96-13 Resolution No. 96-13
RESOLUTION
AUTHORIZING EXECUTION OF AN AGREEMENT WITH
TRUSTMARK INSURANCE COMPANY
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Richard B. Helwig, City Manager, be and is
hereby authorized and directed to execute an agreement on
behalf of the City of Elgin with Trustmark Insurance Company
for an employee health insurance program, a copy of which is
attached hereto and made a part hereof by reference.
s/ John Walters
John Walters, Mayor Pro Tem
Presented: January 24, 1996
Adopted: January 24, 1996
Vote: Yeas 5 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
TRUSTMARK INSURANCE COMPANY(MUTUAL)
400 FIELD DRIVE-LAKE FOREST, IL 60045-2581
PHONE (847) 615-1500-FACSIMILE(847) 615-3910 it
PRELIMINARY APPLICATION FOR GROUP INSURANCE
Application is made to the Trustmark Insurance Company (Mutual) for a Group Contract of insurance to provide the
coverage indicated below for certain Employees and Dependents of:
CITY OF ELGIN
Group Name (As is should appear in Contract, including punctuation)
150 DEXTER COURT
Street Address (Do not use P.O. Box)
ELGIN IL 60120
City State Zip Code
(708) 931 -5620- ( )
Phone Number Fax Number I.
CITY GOVERNMENT 9199
Nature of Business Tax Identification Number SIC Code
1. Based on your current payroll, how many employees do you have in each category?
Employed* Enrolled For Insurance
a. Full-time(30 Hours or more per week) 580 470
b. Part-time (less than 30 hours per week) 0
c. Seasonal (less than 11 months per year) 0
d. Totally Disabled (unable to work)
e. Total Employees (a+b+c+d) 580 470
*COMPANY DIRECTORS THAT ARE TO BE COVERED, MUST BE ACTIVE, FULL-TIME EMPLOYEES.
CONSULTANTS ARE NOT CONSIDERED TO BE FULL-TIME EMPLOYEES. 4
2. Indicate the number of Dependent Unit(s)in each category.
Number of Units
425
a. Eligible
b. Covered by other insurance 383
c. Total Waiving Coverage 0
d. Total Covered Dependents 383
3. Indicate the coverage(s) applied for and your company's contribution toward the monthly premiums or premium
equivalent for each coverage:
Coverage Employee Child(ren) only Spouse Only Child(ren) &Spouse,
[x] Life /AD+D 100 % %
[X] Medical -Core Plan
[ ] Medical -Voluntary Benefits
[ ] Dental
[ ] Weekly Disability Income _AG _I _a __16
[ ] Long Term Disability ,S, _A _1
4. Indicate the funding options applied for by checking the appropriate box(es) below:
Coverage Fully Partially Administrative Aggregate Specific
Insured Self Funded Services Only Stop Loss tS ov Loss
Life/AD+D [X] [ la) [ lc)) I la) 1 1a)
Medical [ l [ 1 [ 1 [X] [X]ca
Dental [ h) [ ]a) [ 1 [ ] [ 1a)
Weekly Disability Income [ lm [ la) [ ] [ 1 I la)
Long Term Disability [ 1 [ la) I ]a) [ lm I la)
Other: 1 ] [ ] [ l [ l [ l
Other: [ ] [ l [ ] [ ] I ]
m Cannot be Fully Insured if medical coverage is Administrative Services Only for 10 Plus Select.
m Required with Administrative Services Only for 10 Plus Select.
0) Funding arrangement is not an option for that coverage for 10 Plus Select.
5. Indicate the length of the Eligibility Period /Waiting Period (1 Month Minimum):
[ ] One Month [ ]Two Months [ ]Three Months [ ] Six Months [ ] One Year
[ ] Other: .(not available for 10 Plus Select)
Effective date of coverage for persons who fulfill the eligibility requirements will be:
(If 10 Plus Select, ALL selections must be on date of eligibility or 1st day of month...)
On Date of 1st Day of Month coinciding with
Eligibility or following date of event.
