. IV. The parties desire to state In this agreement their Intent to comply with the statutory requirements of group insurance, govemmental unit bidding laws, COBRA and its Minnesota extensions, ERISA, and all other applicable federal and state statutes. V. It is not the intent of the parties to the agreement to transfer authority, liability or responsibility for matters other than securing proposals, establishing master contracts, negotiation of operating agreements and funding arrangements, and the facilitation of administrative services and funding arrangements as defined for each component of the group employee benefits and financial risk management services. AGREEMENT The parties agree as follows: I. The Recitals are part of this agreement II. PROCEDURES FOR SECURING GROUP EMPLOYEE BENEFITS AND FINANCIAL RISK MANAGEMENT SERVICES. A. The Board shall from time to time change the procedures to comply with applicable law. B. Group Employee Benefits 1. Definition: pursuant to M.S. 471.6161, Subd. 1 "Group Insurance Coverage" is defined as benefit coverage provided to a group through a carrier authorized under Chapters 61A, 62A, 62C, 620, and 62E to do business in the state. 2. Requests for Proposals/Selection of Carrier/Contract Length a) Pursuant to M.S. 471.6161, Subd. 2, SC will request proposals from, and enter into contracts with, carriers that in the judgment of the Board are best qualified to provide coverage. The request fer proposals shall be In writing and at a minimum shall include: coverage to be provided, criteria for evaluation of carrier proposals, and the aggregate claims records for the appropriate period. Public notice of the request for proposals will be provided in a newspaper or trade joumal at least 21 days before the final date for submitting proposals. b) Pursuant to M.S. 471.6161, Subd. 3, the Board shall make benefit and cost comparisons and evaluate the proposals using the written criteria. The Board may negotiate with the carrier on premiums and other contract terms. The Board must prepare a written rationale for its decision before entering into a oontract with the selected carrier. c) Pursuant to M,S. 471.6161, Sllbd. 4, group insurance contracts may not exceed five (5) years in length, including all extensions. The Board shall request proposals for coverage at 2 OCT. 10. 1997 3:08PM APPLETREE INSTITUTE NO. 248 P.4/7 least once every sixty (BO) months. Employees may be added to an existing group pursuant to a joint powers agreement under section 471.59. 3. Rate Increases a) The Board will annually review renewal Information as presented by the carrier, make recommendations and determine if requests for proposals are necessary. b) Rate increases will be determined on the basis of single coverage. c) The carrier shall notify each Participant and the Board of any changes in rates at least sixty (60) days prior to the effective date of the rate change. Final rate adjustments will be effective the first day of the month following thirty (3D) days written notice by the camer. d) Pursuant to M.S. 471.616, Subd. 1, should the aggregate pool rate increase for single coverage equal twenty-five percent (25%) or more in a given contract year. the Board may solicit quotes for the pool. 4. Benefit Reduction: pursuant to M.S. 471.6161, SUbd. 5, the aggregate value of benefits provided by a group insurance contract for employees covered by a oollectlve agreement shall not be reduced unless the Participant employer and exclusive representative of the employees of an appropriate bargaining unit, certified under Section 179A 12, agree to a reduction in benefits. 5. Master Contract: The Board shall negotiate the master contract with the carrier selected for the pool on behalf of the Participants of the pool. Further, the Board will negotiate an operating agreement for the purpose of administering the master contract. C. Other Financial Risk Management Services 1. The Board will determine the most cost-effective and appropriate manner in which to deliver other financial risk management services. Methods may Include, but are not limited to, provision for staff consultation services and contraoting for profeSSional services with independent contractors. (RE: I<rohnberg v. Pass, 187 Minn. 73, 244 N.W. 329; 1932). Bids and/or quotations may be requested but are not required. 2. Selection of Carrier: the Board will contract with the carrier that, in the judgment of the Board, is best qualified to provide the service. III. RIGHTS AND RESPONSIBILITIES OF THE BOARD A. Group Employee Benefits 1. The Board shall negotiate master contracts for its own benefit and for the benefit of each of the Participants. A copy of the master contract shall be available for review by Participants. 2. PursLJant to M.S. 471.6161, Subd. 5, the Board has no authority nor authorization to change a policy or benefit of the Participant's group insurance policy without written authorization or request of the Participant. The policy of the Participant may be amended with respect to any matter relating to the insurance protection provided thereunder for the officers, employees and their dependents, and retired officers, employees and their dependents of any party by rider, amendment, or endorsement Issued by the insurance carrier by law. or with the written request of the Participant. The Original of each such rider, amendment or endorsement shall be mailed or delivered by the canier to the Board to be attached to, and held with, the policy; and B copy of each such rider, amendment or endorsement will be furnished by the carrier to each of the Participants. 3 OCT. 10. 1997 3:08PM RPPLETREE INSTITUTE NO. 248 P.5/7 3. The Board shall secure quotes from carriers for entities requesting participation in the pool and respond to the carrieres) with acceptance or rejection of their proposal Within sixty (60) days of receiving neoessary data. 4. The Board shall serve as liaison between representatives of the Participants to this agreement and the carrier, 'ncluding general communications, problem resolution, transmittal of material, and pool meeting coordination. 5. The Board retains the right and responsibility, upon c:onsultation with its Participants, to terminate any agreement into which it has entered on behalf of the pool. In the course of carrying out its responsibility, the Board may conduct other business negotiations consistent with group benefits and their delivery mechanisms. 