98-52 Resolution No. 98-52
RESOLUTION
AUTHORIZING EXECUTION OF AN AGREEMENT WITH HMO ILLINOIS
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,
ILLINOIS, that Joyce A. Parker, City Manager, be and is hereby
authorized and directed to execute an agreement on behalf of
the City of Elgin with HMO Illinois for an employee health
insurance program, a copy of which is attached hereto and made
a part hereof by reference.
s/ Kevin Kelly
Kevin Kelly, Mayor
Presented: February 25, 1998
Adopted: February 25, 1998
Omnibus Vote: Yeas 7 Nays 0
Attest:
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
/
BlueCross BlueShield HMO Illinois
°°°• v of Illinois A Blue Gross HMO
A Member of the Blue Cross and Blue Shield Association, a product of
An Association of Independent Blue Cross and Blue Shield Plans Health Care Service Corporation,
a Mutual Legal Reserve Company
(Blue Cross and Blue Shield of Illinois)
Benefit Program Application .
Group No.(s): H57023
Group Name: City of Elgin
(Specify the employer,the employee trust or the association applying for coverage.Names of subsidiary and affiliated companies must also be included.
AN EMPLOYEE BENEFIT PLAN MAY NOT BE NAMED.)
Address: 150 Dexter Court,- Elgin, IL 60123
Group Administrator: Mr. Ferri Folarin Phone No.: 847-931-5620
Effective Date of Coverage: 3/1/98 Anniversary Date: 3/1
1. Eligible Person means a person who resides in the Service Area of a Participating IPA and is:
Ig a full-time employee of the Group.
❑ a member of(name of union or association)
Rj Elected Officials
2. Full-Time Employee means:
❑ A person who is regularly scheduled to work a minimum of hours per week and who is actively
at work and on the permanent payroll of the Group.
3. Classifications of Eligible Persons:
® No classifications.
❑ See attached classifications.
4. Persons not Eligible are:
A person who does not meet the definition of Eligible Person stated above or a person who does meet
the definition of Eligible Person stated above but is affected by TEFRA-COBRA and has selected
Medicare as his Primary Coverage.
In the event a spouse of an Eligible Person, who is otherwise eligible for coverage under this Policy as a
Covered Person and who is affected by TEFRA-COBRA, selects Medicare as his/her primary coverage,
then, such spouse shall not be eligible for coverage under this Policy.
5. The Effective Date of Termination for a person who ceases to meet the definition of an Eligible Person:
❑ The date such person ceases to meet the definition of Eligible Person.
® The last day of the calendar month in which such person ceases to meet the definition of an Eligible
Person.
6. The limiting age for covered unmarried children is: 19; 23 if full-time student
❑ Coverage is terminated at the end of the month in which the limiting age is reached.
❑ Other(please specify):
7. Total number of employees in the Group:
(State the total number of employees,not enrollees.)
GA-16-1.1 HCSC / Page 1
8. New Employee Waiting Period:
O the date of employment.
O the first day of the month following months or days of employment.
IR the 1st day of the month following the date of employment.
O the day of employment.
Free Ride Billing Rule
❑A full month's premium will be charged for the first month of coverage for those new employees whose
Coverage Dates fall between the first and sixteenth day of the Premium Period. No premium will be
charged for the first month of coverage for those new employees whose Coverage Dates fall between the
seventeenth day and the end of the Premium Period.
9. Extension of Benefits Due to Temporary Layoff or Leave of Absence: ❑ 30 days ❑ days
10. Type of Financial Arrangement:
I Premium Charge(complete 11 below)
❑ Service Charge(complete 12 below)
11. Premium Information:
(a) Enrollee Contributions Required: ❑ Yes ❑ No
If Yes;Group contribution is:
❑ 100%of the Individual Coverage Premium and an amount equal to 100%of the Individual Coverage
Premium toward the Family Coverage Premium.
❑ %of the Individual Coverage Premium and %of the Family Coverage Premium.
(b) Premium Period:
❑ The first day of each calendar month through the last day of each calendar month.
O The day of each calendar month through the day of the next calendar month.
