Presented by: Chuck Petruccione Brown & Brown of CT, Inc.
• AHM Youth Services • Hebron Schools • Town of Andover • Town of Marlborough • Andover Schools • Marlborough Schools • Town of Hebron • Reg. School District No. 8 15+ years of cooperation equals: •More members – over 1,000 lives •Better coverage •Stabilized pricing 2
• The Consortium has been working to move from its current fully-insured arrangement to a self- funded one for almost two years • In the simplest terms, the Consortium will be responsible for paying the claims of its members, instead of passing that responsibility to an insurance carrier • This move brings potential risk, and reward 3
• The Consortium is looking to implement this change upon renewal of its health insurance plan with Anthem on July 1, 2017. • To accomplish this, the AHM Board and each Board of Selectmen & Board of Education need to give their approval by April 13 in order to meet Anthem’s implementation deadlines. 4
Potential Risk • If claims run poorly, the cost may be greater • Stop Loss Insurance is used to protect against unexpected or catastrophic loss 5
Potential Risk Risk is reduced by using Stop Loss Aggregate Stop Loss Individual Stop Loss Caps the risk at 115% of projected claims. 6
Limiting Risk Stop Loss Insurance is purchased to limit unexpected claims 7
8 Potential Reward Savings
Fully Insured vs. Self-Funded Costs Fully Insured* Self-Funded** $7,748,251 Expected Medical & Rx Claims $6,728,640 n/a Med. & Rx 15% Claims Corridor $960,694 $48,000 Broker Commission $48,000 $148,739 Health Insurer Fee (ACA) n/a $2,385 PCORI Fee (ACA) $2,385 n/a Individual Stop Loss $545,457 n/a Aggregate Stop Loss $70,282 n/a Self-Funding Admin Fee $190,180 n/a CT Public Health Assessment $6,194 n/a TPA Fee $75,000 $155,092 State Taxes $10,775 $425,257 Pooling Charges n/a n/a . $375,155 Administration / Margin $8,900,494 Total $8,637,608 * Numbers estimated based upon Anthem’s Fully Insured Renewal for Region 8, 2017-18. ** Numbers estimated based upon Anthem Self-Funded Quote for Region 8 for 2017-18 plan year. 10
Savings at 115% Claims: $262,885 Savings at 100% Claims: $1,223,579 11
Fully Insured vs. Self-Funded Benefits Fully Insured Self Insured Insurance Carrier Anthem Anthem Physician Choice Yes Yes Hospital Choice Yes Yes Pharmacy Benefit Yes Yes Co-pay/Deductible Amounts Yes Yes New Mandates Yes Yes Same Coverage Yes Yes Premiums & Claims Paid Anthem Consortium Only the funding vehicle has changed! 12
Analysis of Actual Cost vs. Self-Funded Quotes 2012-13 2013-14 Fully Insured Premium = $8,083,852 Fully Insured Premium = $8,801,481 Claims + Fees – Lg Claims = $7,613,628 Claims + Fees – Lg Claims = $7,653,897 Savings = $388,601 Savings = $1,147,583 2014-15 2015-16 Fully Insured Premium = $8,793,347 Fully Insured Premium = $7,987,118 Claims + Fees – Lg Claims = $8,197,281 Claims + Fees – Lg Claims = $7,841,191 Savings = $596,065 Savings = $145,926 Potential four year total savings, approximately $2,300,000 13
Members Should Not Notice Any Differences • No impact on day-to-day services for member • Keeps everything with Anthem, no changes to provider networks, doctors or plan details • Keeps all benefit levels the same as in the current fully-insured plan • No changes to personnel policies, collective bargaining agreements or state mandated coverages. 15
• Here are the entities that would be involved if the consortium moved to self-funding: • Each Town/BOE/AHM – Each member entity and its employees. • Anthem – Would serve as administrator of plan and stop loss provider. • Brown & Brown – Health Insurance Broker/Consultant • Audit Firm – Identity to be determined. An audit firm would need to be retained each year to analyze the plan’s financial stability. • Third Party Administrator (TPA) – Identity to be determined. The group may decide to hire a TPA to help smooth the transition from the fully insured process to a self-funded one. This is not a TPA like you may be familiar with in handling FSAs or HSAs. • This would strictly be a behind-the-scenes company helping to facilitate the financial transactions between the consortium and Anthem. 16
RHAM Town of AHM Youth Hebron Services COMBINED CLAIM BANK ACCOUNT Each Entity is responsible to pay Marlborough the monthly allocated rates for Hebron their employees into a combined BOE Claim Bank Account. The carrier BOE will request payment for the adjudicated claims on a routine schedule and the administrator will be responsible to pay the expenses of the health plan monthly. Town of Town of Andover Marlborough Andover BOE 17
Consortium Agreement The consortium will modify the existing document that governs how we operate as there are additional financial considerations that need to be addressed. Trust Agreement A separate trust document is being drafted to govern the group’s joint bank account and other financial considerations. Banking Agreement The consortium would enter in to an agreement with a bank, which would hold the group’s finances in a joint account. 18
Administrative Services Agreement The consortium will enter in to an agreement with Anthem to use its network of doctors and claims administration platform. Stop Loss Agreement The consortium will enter in to an agreement with Anthem to purchase both aggregate and individual stop loss protection against any large or “shock” claims. 19
• Many towns and school boards have already made the switch to self-funding. • Though each group’s experience is unique, those who have had the proper protection and have budgeted appropriately have been very pleased. 20
• Some local districts that are self funded • Montville • Hartford • Ledyard • Willimantic • Windsor Locks • Killingly • Mansfield • Manchester • Coventry • East Hartford • Windsor • Haddam • Farmington • Reg.17 • Westbrook • Avon • New Britain • Groton • Colchester 21
Next Steps • Finalize Consortium Agreement • Finalize Trust Agreement • Approval from boards • Selectmen • BOEs • AHM Board • Educate members 22
Rev. SV 3/09 Thank you for your attention!
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