Health and Prescription Insurance Plans_Stop Loss AggregateMasterpiece on the Mississippi
Dubuque
All- America City
II 111!
2012
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Health and Prescription Drug Plans - Specific and Aggregate Stop Loss
Renewal
DATE: June 6, 2013
Personnel Manager Randy Peck and the Health Care Committee recommend City
Council approval of the renewal rate of $659,931 submitted by HM Life for Specific and
Aggregate Stop -Loss Renewal of the City's Health and Prescription Drug Insurance
Plan. This policy increases the specific stop loss amount for one claim to $225,000 and
provides a specific stop loss amount of $120,000 for all other claims. Currently the City
has a specific stop loss of $110,000 for all claims. The coverage would go into effect on
July 1, 2013.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
brit44
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Randy Peck, Personnel Manager
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Mana
FROM: Randy Peck, Personnel Manager
SUBJECT: Health and Prescription Drug Plans — Specific and Aggregate Stop Loss
Renewal
DATE: June 11, 2013
Dubuque
kretal
AJI- America City
2012
Health Choices, Inc., our health plan administrator, obtained specific and aggregate
stop loss quotes from HM Life, our current stop loss carrier, and from AIG and
Companion RE. HM Life presented the most competitive quote. Their quote is
$833,430 for the existing coverages. The current premium is $672,907.
HM Life presented an alternate proposal that would increase the specific stop loss
amount for one claim. The specific stop loss for this claim would be $225,000. The
premium would be $716,979. To keep the specific stop loss at $110,000 for all claims
would cost an additional $116,451. Our liability for increasing the specific loss amount
for one claim to $225,000 is $115,000. The Health Care Committee felt that it was
worth the additional risk to potentially save up to $116,451 in premiums.
Increasing the stop loss amount for one claim to $225,000 and increasing the specific
stop loss amount from $110,000 to $120,000 for all other claims reduces the annual
premium to $659,931. This would be a 2% decrease over the current annual premium.
The following shows the number of claims that exceed the specific stop amount for the
last four years:
Number of Claims Exceeding
the Specific Stop Loss
Fiscal Year Amount
2010 -.........._........._ ....... ........_.._........__......_._ _...............__......_..---....._......._.............................._....... 6...... ......................_........ _...........
2.0.1 ....... ........................_....._ ..............._............................._......._...._._............_._._...... .........._....................
2011 2
2012 8
2013 (7/1 — 5/31)
2
Specific
Stop Loss
Amount
$ 90,000
$ 90,000
$100,000
$110,000
The average number of claims that exceeded this specific stop loss amount over the
last four years is 4.5. If we kept the stop loss amount at $110,000, the premium would
be $57,048 higher than if we were to increase the specific stop loss amount to
$120,000. Based on the cost of keeping the stop loss amount at $110,000 and the
potential savings by increasing the amount to $120,000, the Health Care Committee
recommends assuming the potential risk associated with increasing the specific stop
loss amount to $120,000.
The Health Care Committee recommends that we increase the specific stop loss
amount from $110,000 to $120,000 and that we accept the alternate proposal presented
by HM Life that would increase the specific stop Toss amount for one claim to $225,000.
I support the Health Care Committee's recommendation.
The requested action is for the City Council to pass a motion approving the renewal rate
submitted by HM Life for a policy that increases the specific stop loss amount for one
claim to $225,000 and provides a specific stop loss amount of $120,000 for all other
claims. The annual premium would be $659,931 and coverage would go into effect on
July 1, 2013.
RP /Imh
2
HEALTH CHOICES
Current Stop Loss
HM Life
5110,000 Specific Deductible
Unlimited Lifetime
$5 Million Annual
Masterpiece on the Mississippi
Current Premiums
Single Premium
Family Premium
Composite
Total Stop Loss
HC Admin
Total Fixed Cost
Single Agg
Family Agg
Total Aggregate
$47.63
$108.43
$4.98
$672,907
$20.95
$814,194.24
$685.98
$1,646.36
$9,650,957.28
Single
126
Family
436
Total
562
Sto. Loss Pro.osals
$110,000
$120,000
$130,000
HM Life- Final
48/12
Unlimited Lifetime
$5MM Annual
$833,430
24%
$974,717
$9,921,146
$771,291
15%
$912,577
$10,020,331
$682,048
1%
$823,334
$10,129,484
HM Life- Laser
FINAL
48/12
Unlimited Lifetime
$5MM Annual
$716,979
7%
$858,266
$9,921,146
$659,931
-2%
$801,217
$10,020,331
$575,748
-14%
$717,035
$10,129,484
AIG -Laser FINAL
24/12
Unlimited Lifetime
$5MM Annual
$726,952
8%
$868,239
$10,269,108
$656,821
-2%
$798,108
$10,320,139
$600,758
-11%
$742,044
$10,347,249
Companion Re- Laser
FINAL
24/12
Unlimited Lifetime
$5MM Annual
$834,344
24%
$975,631
$10,322,808
$776,962
15%
$918,249
$10,390,438
$724,955
8%
$866,242
$10,442,249
'Submitted to American National Life (ANTX)-
Not Competitive
THE CITY OF
HEALTH CHOICES DUB
Masterpiece 011 the Mississippi
Single
Family
Total
126
436
562
Company
Contract Type
Lifetime Max
Annual Max
Specific Deductible
HM Life- Laser
48/12
Unlimited
$5 Million
$110,000
HM Life- Laser
48/12
Unlimited
$5 Million
$120,000
HM Life- Laser
48/12
Unlimited
$5 Million
$130,000
Single Spec Premium
Family Spec Premium
rega
Stop Loss Premium
Health Choices Admin
inauaes (utilization rceview, uoae
Review, Case Management,
Bloodhound, Claims Scrubbing, and
Total Fixed Cost
Aggregate
Single Factor
Family Factor _
Attachment Point
Total Plan Costs
*Expected Claims Cost'
Fixed Cost
Expected Liability
Maximum Liabitily
PMPM
$51.27
$115.17
$5.47
Annual
$77,520
$602,569
$36,890
PMPM
$46.51
$105.50
$5.58
Annual
$70,323
$551,976
$37,632
PMPM
$39.85
$91.18
$5.70
Annual
$60,253
$477,054
$38,441
$20.95 $141,287
$20.95 $141,287
$20.95 $141,287
$705.19 $1,066,247
$1,692.45 $8,854,898
$712.24 $1,076,907
$1,709.37 $8,943,424
$720.00 $1,088,640
$1,727.99 $9,040,844
$7,936,917 $8,016,265
$801,217
$858,266
$8,103,587
$717,035
Notes:
1$225,000 Laser on FT if Transplant Occurs
City of Dubuque
Change in Specific Analysis
HM Life HM Life Companion Re Companion Re
7/1/12- 5/31/13 7/1/11- 6/30/12 7/1/10- 6/30/11 7/1/09- 06/30/10
Specific Deductible $ 110,000.00 $ 100,000.00 $ 90,000.00 $ 90,000.00
# of Specific Submissions 2 8 2 6
Amount received in reimbursements $ (50,018.09) $ (335,463.31) $ (627,473.86) $ (256,546.95)
Stop Loss Premiums Paid $ 582,449.18 $ 564,790.85 $ 476,623.76 $ 530,359.39
Carrier Proft/Loss $ 532,431.09 $ 229,327.54 $ (150,850.10) $ 273,812.44