0
(c) Schedule of Monthly Premiums(by coverage):
HMOI PRE-DENT TOTAL
Enrollee only $ 172.37 $ $
Enrollee with one dependent 458.23
Enrollee with two or more dependents 458.23
Medicare Eligible: Individual 168.67
Family 337.34
12. Service Charge Program: ❑ New Group ❑ Existing Group
(a) Service Charge:
(b) Type of Service Charge Program:
❑ Advance Payment ❑ Transfer Payment ❑ Other
(c) Advance Payment Specifications
Amount of Advance Payment: $
Payment Period: Claim Settlement Period:
❑ Monthly ❑ Monthly
❑ Quarterly ❑ Quarterly
❑ ❑
(d) Transfer Payment Specifications
Method of Transfer Payment: Payment Period:
❑ Wire Transfer ❑ Daily
❑ Draft ❑ Semi-Weekly
❑ Other ❑ Weekly
❑ Other
GA 16-1.1 HCSC Page 2
The undersigned person represents that he is authorized and responsible for purchasing coverage on behalf of the
Group,has provided the information requested in this Benefit Program Application(BPA)and on behalf of the Group
offers to purchase the benefit program as outlined in the Proposal document submitted to the Group by the Sales
Representative.Any changes to the Proposal are specified below. It is understood that the actual terms and condi-
tions of coverage are those contained in the Group Policy into which this BPA shall be incorporated and become a
part at the time of acceptance by Health Care Service Corporation,a Mutual Legal Reserve Company(HCSC).In the
event of any conflict between the Proposal and the Group Policy,the provisions of the Policy shall prevail.It is further
understood that this BPA is subject to acceptance by HCSC. Upon acceptance, HCSC shall issue a Policy to the
Group.The undersigned person hereby acknowledges that the Employee Retirement Income Security Act of 1974,
as amended(ERISA),establishes certain requirements for employee welfare benefit plans.As defined in Section 3 of
ERISA, the term "employee welfare benefit plan" includes any plan,fund or program which is established or main-
tained by an employer or by an employee organization,or by both,to the extent that such plan,fund or program was
established or is maintained for the purpose of providing for its participants or their beneficiaries, through the pur-
chase of insurance or otherwise,medical,surgical or hospital care or benefits,or benefits in the event of sickness,ac-
cident or disability.The undersigned person hereby acknowledges(I)that an employee welfare benefit plan must be
established and maintained through a separate plan document which may include the terms hereof or incorporate the
terms hereof by reference,and(ii)an employee welfare benefit plan document may provide for the allocation and del-
egation of responsibilities thereunder. However, notwithstanding anything contained in an employee welfare benefit
plan document of the Group(or any Group member, if the Group is an association),the undersigned agrees that no
allocation or delegation of any fiduciary or nonfiduciary responsibilities under the employee welfare benefit plan of the
Group(or any Group member,if the Group is an association)is effective with respect to or accepted by HCSC except
to the extent specifically provided and accepted in this BPA or the Policy or otherwise accepted in writing by HCSC.
ADDITIONAL PROVISIONS: All eligible retirees of the City of Elgin are included
as an eligible class.
Changing the drug card from $3/$8 to $5/$10
Dan Bondi
Sales Representative Sig . Autho' ur aser
822 630-586-0149 City Manager
District Phone No. Title
Bob Schmitke 33/?(Fi
Producer Representative Date
L1, C4`2iG'✓ Are �iCG1
Producer Firm Witness
$ Amount Submitted
Producer Address
Tax I.D.No.