Original Date of Coverage: [ l [X]
Termination of Coverage: [ 1 [X]
Change of Status: I ] [X ]
Reinstatement of Coverage: [ ] [X]
G355-16 10/92
• 6. Are there any full-time employees not covered by your medical plan? [R]Yes [ ]No. If yes, please explain.
HMO EMPLOYEES
7. Are any of your present or former employees or their dependents currently being insured under COBRA, a State Mandated
Continuation or a State Uninsurability Pool? [R]Yes [ ]No. If yes, please supply the following information:
Name I Qualifying Event I Qualifying Date I Type of Continuation
8. Are any retired employees or their dependents currently covered by your medical plan? [X]Yes [ ]No. If yes, please
list their names:
N/A FOR STOP LOSS COVERAGE
9. Does your company offer HMO coverage in addition to the medical coverage for which you are applying? [R]Yes [ ]No.
If yes, list each HMO, the number covered in each, and the open enrollment period.
HMO ILLINOIS
10. During the last 12 months,have any of your covered employees, retirees, COBRA participants and/or their covered dependents
been treated for medical conditions or incurred medical charges that have or eventually could exceed$5,000? [ ]Yes [ ]No.
If yes, complete the following pertainina to each CLAIMANT:
Full Name Age Date Diagnosis or Amount of Anticipated Current
Diagnosed Condition Charges Charges Prognosis
•
G355-16 10/92
•
' 11. Please list below all persons who are not actively at work and all dependents who are disaoied or hospitalized and who are
insured under your current group insurance plan and are applying for coverage.
N/A-ACTIVELY AT WORK REOUIREMENT WAIVED WITH FULL DISCLOSURE
12. Do any of the currently enrolling employees, or their dependents have a medical condition or a medical diagnosis that could
be expected to lead to surgery or a hospitalization within the next 12 months? [X]Yes [ ]No. If yes, please explain.
13. Are 30% or more of the company's employees members of one family either by blood or marriage? [ ]Yes [X]No
14. During the last 12 months,has there been an increase or decrease in the number of employees? [X]Yes [ ]No. If yes,
please explain.
INCREASE APPROXIMATELY 30 PEOPLE
15.During the last 12 months,has the company's turnover rate for employees exceeded 30%? [ ]Yes [X]No. If yes, please
explain.
INSURANCE SHALL GO INTO EFFECT AS OF MARCH 1. 1996 , AT 12:01 AM, STANDARD TIME, AT THE ABOVE
ADDRESS,PROVIDED THIS APPLICATION SHALL HAVE BEEN ACCEPTED BY THE TRUSLMARK INSURANCE COMPANY(MUTUAL)AND
THE DEPOSIT PREMIUM SHALL HAVE BEEN PAID.
IT IS UNDERSTOOD THAT THE INSURANCE APPLIED FOR IS NOT IN FORCE UNTIL APPROVED IN WRITING AT THE HOME OFFICE OF
TRUSTMARK INSURANCE COMPANY(MUTUAL) IT IS FURTHER UNDERSTOOD THAT COVERAGE UNDER THE APPLICANT'S PRIOR
CARRIER WUL NOT BE TERMINATED UNTIL WRITTEN APPROVAL Is RECEIVED FROM TRUSIMARK INSURANCE COMPANY(MUTUAL)
THE UNDERSIGNED PERSON IS AN OFFICER OF THE APPLICANT COMPANY AND,AS SUCH,HAS KNOWLEDGE OF THE COMPANY'S DAY
TO DAY OPERATIONS AND ITS EMPLOYEES, AND STATES THAT THE ABOVE REPRESENTATIONS ARE BASED ON A THOROUGH
INVESTIGATION AND A COMPLETE AND CURRENT REVIEW OF ALL EMPLOYEES'RECORDS AND PERTINENT DOCUMENTS. FURTHER,
ALL STATEMENTS MADE BY THE APPLICANT ARE TRUE AND COMPLETE TO THE BEST OF HIS/HER KNOWLEDGE.
