INSURANCE COMMISSION

TOWN OF SIMSBURY INSURANCE COMMITTEE

Subject to Vote of Approval - Regular Meeting Minutes

March 25, 2015

The meeting was opened at 7:35 a.m. in the Board of Education conference room by committee chair, Ed Sparkowski. Other committee members who were present included Nick Mason, Peter “Chris” Peterson, and Kateryna Lagun. Burke LaClair, the Board of Education Business Manager; Joseph Mancini, Finance Director; Thomas Cooke, Director of Administrative Services, and Robert Lindberg, of Arthur J. Gallagher & Co. were also in attendance.

Mr. Mason made a motion to approve the minutes from the Insurance Committee meeting on November 26, 2014. Mr. Peterson seconded the motion. All were in favor. The minutes were unanimously approved. The motion passed.

1. Employee Benefits Update - Robert Lindberg, Arthur J. Gallagher & Co.
Mr. Lindberg distributed a 6-page report titled, “Simsbury Town and Board: Insurance Advisory Committee, March 25, 2015.” Page 1 to 2:  Meeting Outline. Page 3:  Experience Update Outline: Recent Claim Activity and Renewal Results / Medical and Dental / 2011 through 2015. Page 4: Scatter Graph of ASO Medical Claim Activity / July 2010 through January 2015. Page 5: Combined ASO Medical & Pharmacy Paid Claims / July 2011 through July 2015. Page 6: Dental ASO Paid Claims / July 2011 through July 2015.

ASO Medical Consolidation. Mr. Lindberg mentioned that the overall service platform has been good. The few transition bumps were handled quickly and well. The plan management and communication activity by CIGNA have focused on wellness, preventive care and chronic care programs. Several presentations have already been given. Mr. Lindberg believes that progress is being made at a faster rate because one vendor can deliver a unified message to both the town and the BoE.

Running Claims Activity. Figures have come in through February 2015. With 8 months of activity to analyze, Mr. Lindberg noted that the town is tracking at 97% of expected claims YTD. He sees improvement in the overall baseline utilization. About 20% of the population is now in the high deductible health plan. He also reported a noticeable reduction in large claims.

Market Trends. Mr. Lindberg mentioned that the straight medical trend is running about 9% to 10%. In recent cycles, the largest expenses are the result of Medicare and Medicaid programs not fully reimbursing, and the costs being transferred to private plans. He also noted that prescription market costs have been mixed, with an 8% to 16% range in this cycle. Causes for this include new pipeline drugs, expiring patents, and an increase in the effectiveness of new specialty prescriptions for Hepatitis C and multiple sclerosis.

Activity for 2015. CIGNA will be reaching out to the Town and BoE to expand its wellness, preventive, and chronic care educational programs. They will be building them into the collective bargaining process. A review of Medicare programs will be scheduled for the summer. Two insured programs are already in place, but other options in the marketplace will also be researched.

ACA Update. Mr. Lindberg noted that there is increased interest in exploring delivery system options other than the traditional models. The three categories include:
1. Public Exchange / Access Health CT.  Not available to municipalities any time soon. Plan designs are geared more towards individuals and small companies.
2. CT State Partnership Program. A pool meant to mimic the state employee plan, which will be run independent of the state employee plan. The required 3-year commitment and lock-in to the state pool makes it a less desirable option.
3. Private Exchange Platform. This is a defined contribution approach to plan management. Members have a dollar value to spend on a variety of plan options in the marketplace. Mr. Lindberg doesn’t expect this to be a popular choice for the public sector in the next 24 to 36 months.

ACA transitional reinsurance fees will be charged to employer groups in one year, and paid in the subsequent calendar year. The payment is ‘transitional’ because it reduces each year. In Simsbury, for example, about $123,000 will be payable in 2015 for 2014 and about $81,000 will be payable in 2016 for 2015.

ACA Reporting Requirements: Per Section 6055 and 6056, group plan sponsors with more than 50
individuals will be required to report to the IRS next year, based on this year. They will have to fill
out a 1095C form noting who has coverage; who does not have coverage and whether coverage was offered to those without coverage. If it was not offered, they will have to explain why. It is a very complicated form. Mr. Lindberg noted that this requirement will problematic for payroll companies.

Cadillac Tax Planning. Mr. Cooke noted that the government is expecting employers to pay for the Cadillac Tax, but most employers would prefer not to pay it. Mr. Lindberg suggested that the ideal solution for mid-size employers (like the town and BoE) would be to create an appropriate plan design and funding mechanism that would satisfy employers and employees without having to pay this tax. Mr. LaClair reported that the teacher’s contract was settled with a HDHP. The third and final year of that contract falls just before the Cadillac Tax will be instituted. It was not an issue for this contract, but will be an issue for any teacher contracts going forward.  

2. Property Casualty Insurance Issues. No report.

3. Approval of 2015 Meeting Dates.

The dates for the 2015 Insurance Committee meeting dates were informally approved by Mr. Sparkowski and present board members.

4. Other Insurance Matters. None.

Mr. Sparkowski adjourned the meeting at 8:35 a.m.

Respectfully submitted,

Lorrie McElligott, Commission Clerk