91-0327 Washington National Insurance RESOLUTION
AUTHORIZING EXECUTION OF AN AGREEMENT WITH
WASHINGTON NATIONAL INSURANCE COMPANY
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Larry L. Rice, City Manager, be and is hereby
authorized and directed to execute an agreement on behalf of
the City of Elgin with Washington National Insurance Company
for an employee insurance program, a copy of which is attached
hereto and made a part hereof by reference.
s/ George VanDeVoorde
George VanDeVoorde, Mayor
Presented: March 27, 1991
Adopted: March 27 , 1991
Vote: Yeas 5 Nays 0
Recorded:
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
- wastiington
national®
INSURANCE COMPANY
1630 CHICAGO AVENUE■ EVANSTON. ILLINOIS 60201
REVISION/STATE OPTIONS REQUEST
To: Washington National Employee Benefits Division
Underwriting Dept.
RE: Policyholder City of Elgin
Amend Group Plan Number 62945
Requested Effective Date March 1 , 1991
As of the above effective date,it is requested that the policy for the plan shown above be amended as follows:
1 . Change the anniversary date from 3/1 to 11/1 .
An Experience Statement will be prepared for the period, 3/1/91 to 11/1/91 .
The next Experience Statement will be prepared from 11/1/91 to 11/1/92,
and from 11/1 to 11/1 thereafter.
The rate change date will remain at 3/1 to 3/1 .
2. Add routine nursery charges as an eligible expense to Medical Classes
B-2, C-3 and E-5.
3. Amend Health Contract to include wording of Illinois House Bill 3406 (Continued
Coverage for Retired or Disabled Municipal Employees and Surviving Spouses).
A change in medical benefits or benefit amounts takes effect on the date of the change except that benefits
will not change(1)for an Insured Person not actively at work or(2)for an Insured Dependent hospital confined.
Increases in Life Benefits (including Dependent Life) and AD&D Benefits are effective on the date of change
only if the Insured Person is actively at work. Decreases in Life Benefits(including Dependents'Life) and in
some cases AD&D Benefits are effective whether or not the Insured Person is actively at work.
Any changes required by State Regulations shall also be incorporated on the required dates. 1
According to state statutes, certain optional coverages shall be offered to each Policyholder with each benefit
revision. Those optional benefits are set forth on the reverse of this page.
•F17522 (over) (3-90) ,, •
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OPTIONS REQUIRED TO BE OFFERED IN
ILLINOIS
State law requires that the Company offer each Policyholder certain coverages(s)which the Policyholder may
either accept or reject.A Policyholder who accepts this coverage must complete and sign section I of this form.
A Policyholder who rejects it must sign section II.
I. In addition to the revisions shown on the reverse,I request that the Company add the optional coverage(s)
• listed below to my revised group health policy. I agree to pay any additional premium required.
E Optional Benefit for Mental and Nervous Disorders
This optional benefit pays the insured percentage of charges for inpatient treatment(including outpatient
convulsive therapy)and 50%of charges for outpatient treatment of mental and nervous disorders.There
are no internal limits, but this benefit will be limited to the lesser of$10,000 or 25% of the maximum
benefit payable while the insured is covered under the policy in each benefit period.
PLEASE NOTE: Washington National's standard benefit also pays the insured percentage of charges for
inpatient therapy(including outpatient convulsive therapy)and 50%of charges for out-
patient treatment of mental and nervous disorders. However, the standard benefit is
limited to a maximum of$25 per outpatient visit and 52 visits per calendar year. The
standard calendar year benefit is$25,000.
A Policyholder who wishes to elect or retain this standard coverage must sign section II.
This additional coverage shall become effective on the date of this revision.
Date Signature of Policyholder
II. I want the revisions to my plan shown on the reverse,but I do not want t . 'onal optional coverage(s)
offered above.