TRUSIMARK INSURANCE COMPANY(MUTUAL)RESERVES THE RIGHT TO RECALCULATE RATES BASED ON FINAL ENROLLMENT.
l 13,
Iignature y's Officer
Signature of Licensed Resident Agent(where by law) Dated at Date
Signature of T Representativ Date
THIS FORM WILL BE CONSIDERED PART OF THE APPLICATION PROCESS AND WILL BE SUPERSEDED BY A FINAL APPLICATION. A COPY
OF THIS FORM WILL BE RETURNED TO THE COMPANY IF COVERAGE IS ISSUED.
G355-16 10/92
•
n
tz?,, Agenda Item No.
January 16, 1996
TO: Mayor and Members of the City Council
FROM: Richard B. Helwig, City Manager
SUBJECT: Group Health Insurance Renewal
PURPOSE
The purpose of this memorandum is to provide the Mayor and
members of the City Council with information to consider
renewing the City's HMO plan with HMO Illinois (Blue Cross)
and to replace the City's Washington National Minimum Premium
Health plan with a fully self funded plan with Trustmark
Insurance Company of Lake Forest.
BACKGROUND
The City currently has two group health insurance plans -- an
HMO plan with HMO Illinois and a Minimum Premium plan with
Washington National. Competitive bidding were solicited
through our broker, Robert L. Schmitke & Associates, last
fall in anticipation of the March 1, 1996 renewal dates of
these plans.
HMO proposals - Attachment #5: Besides the renewal quote
from HMO Illinois, seven proposals were received from six
other carriers . Three of these proposals did not mirror our
current plan. Each of the remaining four mirrored our exist-
ing plan and two quoted far more reasonable rates than HMO
Illinois but they each have only one of the Elgin hospitals
in their network. This might change next year with the re-
sent acquisition of the two in question, Share and Chicago
HMO, by United Health Care.
For this year, our broker recommends renewal with HMO Illi-
nois. HMO Illinois reduced their original renewal quote
(Single $164 .55 and Family $429. 12) by 8% as a result of the
bidding pressure to $149 .24 for single coverage and $396 .73
for family coverage which represents a 5% reduction in last
year's premium.
Indemnity Plan - Attachment #6 and 7 : After comparing the
four proposals received on the Minimum Premium Plan, an ar-
eft-
rangement where the insurance carrier is the fiduciary, to
the six self funding proposals under which the City is the
fiduciary, it is recommended by our broker that the City
change to the Trustmark Insurance Self Funding program from
the Washington National Minimum Premium program.
The Trustmark plan's fixed cost of $239, 155 represents over
10% annual savings in fixed cost from Washington National 's
renewal fixed cost of $267 ,321; Trustmark aggregate attach-
ment point is $2,406,545 compared to Washington National 's
$2,682 ,495; Trustmark's proposal includes a specific individu-
al claim stop loss of $100,000 which Washington National does
not include and Trustmark also has a $1 ,000,000 individual
major medical limit under the stop loss protection compared
with $500,000 under Washington National . Trustmark' s Life
rate is $.23/1,000 compared with Washington National ' s
$ .32/1,000 .
Transition from Washington National to Trustmark should not
present any problem since we will be using the same Third
Party Administrator, the same PPO and the same membership
card. New plan booklet will be prepared with the assistance
of our Third Party Administrator and Robert L. Schmitke and
rft Associates .
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None.
FINANCIAL IMPACT
HMO Illinois rate will go down from:
1995/96 to 1996/97 Difference
Single: $164 .00 $149 .24 $ 14 . 76
Family: $413 . 38 $396 . 73 $ 17 .65
Total Annual : $690,288 $660,089 $30, 199
Indemnity plan change from Washington National to Trustmark
will generate this result:
Washington Trustmark Difference
Total Fixed Cost $ 267,321 . $ 239, 155. $ 28, 166 .
Aggre. Attach. Pt. $2,682.495. $2,406,545. $ 275,950.
Annual Max. Cost $2,959,816 . $2,645,700. $ 304,116 .
Composite Rate $ 481 . 77 $ 432.21 $ 49.56
Life Cost $ 55,503. $ 39,893. $ 15,610 .
Sufficient funds have been budgeted in the Risk Mangement
Fund to cover anticipated insurances expenses .
LEGAL IMPACT
None.
