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Agenda 11/09/2021 Item #16E 1 (Purchase Group Health Reinsurance through Sunlife)11/09/2021 Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $368,877 effective January 1, 2022. OBJECTIVE: To protect the Group Health Insurance Fund against catastrophic losses through the purchase of group health reinsurance coverage. CONSIDERATIONS: The Board of County Commissioners, through the Risk Management Division, sponsors a partially self-funded Group Health Insurance Program (the Plan) for Board employees, participating constitutional officer employees and their eligible dependents. Group Health Reinsurance, also known as “Stop Loss,” is purchased to protect the Plan against adverse loss experience. Two types of reinsurance coverage are generally available. Specific excess insurance protects the Plan if a covered member incurs claims cost in excess of a “per member” deductible (self- insured retention). Aggregate excess insurance provides coverage to the Plan if total losses exceed an annual aggregate deductible for the Plan. Currently, the County purchases specific excess insurance through SunLife with a self-insured retention of $1,000,000 per member. The current Stop Loss coverage expires at midnight, December 31, 2021. In 2020, the County increased its specific retention level from $450,000 to $1 million. This change saved the County approximately $680,000. Thus far, incurred claims costs have not exceeded premium savings. Therefore, the increase in the retention level has continued to be financially beneficial to the County. For the January 1, 2022, renewal, Willis Towers Watson (WTW), the County’s benefits brokerage and actuarial consulting firm, marketed the Stop Loss program on behalf of the County. WTW sought quotes at $1,000,000 and $1,250,000 retention levels from six (6) carriers, three (3) of which declined to quote. The substantive policy provisions sought by the County included 1) an experience rated refund option, 2) a second-year rate cap (to address market volatility), 3) a “no laser provision” which precludes a carrier from applying a higher retention level to an ongoing claimant, and 4) the carrier must follow the County’s Plan definition for Medical Necessity when making coverage determinations. Three carriers responded, however, only SunLife was compliant with all the policy provisions requested. WTW recommends that the County select SunLife for the January 1, 2022, renewal at the $1,000,000 self insured retention level for the following reasons: • The SunLife proposal offered the lowest rate. • The 2022 rate is $14.03 per employee per month compared to $12.87 in 2022, an increase in gross premium of $30,290. This is an increase of 9.01% or $30,290. However, if the County renews with SunLife, it will receive a 2020 experience rated refund, estimated to be $32,500. Thus, the refund would offset the proposed 2022 rate increase. • Sun Life has agreed to cap a second-year rate increase at 40% in 2023. • Stability in working with one carrier for more than one year is perceived favorably by the markets. • WTW reviewed increasing the retention level to $1,250,000. However, there is a material probability that the premium savings could be offset by additional claims cost. Sun Life carries a Best’s “A” (Superior) financial rating. Coverage will commence January 1, 2022, for a one-year period. The Marketing Summary from WTW is attached to this item. 16.E.1 Packet Pg. 1168 11/09/2021 FISCAL IMPACT: The estimated cost of group health reinsurance in calendar year 2022 is $368,877 based upon an average enrollment of 2,191 employees. The composite rate per enrolled employee is $14.03 per month. Premiums are remitted monthly based upon actual enrollment. There are sufficient funds available in Fund 517, Group Health and Life Insurance for this purchase. GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this item. LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, raises no legal issues, and requires majority vote for approval. -JAK RECOMMENDATION: That the Board approves the purchase of Group Health Reinsurance from SunLife as outlined in the Executive Summary and authorizes the County Manager or designee to sign the documents necessary to commence coverage effective January 1, 2022. PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Division ATTACHMENT(S) 1. 