AVk
CL-<—
Date of Policyholder
The signature of the Policyholder's authorized representative appearing in conjunction with the
election or rejection of these optional benefits shall indicate acceptance of this entire revision
request. `�
Underwriter's Approval k/�.�.J1kV 4/ 1% /9
Date
F17522
APPENDIX I
GROUP POLICY NO(S) : 62945
INDIVIDUAL CLAIM POOLING: is included with a $ N/A Maximum Amount
per covered person per contract year and applies
to N/A coverages(s)
RESERVES ARE HELD BY:
Washington National
TContractholder
POST TERMINATION LIABILITY LIMIT PROVISION:
X applies
does not apply
CLAIM LIABILITY LIMITS ARE TO BE CALCULATED:
X cumulative annually
cumulative monthly
LIABILITY FOR CLAIMS INCURRED PRIOR TO THE EFFECTIVE DATE OF THIS MINIMUM
PREMIUM AGREEMENT BUT PAID AFTER SHALL BE:
the responsibility of the prior carrier
—Maid out of Contractholder's reserves currently held
by Washington National
X the responsibility of the Contractholder and
Xincluded under this Agreement
excluded under this Agreement
MINIMUM PREMIUM POST TERMINATION*
COVERED EMPLOYEE/DEPENDENT MONTHLY LIABILITY LIABILITY LIMIT
UNITS BY COVERAGE LIMIT FACTORS FACTORS
Class B-2 Employee & Dependent(s) $386.16 $1 ,199.10
Class C-3 Employee & Dependent(s) $454.30 $1 ,410.42
Class E-5 Employee & Dependent(s) $370.73 $1 , 151 . 11
NOTE: *N/A MEANS THIS PROVISION IS NOT IN EFFECT
COVERAGE(S) WHICH ARE TO BE JOINTLY EXPERIENCE RATED WITH THE MINIMUM
PREMIUM AGREEMENT: Life
COVERAGE(S) FOR WHICH CONTRACTHOLDER IS ASSUMING LIABILITY UNDER THE MINIMUM
PREMIUM AGREEMENT: Medical
(This Appendix must be signed and dated on the reverse. )
F16428
021486: 150+
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APPENDIX I
TO BE EFFECTIVE FROM March 1 , 19 91 to March 1 ,
1992 AND REPLACES APPENDICIES I EFFECTIVE FaR—PRIOR PERIODS
CONTRACT'. WASHINGTON NATIONAL INSURANCE COMPANY
T' 1101° .OW
By • ..._ 4 + BY gna ur19 aiure '
L GG c 4s,K.I.P-� , ice Pr: sident, EBD Underwriting
Title `/ it e
titi� yx,r/ Evanston, Illinois 4/12/91
Sig d at Date Signed at Date
January 26 , 1989
MEMORANDUM
TO: Mayor and Members of the City Council
FROM: City Manager
SUBJECT: Renewal of Group Medical and Life
Insurance with Washington National
PURPOSE: This memorandum will provide the Mayor and the
Council with information on the renewal premium quoted by
Washington National for the 3-1-89 to 3-1-90 coverage year.
BACKGROUND: The City is self insured in the group medical
program. Washington National provides the administrative
services for the plan. Along with this, it also provides the
aggregate insurance for the medical plan and the group life
insurance for city employees . For these services, Washington
National charges the city 10% of the annual projected claim
experience as premium for aggregate insurance and administra-
tive services . It also charges premium based on conventional
rate for the life insurance plan.
FINANCIAL IMPACT: The 3-1-89 to 3-1-90 premium is
$124 ,929. 12 for aggregate insurance and administrative
services . This is $28 ,087 .32 more than the 3-1-88 to 3-1-89
premium.
The life insurance premium for the 3-1-89 to 3-1-90 year is
$28 ,017 . 36 , same as last year.
RECOMMENDATION: It is recommended that staff be allowed to
explore the insurance market in the middle of the year to
obtain comparable quotes from other insurance companies in
anticipation of the 3-1-90 anniversary of these group plans.
Ail 1
es J. .• , City Manager
I'L Washington
national®
INSURANCE COMPANY ROBERT L.SCHMITKE,Regional Group Manager
E KENNETH SPARKS,CLU,Senior Group Account Executive
RODNEY J VANDER HYDEN,Group Account Executive
RONALD L. NUTTER,Assistant Group Manager
Woodfield Corporate Center-Suite 830
150 N
January 26, 1989 Schaumburg MartinIII no is 00173
(312) 517-7170
Mr. Olufemi Folarin
Human Resources Director
City of Elgin
150 Dexter Court
Elgin, Illinois 60120
RE: Renewal
Dear Femi :
The annual renewal date for the Group Life and Medical coverage is
March 1 .
The Group Life and AD&D insurance are on a conventionally-funded basis
wherein a premium rate is established and paid monthly.
The medical coverages are primarily self-funded by the City up to a maximum
of 105% of projected claims in the policy year. If claims exceed the
105% "cap", Washington National then reimburses the City for any amount
in excess.
The funding factors, which determine the City's annual liability, are reviewed
each policy year, and are in direct relationship to the paid claims of
the prior policy year. The factors can fluctuate up or down depending
upon the prior paid claims being reviewed. For example, paid claims for
the current policy year have increased 16.1% over the prior year. Therefore,
the funding factors have been adjusted to compensate for this increase,
and will increase 17.7% as illustrated on the attached sheet. The premium
portion of the arrangement is equal to 10% of projected claims in any one
year. Therefore, due to the fact that claims increased over the prior year,
likewise, the premium portion shows an increase to reflect the increased
claims.