RECOMMENDATION
Staff recommends that the Mayor and Members of the City Coun-
cil approve Robert L. Schmitke & Associates ' recommendation
that we renew our HMO plan with HMO Illinois and replace our
Minimum Premium Plan currently with Washington National with
a Fully Self Funded Plan with Trustmark Insurance Company.
Respectfully submitted,
Olu em oar
Human Re ou ces Director
Richard B. Helwig
City Manager
OF/vls
r
Attachment #1
elk CITY OF ELGIN
Market Survey for HMO and Indemnity Plans
The attached represents the results of the comprehensive market study. The following funding
options are presented in the attached:
• Minimum premium renewal and alternatives
• Self funding with a $100,000 Specific
• HMO renewal and alternatives
• Fully insured option
List of carriers selected to provide competititve bids:
HMO Response Indemnity Response
► - -
Humana Quoted/Presented Washington Nat'l Quoted/Presented
Share Quoted/Presented Boston Mutual Quoted/Presented
MetraHealth Quoted/Presented SLIC No quote
Principal No quote NALAC No quote
FHP Great Lakes Not competitive Safeco Not competitive
Aetna No quote Aetna Not competitive
CIGNA Not competitive CIGNA No quote
RushPru No quote NY Life No quote
New York Life Quoted/Presented MetraHealth Quoted/Presented
American HMO Quoted/Presented Lincoln Nat'l Not competitive
Trustmark Quoted/Presented
Mass Mutual Not competitive
Prudential No quote
Blue Cross Quoted/Presented
•
rik
•
Attachment #2
Similarities and Differences Between Minimum
Premium Funding (current) and Self Funding (recommended)
Minimum Premium Self Funding
1 . Carrier provides legal protection Policyholder is the fiduciary
for the policyholder
' 2 . Monthly attachment . When monthly Aggregate annual attachment .
attachment point is reached Policyholder is reimbursed
carrier reimburses the following the policy anniversary
policyholder in subsequent month date.
3 . Does not include a specific Includes a specific deductible of
deductable $100, 000 . Reimbursement over the
$100, 000 is done at the point the
specific is exceeded.
4 . Third -party administration approved SAME
PPO - preferred plan
Reservas held by policyholder SAME
6 . Policyholder may use own bank SAME
7. Benefits immediately from favorable SAME
claims experience
8. Carrier retentions are higher which Lower carrier retentions as
impact premium costs demonstrated in the bid results
9 . Employee Booklets and master policy Responsibility of the policyholder '
are provided
Attachment #3
CITY OF ELGIN
RECOMMENDATIONS
. 1. Indemnity Plans
We would recommend a change to Trustmark Insurance Company Self
funding from Washington National Insurance Company minimum premium
for the following reasons:
1. The Trustmark Stop Loss proposal represents a 10% annual savings
from Washington Nationals fixed cost annual renewal.
2. The Trustmark proposal includes a specific deductible of $100,000 which
provides the City of Elgin with much greater claim protection.
3. The Trustmark annual aggregate attachment is $2,406,545 which is less
than Washington Nationals current annual attachment of $2,554,755 and
renewal annual attachment of $2,682,495.
e' 4. Trustmark annual maximum cost is $171,526 less than Washington
National Insurance Company's renewal.
5. Trustmark is a local Company (Lake Forest) with an A rating by two
major rating services and is capable of providing the City of Elgin with
excellent service.
6. Current Administrator and PPO can be retained.
7. U.R. added as of 311196.
8. Trustmark will include a$1,000,000 individual major medical maximum under
their stop loss protection at no additional cost. The current maximum is
$500,000.
Attachment #4
H. HMO
Serious consideration was given to a change to either Share, or Chicago
HMO for the following reasons:
1. Cost consideration. Share HMO cost is $82,798 less than HMO Illinois
and Chicago HMO cost is $49,830 less than HMO Illinois.
However,a detailed comparison of networks discouraged a recommendation
to change. HMO Illinois has both Sherman and St. Joseph Hospitals in their
network. Share HMO has St. Joseph only. Chicago HMO has Sherman
Hospital only. Other area providers frequented by city employees were split
between Share and Chicago HMO. All were included in HMO Illinois.
The transition in HMO networks is also a major consideration due to the fact
that some employees would have to change Doctors.
