Summary COMMERCIAL PACKAGE
The City placed the entire commercial package (General and Professional Liability, Automobile Liability, Automobile Physical Damage, Property Coverage and Workers Compensation) with the Florida Municipal Insurance Trust (FMIT) beginning with FY 2012-13. The Commercial Package was renewed in each succeeding year and there is a $24,003 reduction in the renewal premium for the coming fiscal year. The City also received a $14,983 refund of FY 2013-14 property premium during the current year. The total premium for FY 2016-17 is established as $322,061 compared to $346,064 for current year. The net premium reduction of $24,003 was accomplished for the coming fiscal year even though coverage has been increased primarily related to an increase in payroll plus number and value of insured vehicles. The City will also receive in FY 2016-17 a return of $12,154 for FY 2014-15 premium paid as authorized by the FMIT Board of Directors for a total renewal premium saving and offset of $36,157.
Additional small adjustments and coverages are included as a part of the FMIT Commercial Coverage Summary. There are small increases for the Community Redevelopment Agency, City storage tank liability, and Statutory AD&D for Law Enforcement Officers through or by FMIT. The costs ($8,973) are shown separately on the attached schedule and not included in the foregoing summary the costs but are included as a part of the Recommended Action to be taken by the Commission.
The attached FY 2015-16 to 2016-17 Rate Comparison Schedule demonstrates that there is a true premium reduction even though coverage has been increased. General/Professional coverage is directly related to payroll as are Workers Compensation rates. The Liability premium reflects a true savings brought about by a rate reduction. Workers Compensation rates were reduced by an improvement in loss experience and Property rates were reduced by a low loss experience in the trust pool and the City as an individual entity. Auto liability premium went down but auto physical damage premium has a slight increase due to loss experience by the trust and an increase in the number and values of City vehicles (all licensed vehicles are included).
Renewal Recommended.
GROUP HEALTH
The City provides group health benefits through participation in the Florida Municipal Insurance Trust (FMIT). The program is administered by United Health Care (UHC) and service is delivered through the UHC network of providers.
City employee participation, for rate calculation purposes, is deemed to be 100 percent since all full time employees are eligible and 100% of premium is paid by the City. Exception is made for employees who opt out of the City plan and are insured by an outside plan. The 100% participation is an important factor in reducing premium cost since the adverse selection factor is dramatically reduced or eliminated.
FMIT is a participating health benefits trust formed by the League of Cities and, as such, is not subject to the gross premium tax imposed by the Affordable Care Act (ACA) on commercial "for profit" insurance carriers. The FMIT program employs a small corps of salaried sales personnel and does not pay commissions. The Board of Directors is made up of elected officials from around the state and the trust serves as an actuarially sound pool the purpose of which is to provide coverage to its members on a cost basis, absent a profit motive.
The absence of a profit motive has served the City well in the 2015-16 fiscal year. The attached Premium/Paid Report (claims paid vs. premium paid) demonstrates the heavy losses experienced by the City group in the current year. The high losses demonstrate the value to City staff of City benefits and the commitment of the City Commission to its employees. Fifteen to twenty percent of additional premium increase is justified by the extraordinary high loss experience in the current year has been absorbed by the trust as opposed to being directly passed through as would be the case with a commercial carrier.
FMIT staff, FMIT actuaries and City staff worked together for the past few months to meet of the challenge the high loss ratio.
The objective was, and is, to provide Group Health Care to all employees. The developed and recommended program is to maintain access to health care through an affordable co-pay schedule with what is a reasonable deductible and, at the same time, establish a premium within the projected City budget. Maintaining the existing HSA plan "Plan 5" with an individual
deductible of $1,300 and a family deductible of $2,600 as
required by federal law, plus a City HSA contribution of $104.94/per month,
and, the existing PPO "Plan 14" with an individual deductible
of $1,000 and a family deducible of $2,000, (supported by a Flexible Spending account), was successful.
There also are in place a variety of supplemental employee paid coverages at group rates and by payroll deduction.
Group Health benefit numbers are not subject to specific determination since the premium varies by the number of budgeted Full Time Equivalent (FTE) Employees actually working, eligible, and participating during the budget year. The FY 2015-16 projection was that an average of 112 budgeted employees would be eligible and participating over the fiscal year. The number for FY 2016-17 is 123 with an average of 7 non participating yields 116 eligible FTEs. The 116 eligible and participating FTEs is the budgeted number.
The amount for all employee health benefits currently in the City Budget is $947,814. The breakdown is ($862,873 Group Health + $61,087 Other Group Coverages = $947,814).
Negotiations, including factoring a 10% medical cost trend, 108% loss ratio, 12% other cost = 30% increase - 16% pool absorption = 14% increase.
Renewal Recommended.
GROUP DENTAL
No change in rate. The Monthly Rate is $29.88/per employee per month(PEPM). Recommend Renewal.
GROUP VISION
Group Vision premium increased by $.23/PEPM from $5.18 to $5.41. This is a two year fixed premium rate. Recommend Renewal.
LIFE, AD&D and EAP
No change in rate. Monthly Rate of $5.60/PEPM is a two year fixed rate (2018). Recommend Renewal.
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