The medical premium equivalent for Class E-5 develops an increase of 18.7%,
which closely aligns the increase in claims which was experienced of 16. 1%.
The new rate for Medical Class E-5 is $261 .01 whereas the current policy year
rate was $219.72.
Evanston,Illinois 60201 • A Washington National Corporation Financial Service Company
Mr. Olufemi Folarin
Page 2
January 26, 1989
We have provided various projections and illustrations of prior year's
projections and results for your review.
Also enclosed are Amendments to be signed, which reflect the new factors
and rates for the policy year commencing March 1 , 1989.
We look forward to meeting with you, and discussing the new factors and rates
in more detail .
Sinerely,
obert L. Schmitke
Regional Group Manager
RLS:sg
encl .
CITY OF ELGIN
Claim and Liability Projections
Percent Percent Percent
3/1/85 to 3/1/86 of Change 3/1/86 to 3/1/87 of Change 3/1/87 to 3/1/88 of Change
Annual
Liability
Limit $820,451 +2. 1% $917,419 +11 .8% $1 , 159,993 +26.4%
Paid
Claims $812, 108 +28.3% $995,048 +22.5% $ 874,801 -12. 1%
Estimated Percent Projected Percent
3/1/88 to 3/1/89 of Change 3/1/89 to 3/1/90 of Change
Annual
Liability
Limit $1 , 112,363 -4. 1% $1 ,309,925 +17.7%
Paid
Claims $1 ,015,452 +16. 1% $1 ,247,972 +22.9%
Washington National Insurance Company
January 26, 1989
City of Elgin
3/1/85 to 3/1/86
Paid Claims $ 812,108.00 Based on an average monthly enrollment
+ Minimum Premium Premium $ 88,577.28 of 427 employees, the actual monthly
Actual Annual Cost $ 900,685.28 per person cost is $175.78.
Maximum Annual Actual Annual Cost is $8,343.45
Claim Liability Limit $ 820,451 .45 less than the Maximum Annual
+ Minimum Premium Premium $ 88,577.28 Cost.
Maximum Annual Cost $ 909,028.73 ($909,028.73 less $900,685.28) .
*******************************************************************************************
3/1/86 to 3/1/87
Paid Claims $ 995,048.00 Based on an average monthly enrollment
+ Minimum Premium Premium $ 91 ,624.51 of 424 employees, the actual monthly
Actual Annual Cost $1 ,086,672.51 per person cost is $213.59.
Maximum Annual Actual Annual Cost is equal to
Claim Liability Limit $ 917,418.56 the Maximum Annual Cost.
+ Minimum Premium Premium $ 91 ,624.51 Washington National reimbursed the
Maximum Annual Cost $1 ,009,043.07 City of Elgin $77,629.44.
*******************************************************************************************
3/1/87 to 3/1/88
Paid Claims $ 874,800.88 Based on an average monthly enrollment
+ Minimum Premium Premium $ 97,293.58 of 429 employees, the actual monthly
Actual Annual Cost $ 972,094.46 per person cost is $188.83.
Maximum Annual Actual Annual Cost is $285, 192.57
Claim Liability Limit $1 , 159,993.45 less than the Maximum Annual
+ Minimum Premium Premium $ 97,293.58 Cost.
Maximum Annual Cost $1 ,257,287.03 ($1 ,257,287.03 less $972,094.46).
*******************************************************************************************
3/1/88 to 3/1/89 (Estimated)
Paid Claims $1 ,015,452.00 Based on an average monthly enrollment
+ Minimum Premium Premium $ 96,842.00 of 437 employees, the Estimated Actual
Actual Annual Cost $1 , 112,294.00 monthly per person cost is $212.11 .
Maximum Annual Actual Annual Cost is $96,911.00
Claim Liability Limit $1 ,112,363.00 less than the Maximum Annual
+ Minimum Premium Premium $ 96,842.00 Cost.