Based on these facts it is recommended that the City remain with HMO Illinois at
least for the next policy year. Share and Chicago HMO were recently purchased
by United Health Care and it is anticipated the two Networks will be combined by
the next policy year which will then compete favorably with HMO Illinois Network.
It should be noted however, that there still is a cost savings of $54,000 annually
as HMO Illinois reduced their original renewal rates by 8% as a result of
competitive bidding.
rbk
0 4
`a l• 4 Kr117' `C•MICUMME ens :
Family - 130 _- ��----
li :.. .■�
f�. , , =.L 1 7 ca. • HMO T etrs '1 ,u tf; -771 �«_...; •
VIM _Current - - 93020
e Hera l Svcs
ea /. No Cost Same Same Same - ��Same $5
Office Visits No Cost " " " w w
Immunization No Cost " " " w " w w
Well Visits No Cost " " w
Vision Eye Exam&Disc$ - -■■■-liWille====
Hospital Svcs
_- ■� ■�
Inpatient No Cost Same
Outpatient No Cost " IMEIMEMIIIMEM
Surgery • • Same Same
S •eon No Cost
Ansth • .st No Cost " "
Emergency ■-■ -■At Mdd Gp No Cost riiM Same $25 No Cost No Cost $25 Same Same_
Atter Hours $10 No Cost No C ost No Cost " _ ----------
H_osp30 mi $10 No Cos t - " - $10 $10 "
Svc>30 mi No Cost Same " $10 $10 " "
Mental Health - -- -Outpt M/H 20 $20 Visit Same 20 visits $20/20visits Same Same Same Same Same
Outpt S/A 20 $20 Visit 20 visits $20/20visils Same Same Same Same___ _ _ "
Inert M/H 20 No Cost " 30 days 100 days Same Same Same 30 days
In•t S/A 20 No Cost 30 days 10 days Same Same Same 30 d_ "
Prescpt Drug i.311111111.111Sama $3 $3 $3 $3 $3 $3
Contrcptv • • ' • spy " Mail Order Mail Order $3/90dayspy $3/90dayspy
Rates:
Single $184.58 $149.24 $141.88 $151.15 $124.34 $131.48 $127.20 $140.70 $143.78 w
Family $413.38 $396.73 $396.97 $423.18 $348.06 67.93 $356.06 $367.50 $397.46 w
$3
rD
Total Month $57,524.05 _ $55,007.42 __ $54,861.98 $58,489.85 $48,107.62 $50,854.94 $49,213.40 $51,011.10 $54,976.74 r
Total Annual $690,288.60 $660,089.04 $658,343.76 $701,878.20 $5 77,291.44 $610,259.28 $590,560.80 $612,133.20 $659,720.88 ul
Attachment #6
.ITY OF ELGIN -MINIMUM PREMIUM ILLUSTRATION '
Census:
Single - 81
Family-383 j
.
Carrier Washingtn Nat'l Washnatn Nat'l Mutual/Omaha NYLIfe/Sanus GreatWest
(Current) Renewal i
Pooling Point Not Included Not included Not included I Not included Not included
Reserves:
Held by City City City City City
Mo. Liability Limit Yes Yes Yes Yes Yes
Deficit Recovery No No Yes No No
Post Term. Liability No No No No No
Plan Cosh .