Underwriting Only
Date BPA approved by Underwriting
Signature of Underwriter approving
Certificate Booklets: ❑ Individual Mail
❑ Ship to:
Attn:
No.:
Mail Policy to: ❑ Group ❑District
GA-16-1.1 HCSC Page 3
PROXY
The undersigned hereby appoints the Board of Directors of Health Care Service Corporation,a Mutual Legal Reserve Company(hereinafter referred
to as "HCSC") and such persons as the Board of Directors may designate by resolution as the undersigned's proxies to act on behalf of the
undersigned at all meetings of members of HCSC and any adjournments thereof,with full power to vote on behalf of the undersigned on all matters
that may come before any such meeting and any adjournment thereof.The annual meeting of members shall be held each year in the corporate
headquarters on the last Tuesday of October at 12:30 p.m.Special meetings of members may be called pursuant to notice mailed to members not
Z less than 30 nor more than 60 days prior to such meetings.This proxy shall remain in effect until revoked in writing by the undersigned at least 20
0 days prior to any meeting of members or by attending and voting in person at any annual or special meeting of members.
>- Q
X N Group No. Dist. No. By:
0 CC
E Group Name&Address: Pr'. er's Name Here
a ° _
Sig Lire a ;11 itle
Dated this day of
FC-849 7/83
Kfn fEC`41'.
City of Elgin Agenda Item No.
.�
February 3, 1998
TO: Mayor and Members of the City Council
FROM: Joyce A. Parker, 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 renewal information and
a recommendation for the City' s Health Maintenance
Organization (HMO) and Self Insurance Plans .
BACKGROUND
The City has two group insurance plan options available for
full-time employees and retirees, a fully self-insured
indemnity plan and an HMO plan through HMO Illinois (Blue
Cross Blue Shield) . Specific and Aggregate Insurance are
provided for the self-insured plan by Trustmark Insurance
Company.
Bid specifications were sent out to Excess Insurance and HMO
carriers by our broker, Robert L. Schmidtke and Associates .
The submitted quotes were narrowed down to five companies
(attachment 1) which the broker reviewed with staff. It is
our broker' s recommendation that, based on our costly claim
experience for the 1997/98 claims year (attachment 2) , it
might be best to stay with Trustmark for the 1998/99 claims
year. With the slight modification in administration and PPO
cost, this recommendation will result in a 5 percent increase
in our total cost for the self funded plan.
Current Renewal
$ 249, 832 $ 262, 977
None of the carriers that submitted bids on our HMO plan were
willing to quote on our current benefit package (attachment
3) . The only responsive proposal was from our present provid-
er, Blue Cross, which will result in a 10 percent rate in-
crease (attachment 4 ) .
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None.
Group Health Insurance Renewal
February 3, 1998
Page 2
ç., INNC IAL IMPACT
j HMO Illinois ' rate will increase 10 percent from:
1997/98 1998/99 Difference
Single $ 156. 70 $ 172 . 37 $ 15. 67
Family 416. 57 458 .23 41 . 66
Total Annual $749, 370 $824 , 312 $74 , 942
Self-Insured Plan changes will be as follows :
1997/98 1998/99 Difference
Administration $ 43, 104 $ 44, 451 $ 1, 347
PPO/UR 16, 433 11, 043 5, 390
Aggregate Stop Loss
Premium 9, 698 9, 698 0
Specific Stop Loss
Premium * 133, 676 150, 864 17, 188
LifeAD& D 46, 921 46, 921 0
TotalFixed Cost $249, 832 $262, 977 $ 23, 925
* Reimbursements to date from Trustmark on specific claims
for the 1997/98 contract year are $223, 000 (attachment 2) .
Funds totalling $750, 000 and $2, 587, 500 have been budgeted in
the Medical Insurance Fund, Account Numbers 635-0000-796 . 50-04,
HMO, and 635-0000-796 . 53-08 Medical Claims, respectively, to
cover anticipated insurance expenses .
x LEGAL IMPACT
�� } None.
ALTERNATIVES
None.
em.
Group Health Insurance Renewal
February 3, 1998
Page 3
RECOMMENDATION
It is recommended that the City Council approve the renewal of
the HMO Plan with HMO Illinois . Moreover, it is recommended
the self-funded insurance plan be awarded to Trustmark because
of their overall lower maximum cost ($2, 934 , 340) for the plan
year.
