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Agenda 12/13/2022 Item #16E 1 (Group Health Reinsurance through SunLife)12/13/2022 EXECUTIVE SUMMARY Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $708,022, effective January 1, 2023. 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 exc ess insurance protects the Plan if a covered member incurs claims cost more than 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 Pl an. The purchase of Aggregate Excess is not recommended due to the high likelihood that the self -insured retention will never be met. 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, 2022. For the January 1, 2023 renewal, Willis Towers Watson (WTW), the County’s benefits brokerage and actuarial consulting firm, marketed the Stop Loss program. WTW sought quotes at the $1,000,000, $750,000, and $500,000 retention levels. 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), and 3) the carrier must follow the County’s Plan definition for Medical Necessity when making coverage determinations. Quotations were requested from the following nine (9) carriers of which three (3) quoted. The major reason for declining to quote was due to an inability to meet the terms of coverage or an inability to offer competitive rates: 1. American Fidelity (declined to quote) 2. Swiss Re (quoted 40% increase over current) 3. Voya (declined to quote) 4. Sun Life (quote received) 5. Optum (declined to quote) 6. HM Insurance Group (declined to quote) 7. UNUM (declined to quote) 8. QBE (quoted 61% over current rates) 9. Symetra (declined to quote) WTW performed an actuarial analysis of the proposals quoted to determine the retention level and carrier to recommend. WTW recommends renewing coverage with SunLife for the following reasons. • SunLife’s premium quotations were the lowest at every retention level. • By renewing with SunLife, the County is likely to receive an experience rated refund for the 2021 policy year in the amount of $34,000. • Stability in working with one carrier for more than one year is perceived favorably by the markets. The County has been insured with SunLife for the last seven (7) years. WTW further recommended the purchase at a $750,000 retention level as stated in their report as follows: “Further, WTW’s statistical models suggest a greater than even probability that the increasing premium (associated with a lower deductible) would likely be offset by reimbursements provided by Sun Life. The increase in premiums over the current level is $343,000. The total cost for medical stop loss for 2023 is estimated at $708,000.” 16.E.1 Packet Pg. 1948 12/13/2022 The proposed rates are as follows: Carriers: SunLife QBE Swiss Re Composite Rate PEPM* $27.24 $34.90 $39.76 Specific Deductible $750,000 $750,000 $750,000 Monthly Premium $59,002 $75,593 $86,120 Annual Premium $708,022 $907,121 $1,033,442 *PEPM means “Per Employee per Month” In summary, WTW recommends that the County select SunLife at a $750,000 retention level for the reasons as stated. The Risk Management Director agrees with this recommendation. Sun Life carries a Best’s “A” (Superior) financial rating. Coverage will commence January 1, 2023 for a one -year period. FISCAL IMPACT: The estimated cost of group health reinsurance in calendar year 2023 is $708,022 based upon an average enrollment of 2,166 employees. The composite rate per enrolled employee is $27.24 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 bind and commence coverage effective January 1, 2023. PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Division ATTACHMENT(S) 1. 2023 01 CCG MDSL Renewal MKT Results (003) (PDF) 16.E.1 Packet Pg. 1949 12/13/2022 COLLIER COUNTY Board of County Commissioners Item Number: 16.E.1 Doc ID: 23541 Item Summary: Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $708,022, effective January 1, 2023. Meeting Date: 12/13/2022 Prepared by: Title: Benefits Analyst – Risk Management Name: Sonja Sweet 10/05/2022 2:40 PM Submitted by: Title: Division Director - Risk Management – Risk Management Name: Jeff Walker 10/05/2022 2:40 PM Approved By: Review: Risk Management Jeff Walker Director Review Completed 10/05/2022 4:38 PM County Attorney's Office Jeffrey A. Klatzkow Level 2 Attorney Review Completed 10/05/2022 4:51 PM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 10/05/2022 4:51 PM Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 10/06/2022 8:59 AM Office of Management and Budget Susan Usher Additional Reviewer Completed 10/14/2022 4:08 PM County Manager's Office Dan Rodriguez Level 4 County Manager Review Completed 12/05/2022 9:07 AM Board of County Commissioners Geoffrey Willig Meeting Pending 12/13/2022 9:00 AM 16.E.1 Packet Pg. 1950 Current Renewal Option Option Option Option Option Option Option Reinsurance Carrier SunLife SunLife SunLife SunLife QBE QBE SwissRe SwissRe SwissRe Medical Administrator Allegiance Allegiance Allegiance Allegiance Allegiance Allegiance Carrier Carrier Carrier Provider Network(s)Cigna PPO Cigna PPO Cigna PPO Cigna PPO Cigna PPO Cigna PPO Network Network Network SPECIFIC STOP LOSS Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx LASERS None None None None TBD TBD TBD TBD TBD Contract Type 12/24 12/24 12/24 12/24 12/24 12/24 12/24 12/24 12/24 Specific Deductible $1,000,000 $1,000,000 $750,000 $500,000 $1,000,000 $750,000 $1,000,000 $750,000 $500,000 Aggregating Specific Deductible Specific Annual Maximum¹Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Specific Run-In Limit Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited No New LASER at Renewal Provision Included Included Included Included Included Included Included Included Included Rate Cap at Renewal Provision 40%40%40%40%40%40%40%40%40% Experience Refunds Included Included Included Included Included Included Included Included Included Plan Mirroring Included Included Included Included Included Included Included Included Included Actively at Work Provision Waived Waived Waived Waived Waived Waived Waived Waived Waived Retiree Inclusion Included Included Included Included Included Included Included Included Included Specific Premium 2166 Composite $14.03 $16.42 $27.24 $48.91 $22.70 $34.90 $19.60 $39.76 $84.65 Monthly Specific Premium $30,389 $35,566 $59,002 $105,939 $49,168 $75,593 $42,454 $86,120 $183,352 Annual Specific Premium $364,668 $426,789 $708,022 $1,271,269 $590,018 $907,121 $509,443 $1,033,442 $2,200,223 Total Annual Stop Loss Costs $364,668 $426,789 $708,022 $1,271,269 $590,018 $907,121 $509,443 $1,033,442 $2,200,223 Cost Difference ($)--$62,121 $343,354 $906,601 $225,351 $542,453 $144,775 $668,774 $1,835,555 Cost Difference (%)--17.03%94.16%248.61%61.80%148.75%39.70%183.39%503.35% Proposal Finalization Date / Requirements Additional Notes 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: 01/01/2023 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. Data through August needed for firm quotes Data Through August needed for firm quote Updated claims data needed for firm quote wtwco.com © 2022 Willis Towers Watson. All rights reserved. 16.E.1.a Packet Pg. 1951 Attachment: 2023 01 CCG MDSL Renewal MKT Results (003) (23541 : Group Health Reinusrance)