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 is recommended for renewal for FY 17/18.
Rates in General/Professional Liability, Auto Liability (includes all vehicles), Automobile Physical Damage (all Vehicles) and Property (buildings) all are reduced for the next F/Y. Workers Compensation rates increased by 2.5% compared to the 14.9% rate increase approved by the state for carriers in the Commercial Market. General/Professional Liability and Workers Compensation are based on total payroll (and Workers Compensation was slightly increased by the loss calculation FY year of 15/16). The overall effect is that the annual Commercial Package, increased by $20,209.00 over current year to $342,270.00.
The City will also receive a $12,094.00 refund of FY 15/16 Property premium as a distribution of "excess" premiums authorized by the FMIT Board of Trustees.
Additional small adjustments to other coverages are not included as a part of the FMIT Commercial Coverage Summary. The separate Community Redevelopment Agency policy ($5,118.00 P/Y) will not be renewed as no longer required since the City Commission has assumed those duties which are now covered under the City comprehensive coverage at no extra charge. Storage tank liability ($1,155.00 P/Y) is included in the recommended action total but the cost of Statutory AD&D for Law Enforcement Officers through or by FMIT was approved and paid by the City in the FY 16/17 budget as a two year advance paid agreement = $1,350.00.
Renewal Recommended.
GROUP HEALTH
The City has provided group health benefits through participation in the Florida Municipal Insurance Trust (FMIT) since FY 14/15. 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.
FMIT staff, FMIT actuaries and City staff worked together for the past few months to meet the challenge of a high loss ratio.
Attached are the rate sheets and breakdown of the Group UHC plans 5 and 14 reflecting the 15% rate increase negotiated by staff. Also attached is the zero increase renewal notice for Dental. The Standard dental plan was projected to increase by 7% but will renew with 0 change. There is no renewal for Life (and included EAP) or Vision since last year a negotiated two year renewal at a fixed premium was approved.
The United Health Care premium increase is $1,115.76 PYPE and came about primarily because of the 103.36% loss ratio. Total Premium Paid was $837,142.00 and claims paid total $865,247.00. Claims paid amount to $28,105.00 more than premium paid. The following is a basic analysis of a projected premium in the face of the City Loss Ratio:
03.36% Above 100 % Loss
12.00% Adm Costs (all business costs including claims processing, etc.)
06.50% Medical Inflation
21.86% Total Rate Increase to break even but a negotiated increase of 15% was accomplished. A commercial Carrier would have canceled coverage or required an increase between 30 to 40%.
One added calculation is telling. There are three large claims (still open) that have paid cost totals of $337,028.00. The $337,028.00 represents 38.9% of claim dollars paid. The maturing of these claims (demonstrated by claims paid this March of $214,057.00 down to $54,821.00 in April and $49,992.00 in May), absent another calamitous year and plus the planned vigorous implementation of an employee wellness program, should bring costs down.
There also are in place 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 2016-17 projection was that an average of 121 budgeted employees would be eligible and participating over the fiscal year. The number for FY 2017-18 is 132 with an average of 3 non participating yielding 129 eligible FTEs. The 129 eligible and participating FTEs is the budgeted number.
The amount for all employee health benefits currently in the City Budget is $1,186,269.00. The breakdown is ($1,122,414.00 Group Health + $63,855.00 Other Group Coverages = $1,186,269.00).
Negotiations, included factoring a 6.5% medical cost trend,103.36% loss ratio, 12% other cost = 21.86% increase - 16.96% pool loss absorption = 15% 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 is $5.41. This is the second year of a two year fixed premium rate. Approval not required.
LIFE, AD&D and EAP
Life, AD&D and EAP premium is $5.60/PEPM. This is the second year of a two year fixed rate. Approval not required.
|