Life AD&D $0.26/1000' $0.32/1000, $).28/10001 $0.37/10001 $0.29/1000
fPA Fees: $7.00 , $8.00 $8.0001 $8.00 ' $8.50
PPO/UR $2.70 $3.05 $3.05 ! $3.05 $3.05
Total Monthly $8,010.80 $9,447.20 $8,907.20 I $10,122.20 $9,274.20
Rates:
Single $23.13 $27.65 $39.40 i $51.55 $27.58
Family $23.13 $27.65 $39.40 ; $51.55 , $53.98
Monthly Premium $10,732.32 $12,829.60 $18,283.74 I $23,919.20 $22,908.32
Total Monthly Fixed $18,743.12 $22,276.80 $27,422.94 l $34,041.40 $32,182.52
Annual Fixed $224,917.44 $267,321.60 $329,075.28 ' $408,496.80 $386,190,24
Claim Factors:
Single $458.83 $481.77 $423.141 $450.09 $498.56
Family $458.83 $481.77 $423.13 f $450.09 $498.56
Monthly Liability $212,897.12+ $223,541.28 $196,332.00 $208,841.76 231,331.84
Annual Attachment $2,554,765.40 $2,682,495.30 $2,355,981.00 t $2,506,101.10 $2,775,982.00
Annual Plan
Maximum $2,779,682.80 $2,949.816.90 $2,568,056.00 ' $2,914,597.90 ' $3,162,172.20
1
1
CITY OF ELGIN-STOP LOSS QUOTES $100K
Census:
Single - 81
Family-383
Blue Cross
SKEW ;,•Elva M _ I T_ Lit Omaha_Trans ica_ INS/ Cost Plus
Specific $100,000 $100,000 $100,00 0 $100,000 $100,000 $125000
Contract Basis 15/12 15/12 15/15 15/12 15/12 15/12
Rates:
Single $10.36 $23.41 $29.42 $15.15 $16.08 $11.61
Family $24.13 $23.41 $29.42 $27.43 $27.76 $11.61
Aggregate Premium $3.85 $1.80 $3.37 $2.25 $1.35 $6.35
TPA Fees $8.00 $8.00 $8.00 $8.00 $8.00 $21.90
PPO/UR $3.05 $3.05 $3.05 $3.05 $3.05 $3.20
Life AD&D $0.27/1000 $0.23/1000 $0.28/1000 $0.27/1000 $0.27/1000 $0.25/1000
Total Monthly Fixed $20,639.55 $19,929.84 $24,121.76 $21,549.04 $21,333.18 $23,354.84 --
Annual Fixed $247,874.60 $239,155.68 $289,461.12 $258,588.48 $255,997.92 $280,258.08
Aggrgate:
Contract Basis 15/12 15/12 15/15 15/12 15/12 15/12
Agg Factors: -Single $240.30 $432.21 $552.00 $235.49 $472.34 $463.89
Family L$$600.74 $432`21 $552.00 $529_67 $472.34 $463.89
Total Mo.Liability $249,547.72 $200,545.44 $256,128.00 $222,409,28 $219,165.76 $215,244.96 a
rt
Annual Attachment $2,994,572.60 $2,406,545.20 $3,073,538.00 $2,668,911.30 $2,629,989.10 $2,582,939.50 n
a _ i
Annual Maximum $3,242,247.20 $2,645,700.80 $3,362 997.10 $2,927.499.70 $2,885,987.00 $2,863,197.5000
Attachment #8
Washington
nati.•
INSURANCE COMPANY HEALTH DIVISION
DAVID W.CARRELL
Sc.Regionat Aeeeunt Menage
(7011) 753-3743
M00)$47.9$44, x3743
FAX (70x) 753-3599
January 9, 1996
Mr. Robert L. Schmitke
Robert L. Schmitke& Associates
175 Olde Half Day Road
Lincolnshire,Illinois 60069
Re: City of Elgin - Conventional Insurance Quote
March 1, 1996 Renewal -E11640083
Dear Bob:
As a follow-up to my voice message on January 9, 1996, the premium rate to Insure tht City of
"` Elgin on a conventional basis would be $531.18 per employee per month and assumes in effective
date of March 1, 1996. The quote further assumes that the old Minimum Premium Ccntract
would be terminated and a new Conventional Master Policy would be issued to include claims
incurred on or after March 1, 1996.
Based on an assumed employee count of 464, the monthly premium for the medical plan would be
5246,467.52. The projected annual premium would be $2,957,610.20.
The above premium rate assumes a pooling level of 5100,000.00. Please let me know how your
meetin: :oes on J uary 10, 1996. 1f you need additional information, or if there is any additional
asst • I ca •rovide you, please let me know.
•
David W. Carrell
Sr.Regional Account Manager
DW fcs
f1.. cc: Ms. Sandy Groeneveld
Mr. Henry Trevor
96008.dc
300 Tower Parkway a Lincolnshire. Illinois $0060-3665