Respectfully submitted,
O . emi .ola n
Human Re-ourc: s Director
/
dof. 146___,—
J(ice '1 . Parker
City Manager
OF/vls
N Attachment #1
''''')
O
a
1 CITY OF ELGIN - SELF FUNDED
Trustmark Trustmark I Mutual of Trans Monumental Canada
Current Renewal I Omaha General Life
FIXED COSTS Ee's
SPECIFIC
Slop-Loss Point $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Contract Basis 15/12 15112 15112 15112 15/12 15/12
01 Rate:Composite 449 $24.81 $28.00 $26.83 $25.85 $23.61 $26.51
t0
CO
r4 AGGREGATE
N Rate: Composite 449 $1.80 $1.80 $1.92 $3.06 $1.86 52.23
000 CLAIMS FEE 449 $8.00 S825 S8.25 58.25 $8.25 $8.25
PPO!UR 449 $3.05 1 $2.05 $2.05 $2.05 $2.05 $2.05
LIFE AD&D 17000 $0.23 $0.23 $0.22 $0.27 $0.33 $0.26
TOTAL MONTHLY FIXED S20,819.34 $21,914.17 $21,272.70 $22,195.29 S21,670.73 521,948.96
I
TOTAL ANNUAL FIXED 249,832.08 $262,970.04 $255,272.40 I $266,343.48 $260,048.76 $263,387.52
UO Difference (%) 105% 102% 107% 104% 105%
t4 .
Q CLAIMS
Da AGGREGATE
W Contract Basis 15/12 15/12 15/12 15/12 15/12 15/12
I- . Funding Factor 449 S432.21 $495.80 $510.67 $511.63 $527.12 S549.07
H
Z
I TOTAL MONTHLY CLAIMS $194,062.29 $222,614.00 $229,290.83 $229,721.87 $236,676.88 $246,532.43
v
a ANNUAL ATTACHMENT $2,328,747.48 $2,671,370.00 $2,751,489.96 S2,756,662.44 $2,840,122.56 $2,958,389.16+
N
ct PLAN YEAR MAXIMUM
�� $2,578,579.56 r $2,934,340.00 33,006,762.00 $3,014,845.00 $3,100,370.00 $3,221,776.00
N
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RI
Attachment #2
City of Elgin
• Large Claim Analysis
Three ongoing claims, all myocardial infarctions. Expenses incurred to
date are $61,719, $167,150, and $131,522 respectively. All three
claims have the potential of being large claims in the'1998 contract
year.
• Two additional claims in excess of $100,000 were incurred during this
contract year and both are deceased.
• Total reimbursements by Trustmark on specific claims (3) will reach
$223,000 for the contract year.Premium paid was $133,676. The loss
ratio is 167%.
risk
• Net paid claims for the year 3-1-96 to 3-1-97 were $1 ,951,537.
Annualized net paid claims for 3-1-97 to 3-1-98 are $2,344,175, or an
increase of 20% over the prior year.
• Projected run-out claims are $526,578.
• PPO discounts for the period March of 97 through December of 97
totaled $354,654. This represents a savings of 15% of total claims.
