Insurance Commission Minutes 03/26/2014
TOWN OF SIMSBURY
INSURANCE COMMITTEE
DRAFT MINUTES
Board of Education Conference Room
March 26, 2014
The meeting was opened at 7:40 a.m. by Burke LaClair, the Board of Education Business Manager. Two committee members were present: Nick Mason and Peter “Chris” Peterson.
Tom Cooke, the Director of Administrative Services; Eric Gomes, Human Resources consultant; and Nancy Haase, Town selectman were also present. Robert Lindberg of L&R Benefits and Carol Fitzsimons of CIRMA were in attendance as well.
1. Employee Benefits Update - Robert Lindberg, L & R Benefits
Mr. Lindberg distributed 5 pages for the committee’s review. Page 1 and 2: Meeting Outline. Page 3: Experience Update Outline. Page 4: Combined ASO Medical / Pharmacy Paid Claims for Town and BOE employees from July 2010 through July 2014. Page 5: Dental ASO Paid Claims for Town and BOE employees from July 2010 through July 2014.
Competitive Market Study Update. Mr. Lindberg gave the Insurance Committee a brief working timeline, and noted that the Town was on track, and 85% of the way through the implementation process.
CIGNA has been confirmed and approved as the new Town vendor. Meetings with the BOE and the Town have been scheduled to introduce and explain the completely new high deductible health plan alternatives. The next step is the open enrollment period which will take place later this spring. The target date for completing the vendor consolidation/HDHP implementation is July 1, 2014. When asked how the consolidation would benefit the Town, Mr. Lindberg replied that there would be more than $400,000 in hard dollar savings, and tangible administrative efficiencies that would result from working with a single vendor. He also noted that administrative fees would be protected by a guaranteed cap for the second and third years of the 3-year contract, but that the Town and the BOE would not be locked into anything beyond the first year. As the transition proceeds, he acknowledged that there will be no gap in coverage. The Town is insured for any large claims that may come in. He expects that the Town’s previous vendors will continue to process claims for an additional 3 to 4 months.
Recent Claim Activity. Mr. Lindberg reported that the medical/Rx results for 2013-2014 were based on 8 months of data. While population counts remained stable, medical claims were running ahead of projected numbers because of several large claims. Dental results for 2013-2014 were based on 6 months of data. Dental claims are running under projections.
Recent Renewal Results. Mr. Lindberg mentioned that medical allocation rate projections remain flat for July 1, 2014, even after the ACA reinsurance and effectiveness fees were added in.
Mr. Lindberg noted that the ACA reinsurance fee began to be chargeable on January 1, 2014. Simsbury’s group specific costs will come to $63 per member, per year, for employees and their covered dependents. Under the current structure, the Town and the BOE will fund directly. The first payment is due in January 2015.
National Healthcare Reform. Recent developments: With “Pay or Play” Employer Mandates, for non-calendar year plans (July-June/Simsbury), the first compliance cycle will be July 2015. Also, in the first year, the “safe harbor” threshold for accessibility enrollment has been dropped from 95% to 70%.
Cadillac Tax. The Cadillac tax is scheduled to take effect in 2018, but planning for collective bargaining will begin now. It is a 40% excise tax on the difference between the cost of the employee’s plan and the national benchmark thresholds. Unfortunately, the benchmarks are universal, and not based on geographic differences. All regions or states will get the same target. He expects that it will be difficult for Connecticut and the Northeast to get below the thresholds. If this tax does get levied, it could be handled and shared in the following ways: 1. Employers can pay for all of it, 2. Employees could pay for all of it, 3. Costs could be shared based on current premium contribution percentages, 4. Costs could be shared in some other proportions, or perhaps a plan could be created that would get below the Cadillac tax. Mr. Lindberg admitted that it would be difficult to simultaneously get below the threshold and meet national requirements.
State Exchange Program. Mr. Lindberg reported that the Connecticut Exchange, which is not linked to the federal plan, is working better than most other state plans. About 165,000 individuals have signed up so far.
Wellness Campaign. Mr. Cooke reported that currently, 30% of employees are enrolled. The Town’s goal is to have 50% of employees enrolled.
2. Property Casualty Insurance Issues - Carol Fitzsimons, CIRMA
Ms. Fitzsimons offered a 1-page discussion outline for this meeting. She also presented a 4-page report with colored bar graphs that further analyzed worker’s compensation and LAP losses for the Town of Simsbury and the BOE from FY 2008/9 through FY 2013/14. CIRMA’s 2012-2013 Annual Report was also presented.
Loss Experiences. Ms. Fitzsimons gave an update on loss experiences since November 27, 2013. Overall, they are improving. Recent losses include one new workers’ compensation claim for the BOE over $25,000, and one older general liability claim that increased by $25,000 due to litigation.
Renewals. 3 year renewal agreements are averaging the same as last year: 8% for WC and 9% for LAP.
Risk management. Since July 1, 2013, the Town has had 60 individuals participate in eight CIRMA workshops. Most recently, workshop topics included property conservation, respiratory protection, and aquatics risk management.
Pollution Coverage. Simsbury’s 2-year CIRMA pollution coverage policy expires this year. Ms. Fitzsimons expects that the new policy will be more expensive. CIRMA has recently processed many large claims for mold in schools, and above-ground storage tanks blown over in storms.
Marketplace. There have been no new entrants and no bids yet for either WC or LAP.
CIRMA update. Ms. Fitzsimons expects the CIRMA board to vote on a member equity distribution shortly. CIRMA has released a short video on its web site noting how unpredictable, catastrophic “Black Swan Events”—like Storm Sandy and Sandy Hook—have affected the pool in the last couple of years.
3. Other Insurance Matters- None
Mr. LaClair made a motion to adjourn the meeting. Mr. Mason seconded the motion. The meeting was adjourned at 8:40 a.m.
The next Insurance Committee Meeting will be held on Wednesday, June 25, 2014 at 7:30 a.m. in the Board of Education Conference Room.
Respectfully submitted,
Lorrie McElligott,
Commission Clerk