6. The Board may negotiate, implement, and administer alternative financing arrangements which it determines best serves the interests of the Participants of the pool. 7. The Board shall determine the utilization of any monies acquired through discounts, credits, reserves, savings or in any other manner. B. Other Financial Risk Management Services 1. The Board may negotiate operating agreements for its OWn benefit and for the benefit of each of the Participants. Copies of the operating agreements shall be on file for review by any Participant upon request 2. The Board may request proposals from and enter into contracts with carriers/providers that in the judgment of the Board are best qualified to provide the service. Bids and/or quotations may be requested but are not required. 3. The responsibilities of the Board In the performance of other financial risk management servioes will be set forth in individual agreements. C. The Board, its authorized representatives, employees and designees shall have no duty or liability to any of the Participants, carriers, providers, or other financial risk management service providers with respect to the fees, premiums and/or contract charges, offers, acceptances or binders of c:overage, cancellation notices, or other changes relating to the Participant's subscribers. The Board, its authoriZed representatives, employees and designees, and each Participant shall have no duty or liability due to negligence of other Participants, carriers, and providers. D. Upon request, the Board will assist in the resolution of disputes between a Participant and the canier regarding claims, fees, premiums, and/or contract charges. E. The Board may recover the cost of administering services in the group employee benefits and financial risk management services as part of the premium or cost of the benefits provided by such means as deemed appropriate by the Board. IV. RIGHTS AND RESPONSIBILITIES OF PARTICIPANTS: A. Any Board Participant or other governmental unit. through its goveming authority, may become a party to this agreement by executing and delivering this agreement to the Board. B. Group Employee Benefits 4 OCT. 10. 1997 3:09PM RPPLETREE INSTITUTE NO. 248 P.6/7 1. Each Participant will execute necessary enrollment and renewal documents directly with the carrier for insurance protection for Its officers and employees and dependents, retired officers and employees and dependents under their polley which Shall be provided by the carrier. 2. Each Participant of the pool agrees to furnish employee data (census) pertaining to insurance coverage (i.e., name, date of birth, gender, single or family coverage status. salary, date of hire, benefits, class of benefit levels, experience records, medical Information and other information required. etc.) directly to the carrier, as required. 3. The Participant shall remit, upon receipt of the appropriate bill from the carrier, contract charges to the appropriate authority prior to the due date. 4. The Participant will be responsible to notify the Board and the carrfer at least forty-fiVe (45) days prior to the effective date of any rate change of its intent to withdraw from the pool. C. Other Financial Risk Management Services 1. The Participant agrees to execute and submit all necessary data required to perform the respective service requested to the appropriate parties as directed by the Board. 2. The Participant shall remit payment as designated by the Board for services as billed and when due. v. LENGTH OF CONTRACT AND TERMINATION A This agreement shall continue for a period of four years. The effective date shall be the date both parties have signed this agreement. Any Participant wishing to withdraw from this agreement shall provide a minimum of forty-five (45) days written notice prior to annual renewal of said intent to the Board. and the service carrier/provider, unless otherwise specified in a given contract B. Group Employee Benefits 1. Participants receIving a fifty percent (50%) or greater increase in single rates in a given policy year shall be allowed to solicit proposals without jeopardizing their participation in the pool. Once the Participant accepts the proposal, it is excluded from the pool for two (2) years and forfeits all residuals and claim to excess pooled dollars. If the Participant elects to reject all proposals and retain participation In the pool, the Board will determine the applicable rate for the Participant, which will be one of the following: a. The Participant will be obligated to accept the actual formula rate as determined by the Participant's own utilization and the carrier's rating formula; or b. The Participant will receive II rate to be established by the Board. If the Participant's single insurance rate is increased by more than fifty percent (50%) in any given policy year, the affected Participant may withdraw from this agreement by giving written notice of its withdrawal to the Board and the carner at least forty-five (45) days prior to the start of the policy year for which the rate Increase is effective. 2. Should an individual Participant solicit proposals independently withoLlt a fitly percent (50%) increase in Single rates in a gl\1en year. the Board retains the right to terminate said Participant's participation in the appropriate group insurance service. An individual Partioipant termineted under these conditions shall be ineligIble to participate for a period of not less than two (2) complete policy years and forfeits any pool reserves or excesses. 5 IW:" .... orT.10.1997 3:09PM APPLETREE INSTITUTE NO. 248 P.7/7 "Soliciting proposalslf shall be defined as requesting and/or accepting proposals. 3. Any Participant wishing to withdraw from the pool at a time other than the date of renewal shall provide a minimum of nInety (90) days written notice of said intent to the Board and to the carrier. If a Partic:ipant withdraws from the pool Without a fifty percent (50%) increase In a given year, the Participant shall be ineligible to partiCipate for a period of not less than two (2) complete policy years and forfeits any interest in and rights to any pool reserves. 4. The Board retains the right to shorten or extend the policy/plan year shoUld such action benefit the Participants. VI. LIABILITY OF PARTIES: The Board, acting on behalf of the Participants, shall exercise reasonable care with the bidding, rating, claims, renewal, and administrative matters associated with the master agreement. Certain other responsibilities, including but not limited to collective bargaining disputes, benefit disputes, claims payments, employee ERISA and COBRA r1ghts, claims, compliance with statutes, eligibility, premium and/or contract charge payments, retiree benefits, and enrollments, are the sole responsibility of the respective Participant. Pursuant to all applicable state and federal laws, this agreement has been approved by the governing boards of the parties and is signed by the duly authorl2ed officers of the parties. Minnesota Service Cooperatives BY: TITLE: BY: TITLE: DATE: DATE: (PARTICIPANT NAME) BY: TITLE: BY: DATE: TITLE: DATE: 6