Maximum Annual Cost $1 ,209,205.00
*******************************************************************************************
Washington National Insurance Company
January 26, 1989
CITY OF ELGIN
Enrollment Assumptions: Life and AD&D Volume - $5,559,000
Class B-2 Medical - 88 Employees
Class C-3 Medical - 73 Employees
Class E-5 Medical - 277 Employees
Monthly Liability Limit Factors
Current Renewal effective March 1 , 1989
Cl. B-2 $210.52/EE x 88 = $18,525.76 Cl . B-2 $248.20/EE x 88 = $ 21 ,841 .60
Cl. C-3 $247.66/EE x 73 = $18,079. 18 Cl . C-3 $291 .99/EE x 73 = $ 21 ,315.27
Cl . E-5 $202. 10/EE x 277 = $55,981 .70 Cl . E-5 $238.28/EE x 277 = $ 66,003.56
Total Mo. Liability Limit $92,586.64 Total Mo. Liability Limit $109, 160.43
Total Annual Liability Total Annual Liability
Limit $1 ,111 ,039.68 Limit $1 ,309,925.16
Minimum Premium Premium Rates
Current Renewal effective March 1 , 1989
Cl . B-2 $18.35/EE x 88 = $ 1 ,614.80 Cl . B-2 $23.67/EE x 88 = $ 2,082.96
Cl. C-3 $21 .57/EE x 73 = $ 1 ,574.61 Cl . C-3 $27.83/EE x 73 = $ 2,031.59
Cl . E-5 $17.62/EE x 277 = $ 4,880.74 Cl . E-5 $22.73/EE x 277 = $ 6,296.21
Total Mo. Mini-Prem Prem. $ 8,070. 15 Total Mo. Mini-Prem Prem. $10,410.76
Total Annual Minimum Total Annual Minimum
Premium Premium $96,841 .80 Premium Premium $124,929. 12
Medical Premium Equivalents Medical Premium Equivalents
Class B-2 $228.87 Class B-2 $271 .87
Class C-3 $269.23 Class C-3 $319.82
Class E-5 $219.72 Class E-5 $261 .01
Life and AD&D Rates Life and AD&D Rates
Current Renewal
Life Rate - $.36/$1 ,000 Life Rate - $.36/$1 ,000
AD&D Rate - $.06/$1 ,000 AD&D Rate - $.06/$1 ,000
Total Monthly Life and Total Monthly Life and
AD&D Premium $ 2,334.78 AD&D Premium $ 2,334.78
Total Annual Life and Total Annual Life and
AD&D Premium $28,017.36 AD&D Premium $28,017.36
TOTAL MONTHLY MAXIMUM COST $ 102,991.57 TOTAL MONTHLY MAXIMUM COST $ 121,905.97
TOTAL ANNUAL MAXIMUM COST $1,235,898.84 TOTAL ANNUAL MAXIMUM COST $1,469,739.72
Post Termination Liability Post Termination Liability
Limit $279,021 Limit $347, 102
Washington National Insurance Company
January 26, 1989
Elm .
nV
rik ;`y°`14 Memorandum
March 6, 1991
TO: City Council
FROM: Larry Rice
SUBJECT: Renewal of Group Medical and Life Insurance
Purpose: This is to request that the Council authorize the
City Manager to sign the contracts renewing the City's Group
Life and Health Insurance with Washington National and H.M.O.
Illinois.
fik Background: The City has two group health insurance
programs. The minimum premium (self-insurance) plan is
through Washington National. Washington National is paid
premium for providing aggregate insurance, claims
administration and life insurance. The H.M.O. option is
through H.M.O. Illinois.
There was a 68. 3% increase in paid claims in the 1990/1991
claim year compared to a 1.8% increase in the prior year.
This has therefore, led to an increase in paid claims
projected for the 1991/1992 year and the annual liability
limit, the aggregate insurance attachment point, which is used
for determining the Medical Premium Equivalent. A review of
our claims show that we are only experiencing heavy
utilization of the plan instead of shock loss claims.
In anticipation that the PPO's will reduce the City's chances
of reaching the aggregate insurance attachment point in
1990/1991, Washington National is asking for only a 2%
increase in the Minimum Premium. The Life Insurance premium
will remain the same as the 1990/1991 year.
Quotations were received from Chicago H.M.O. , Health Chicago
and Rush-Anchor H.M.O. and compared to the renewal quote from
our present carrier, H.M.O. Illinois . H.M.O. Illinois
proposed rate increase is found to be in line with competition.
Financial Impact: The March 1, 1991 to March 1, 1992 411
Minimum Premium is $147,601.68 which is $2,850 (2%) more than
the 1990/1991 premium.
The Life Insurance and AD & D rate remains the same as last
year $ .24/$1,000 and $.06/$1,000 respectively.
H.M.O. rate is $340 . 13 compared to $318 . 77 in the 1990/1991
premium year.
Recommendation: It is recommended that the Council
authorize the City Manager to sign the contracts necessary to
renew these plans for the 1991/1992 year.
-)/1)4//77)
F
LarrRicelty Manager
LR/vls
410
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