I CITY OF ELGI IIMO
CARRIER BLUE CROSS BLU _OSS BLUE CROSS RUSH HUMANA
Current RenewaD Revised Rnwl PRUDENTIAL
Benefits -
General Services
Checkups No Cost No Cost $10 $10 $10
Office Visits No Cost No Cost $10 $10 $10
Immunization No Cost No Cost $10 $10 $10
Well Visits No Cost No Cost $10 $10 $10
Vision Exam & Disct Same Same Discounts Exam & Disct
Hospital Services
Inpatient No Cost No Cost No Cost No Cost No Cost
Outpatient No Cost No Cost No Cost No Cost $10
Surgery
Surgeon No Cost No Cost No Cost No Cost No Cost
Anesthesiologist No Cost No Cost No Cost No Cost No Cost
Emergency
At Medical Group No Cost No Cost $10 $10.00 No Cost
After Hours $10 $10 $10 $10.00 No Cost
Hospital<30 mi. 510 $10 $25 $25.00 No Cost
Service >30 mi. No Cost No Cost $25 $25.00 No Cost
Mental Health
Out-pt M/H 20 $20 Visit $20 Visit $20 Visit $25/20visits 20visits
Out-pt S/A 20 $20 Visit $20 Visit $20 Visit 20 visits 20 visits
In-pt M/H 20 No Cost No Cost No Cost 14 days 30 days
In-pt S/A 20 No Cost No Cost No Cost 10 days 30 days
Prescription Drug $3/$8 $5/$10 $5/$10 $5 $5
Contraceptive $8/90daysupply $10/90daysupply $10/90daysupply $5/90daysupply $15/90daysupply
Rates:
Single 29 $156.70 $172.37 $163.61 $161.12 $165.42
Family 139 $416.57 $458.23 $434.94 $430.31 $454.62
Total Month $62,447.53 $68,692.70 $65,201.35 $64,485.57 $67,989.36
Total Annual $749,370.36 $824,312.40 $782,416.20 $773,826.84 $815,872.32
Difference (%) -- 1 110.0% I 104.4% 1 103.3% 108.9%
Attachment if
H M O I L L I N O I S • •
Blue
Blue
rak
A Blue Cross HMO '"'"°'
••
December 19, 1997
Mr. Robert L.Schmitke
175 Olde Half Day Road
Lincolnshire, IL 60069
Re:City of Elgin
31/98 Renewal
Dear Mr. Schmitke:
We have completed the March 1, 1998 renewal for City of Elgin. Enclosed is the renewal
exhibit for their HMO Illinois plan.
The underwriter provided an experience work-up for the plan based on a twelve month period
that ran from 8/1/96 to 7/31/97. There was one large claims over the pooling level of$75,000
and the underwriter is considering this condition open with more claims anticipated in the next
renewal period. $120,642 was paid out for this claim over the last twelve months. The overall
claim costs per subscriber has doubled in the current period,bringing the claim costs up to the
rk level of the tabular claim costs. Last year the claim costs were only 59%of the tabular claim
cost,which is the reason for the prior favorable rate action. The groups experience is 39%
credible with trend of 0% for the medical claims and I0% for the drug claims. The desired loss '«6/(*"-- '
ratio is 83%. City of Elgin had a proposed increase of 13.2% increase at their last at m.o.. 'o%
was sold at 5%. This year the requested premium increase is 19.9%. a group currently has a
rich HMO benefit package that would allow them to make some modest benefit changes to
temper this rate increase. If they changed to a$10 office visit co-pay and a$25 emergency room
co-pay they could reduce the increase by 6%. If they also change the drug card to a 5$/$10
benefit they could save an additional 2.7%.
The group currently has no Life and AD&D with Blue Cross Blue Shield of Illinois. If they
would like a quote please let me know.
We thank-you for your continued association with Blue Cross Blue Shield of Illinois and look
forward to working with you and City of Elgin for niany more years. If you have any questions
or concerns, please feel free to call me.
Sincerely,
Daniel F. Bondi • •
Senior Marketing Executive
(630)586-0149
Pe
JAN-16-86 FK1 14:41 " " V`
BlueCross BlueShield An independent Licensee or the
an
of Illinois Blue Cross and Blue Shield Association
�oG
1515 West 22nd Street
Oak Brook,Illinois 60523-2000
Telephone 630-586-0500
FAX 630-586-0600 •
•
January 16, 1998
Mr.Robert L.Schmitke
175 Olde Half Day Road
Lincolnshire,IL 60069
•
Re:City of Elgin
Dear Mr. Schmitke:
Our underwriter completed a thorough review of your request for proposal on the City of Elgin.
Unfortunately,we will not be able to provide you with a proposal. Our intention was to provide
you with a PPO program with 100% in-network and 80%out-of-network benefits. The
underwriting analysis was an uncompetitive proposal compared to their current rates. •
We thank-you for your continued association with Blue Cross Blue Shield of Illinois and look
forward to working with you and City of Elgin for many more years. If you have any questions
or concerns, please feel free to call me.
Sinerly, •
Daniel F.Bondi •
Senior Marketing Executive
(630)586-0149
•
rink
•
Health Care Service Corporation,a Mutual Legal Reserve Company
(Blue Cross and Blue Shield of Minnie)