| EC05
– I – 1
Medical, Dental, Group-Term Life, AD&D and Long-Term
Disability Insurance Renewals for 2006
|
a.
Medical Insurance Plan
Mr.
Woehlke provided background on the insurance renewal process,
noting that Post & Kurtz, the Society’s insurance
broker for employee insurance plans, annually solicited
bids from a number of insurance carriers with multiple benefits
permutations. He noted that it was typical for insurance
companies not to provide quotes until shortly before the
expiration or renewal dates for current plans and that the
term with the Society’s current provider, Health Net,
Inc., ended as of December 31.
Mr.
Woehlke continued that several carriers had been solicited,
including the incumbent Health Net which had been the Society’s
provider for each of the prior three years. He reported
that two of the solicited carriers, Cigna and Horizon Healthcare,
declined to provide a quote. Others, HIP, Empire Blue Cross
Blue Shield (“BCBS”), United Healthcare and
Aetna, proposed rates that were appreciably higher than
the current plan. In addition to an increased cost under
these plans, Mr. Woehlke noted that all employees could
be required to fill out new enrollment forms for themselves
and their family members, plus reselect or change doctors.
The provider network for HIP was also not as large as Health
Net and, although BCBS provided a larger network, a managed
plan or HMO was not offered but only a point-of-service
plan. Mr. Woehlke further noted that staff had been informed
that United Healthcare was in the process of merging with
Oxford, which could lead to some additional plan disruption,
plus the company had been known to charge first-year renewal
increases as high as 20% for companies of the Society’s
size.
Mr.
Woehlke continued that staff had the broker run numbers
on a combined health savings account (HSA) / high-deductible
insurance approach but learned that this was not an appropriate
insurance vehicle for the Society at this time. The concept
was still very new. Cost savings were not as dramatic as
early adopters had hoped. And, also, these plans, as currently
offered, introduced higher risk to lower income employees.
Mr.
Woehlke then noted that staff reviewed nine different permutations
of varying co-pays and deductibles which were prepared by
the broker for continued coverage under Health Net. He referred
the committee to a memo which outlined the two best options
for coverage.
The
total premium for Option One, continuation of the current
coverage, would increase from $394,997.04 to $431,481.48
an increase of $36,484.44 or 9.2 % overall.
The
HMO plan under Option Two would be the same as Option One.
Under the POS plan, however, the co-payment for office doctor
visits would increase to $25.00 from the current $20.00
co-payment, but the co-insurance would be at 80% instead
of 70% under the current plan. The out-of-pocket expense
caps would be reduced to $2,500 for the single coverage
and $5,000 for the family coverage. The current plan’s
out-of-pocket expense was $3,500 for single coverage and
$7,000 for family coverage.
The
total premium for Option Two would increase from $394,997.04
to $427,814.64 an increase of $32,817 or 8.3% overall.
Mr.
Woehlke stated that staff was recommending Option Two, while
maintaining the current level of and approach to employee
contributions including the reimbursement of a $250 hospital
deductible. A discussion ensued.
A committee
member asked if the recommended option could have a negative
impact on the Society in the following year’s renewal
process. Mr. Woehlke stated the answer depended on the Society’s
experience during 2006. These renewals are made on a year-to-year
basis and depend both on general market conditions and group
experience.
In response
to a question, Mr. Woehlke stated that the quoted rates
were already discounted by approximately one percent because
the Society uses as its third-party administrator a company
called PPI, which administers many nonprofit organizations.
A committee
member asked if it were customary for non-profits such as
the society to have lower out-of-pocket employee contributions
than for-profit companies. The member asked whether a larger
contribution should be sought from Society employees. Several
committee members responded that the lower salary structure
for non-profits such as the Society meant that lower out-of-pocket
contributions were an important incentive for employee retention.
Mr. Grumet agreed, additionally noting a general concern
that lower-paid staff could be discouraged from participating
in the health plan if it were prohibitively expensive to
do so. He reminded the executive committee of a general
policy rationale, expressed by past executive committees,
to maintain low employee contributions whenever possible.
Mr.
Woehlke added, for example, that the prior year’s
executive committee had approved reimbursing employees $250
for an out-of-pocket hospital deductible and that approval
of this reimbursement approach is in the current year’s
renewal. He noted that the rationale for the reimbursement
was to take advantage of significant premium savings, but
also assure lower-paid staff would not forego trips to the
hospital because of the deductible. Mr. Grumet stated that
employees with children were additionally encouraged to
pursue supplemental coverage options through the New York
State Child Plus Program.
Several
committee members expressed concern regarding the timing
of the recommendations so close to the renewal deadline.
Several stated that an analysis of the insurance market
would have been helpful in deciding upon a course of action.
Staff agreed to perform a more in-depth analysis of the
industry and what it could bear during future renewals.
Mr. Moynihan then moved to renew coverage under Health Net,
Inc. under recommended Option Two, with the understanding
that staff would obtain comparables on what the industry
would bear for next year’s renewal process. Ms. Cutler
seconded the motion. The motion passed unanimously.
b.
Dental, Group-Term Life, AD&D and Long-Term Disability
Mr.
Woehlke reported that there would be no increase in the
Society’s dental plan with Aetna for 2006. In addition,
he reported that the Society’s broker was able to
secure a second three-year rate guarantee at current rates
for the Group-Term Life (Life) Insurance, Accidental Death
& Dismemberment (AD&D) and Long-Term Disability
(LTD) Insurance plans; therefore, at the expiration of the
new Life, AD&D and LTD insurance policy, which would
begin in January 2006 and end in December 2008, the Society
will have enjoyed no premium rate increase for six years.
In response to a question, Mr. Woehlke stated that he would
inquire with the Society’s human resources department
regarding the payment of premiums for the Life, AD&D
and LTD plans and advise the committee at a later time.
A discussion
ensued with respect to how the society’s plans compared
to others within the industry. Several stated that they
would like more information in this regard.
Ms.
Schoenfeld then moved to accept the recommended three-year
renewal of the Life, AD&D and LTD insurance policy and
that the Executive Committee would like an extensive review
and market analysis prior to the next renewal period. Mr.
Valenti seconded the motion. Ms. Cutler abstained.
|