2022 01 CCG MDSL MKT Results (PDF) 16.E.1 Packet Pg. 1169 11/09/2021 COLLIER COUNTY Board of County Commissioners Item Number: 16.E.1 Doc ID: 20333 Item Summary: Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $368,877 effective January 1, 2022. Meeting Date: 11/09/2021 Prepared by: Title: Benefits Analyst – Risk Management Name: Sonja Sweet 10/11/2021 1:37 PM Submitted by: Title: Division Director - Risk Management – Risk Management Name: Jeff Walker 10/11/2021 1:37 PM Approved By: Review: Risk Management Jeff Walker Director Review Completed 10/11/2021 2:16 PM Agenda Clerk Preview Geoffrey Willig Agenda Clerk Preview Completed 10/11/2021 2:31 PM Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 10/12/2021 9:37 AM Office of Management and Budget Laura Wells Additional Reviewer Completed 10/13/2021 10:41 AM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 10/13/2021 2:31 PM County Manager's Office Sean Callahan Level 4 County Manager Review Completed 11/01/2021 11:21 AM Board of County Commissioners Geoffrey Willig Meeting Pending 11/09/2021 9:00 AM 16.E.1 Packet Pg. 1170 Current Renewal Option Option Option Option Option Reinsurance Carrier SunLife SunLife SunLife Carrier HMIG QBE QBE Medical Administrator Allegiance Allegiance Allegiance Allegiance Allegiance Allegiance Allegiance Provider Network(s) Cigna Cigna Cigna Cigna Cigna Cigna Cigna SPECIFIC STOP LOSS Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx LASERS None None None None TBD TBD TBD Contract Type 12/24 12/24 12/24 12/24 12/24 12/24 12/24 Specific Deductible $1,000,000 $1,000,000 $1,250,000 $1,500,000 $1,000,000 $1,000,000 $1,250,000 Specific Annual Maximum¹ Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Specific Run-In Limit Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited No New LASER at Renewal Provision Included Included Included Included Included Included Included Rate Cap at Renewal Provision 40% 40% 40% 40% 40%60% 60% Experience Refunds Included Included Included Included Not Included Not Included Not Included Medical Necessity Determination Plan Plan Plan Plan Plan Plan Plan Plan Mirroring Included Included Included Included Included Included Included Reimbursement Process Initiation Automatic Automatic Automatic Automatic Client/TPA Client/TPA TPA Actively at Work Provision Waived Waived Waived Waived Waived Waived Waived Retiree Inclusion Included Included Included Included Included Included Included Specific Premium 2176 Composite $12.87 $14.03 $10.24 $7.68 $18.57 $15.12 $10.45 Monthly Specific Premium $28,005 $30,529 $22,282 $16,712 $40,408 $32,901 $22,739 Annual Specific Premium $336,061 $366,351 $267,387 $200,540 $484,900 $394,813 $272,870 Total Annual Stop Loss Costs $336,061 $366,351 $267,387 $200,540 $484,900 $394,813 $272,870 Cost Difference ($) -- $30,290 ($68,675) ($135,521) $148,838 $58,752 ($63,191) Cost Difference (%) -- 9.01% -20.44% -40.33% 44.29% 17.48% -18.80% Total Annual Fixed Costs $336,061 $366,351 $267,387 $200,540 $484,900 $394,813 $272,870 Cost Difference ($) -- $30,290 ($68,675) ($135,521) $148,838 $58,752 ($63,191) Cost Difference (%)--9.01%-20.44%-40.33%44.29%17.48%-18.80% This comparison is intended to illustrate the carrier's proposed services and rates (in summary) and should not be relied upon to fully determine benefits and rates. Refer to carrier's renewal/proposal for a complete representation of coverage terms and conditions. Collier County Government Stop Loss Cost Analysis Effective: 01/01/2022 ¹ Please review medical summary plan description to ensure that the annual maximum matches up with the carrier annual maximum. Failing to do so could result in a gap in coverage. willistowerswatson.com © 2020 Willis Towers Watson. All rights reserved. 16.E.1.a Packet Pg. 1171 Attachment: 2022 01 CCG MDSL MKT Results (20333 : Purchase of Group Health Reinsurance for 2022)