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Agenda 12/12/2023 Item #16E 1 (Approve the purchase of Group Health Reinsurance through Sunlife)12/12/2023 EXECUTIVE SUMMARY Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $853,320, effective January 1, 2024. 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 that 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 Plan. 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 $750,000 per member. The current Stop Loss coverage expires at midnight, December 31, 2023. For the January 1, 2024 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 six (6) carriers of which two (2) 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. Voya (declined to quote) 2. Sun Life (quoted 15% above current rates) 3. Optum (declined to quote) 4. HM Insurance Group (declined to quote) 5. QBE (quoted 23.5% over current rates) 6. 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 will likely receive an experience-rated refund for the 2022 policy year. That rebate is currently estimated at $55,800. • 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 eight (8) years. WTW further recommended the purchase at a $750,000 retention level as stated in their report as follows: “Depending on their experience, the increase of 15% appears to be either slightly above or at the low end of the reasonable range. While all the rates quoted for 2024 appear to be in excess of the likely 75 th percentile, the rate quoted from the current $750,000 limit is the one that exceeds the 75th percentile by the lowest margin.” The proposed rates are as follows: Carriers: SunLife QBE 16.E.1 Packet Pg. 2195 12/12/2023 Composite Rate PEPM* $31.33 $33.62 Specific Deductible $750,000 $750,000 Monthly Premium $71,110 $76.351 Annual Premium $853,320 $916,212 *PEPM means “Per Employee per Month” In summary, WTW recommends that the County select SunLife at a $750,000 retention level for the reasons stated. The Risk Management Director agrees with this recommendation. Sun Life carries a Best’s “A+” (Superior) financial rating. Coverage will commence January 1, 2024, for a one- year period. FISCAL IMPACT: The estimated cost of group health reinsurance for calendar year 2024 is $853,320 based upon an average enrollment of 2,270 employees. The composite rate per enrolled employee is $31.33 per month. Premiums are remitted monthly based upon actual enrollment. Funds are available in Fund 5017, cost center 121640, Group Health and Life Insurance. GROWTH MANAGEMENTIMPACT: 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, 2024. PREPARED BY: Sonja L. Sweet, Risk Manager, Risk Management Division ATTACHMENT(S) 1. 2024 01 CCG Marketing-Final (PDF) 16.E.1 Packet Pg. 2196 12/12/2023 COLLIER COUNTY Board of County Commissioners Item Number: 16.E.1 Doc ID: 27243 Item Summary: Recommendation to approve the purchase of Group Health Reinsurance through SunLife in the estimated amount of $853,320 effective January 1, 2024. Meeting Date: 12/12/2023 Prepared by: Title: Benefits Analyst – Risk Management Name: Sonja Sweet 11/10/2023 11:26 AM Submitted by: Title: Risk Management Director – Risk Management Name: Michael Quigley 11/10/2023 11:26 AM Approved By: Review: Risk Management Michael Quigley Director Review Completed 11/10/2023 1:13 PM County Attorney's Office Jeffrey A. Klatzkow Level 2 Attorney Review Completed 11/15/2023 3:21 PM Corporate Business Operations Kenneth Kovensky Corporate Business Operations Review Completed 11/18/2023 4:13 AM Office of Management and Budget Debra Windsor Level 3 OMB Gatekeeper Review Completed 11/20/2023 8:44 AM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 11/20/2023 9:03 AM Office of Management and Budget Blanca Aquino Luque Additional Reviewer Completed 11/29/2023 2:30 PM County Manager's Office Amy Patterson Level 4 County Manager Review Completed 12/06/2023 12:36 PM Board of County Commissioners Geoffrey Willig Meeting Pending 12/12/2023 9:00 AM 16.E.1 Packet Pg. 2197 Reinsurance (Stop Loss) Carrier Sun Life Sun Life QBE Medical Administrator Allegiance Allegiance Allegiance Current Renewal Option Option Option SPECIFIC STOP LOSS Medical/Rx Medical/Rx Medical/Rx Medical/Rx Medical/Rx QUOTE STATUS SELECT ONE FIRM FIRM FIRM FIRM Quote Expiration date 10/15/2023 10/15/2023 10/15/2023 LASERS - ASSESSED None None None None None LASERS - CONTINGENT None None None None None Contract Type 12/24 12/24 12/24 12/24 12/24 Specific Deductible $750,000 $750,000 $1,000,000 $500,000 $750,000 Specific Annual Maximum¹Unlimited Unlimited Unlimited Unlimited Unlimited Specific Run-In Limit N/A N/A N/A N/A N/A No New LASER at Renewal Provision Included Included Included Included Included Rate Cap at Renewal Provision 40%40%40%40%40% Experience Refunds Included Included Included Included Included Medical Necessity Determination Per Plan Doc Per Plan Doc Per Plan Doc Per Plan Doc Per Plan Doc Plan Mirroring Included Included Included Included Included Specific Advance Funding Provision Included Included Included Included Included Actively at Work Provision Waived Waived Waived Waived Waived Retiree Inclusion Included Included Included Included Included Specific Premium 2270 Composite $27.24 $31.33 $22.55 $64.37 $33.62 Monthly Specific Premium $61,835 $71,110 $51,199 $146,120 $76,317 Annual Specific Premium $742,018 $853,320.00 $614,388 $1,753,439 $915,809 Total Annual Stop Loss Costs $742,018 $853,320 $614,391 $1,753,439 $915,809 Cost Difference ($)--$111,302 ($127,627)$1,011,421 $173,791 Cost Difference (%)--15.0%-17.2%136.3%23.4% Additional LASER Liability ($ in excess of ISL Ded)$0 $0 $0 $0 $0 Total Annualized Maximum Costs (Incl Laser & Agg Spec)$742,018 $853,320 $614,391 $1,753,439 $915,809 Percent of Cost Difference % (Max)--15.0%#-17.2%136.3%23.4% Total Annualized Expected Costs (Excl Laser & Agg Spec)$742,018 $853,320 #$614,391 $1,753,439 $915,809 Percent of Cost Difference % (Exp)--15.0%#-17.2%136.3%23.4% Proposal Finalization Date / Requirements Firm through 10/15 Firm through 10/15 Firm through 10/15 Additional Notes Health Navigator can be added for $3 PEPM Health Navigator can be added for $3 PEPM Health Navigator can be added for $3 PEPM Quote subject to updated large claims through 8/2023 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. 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. Sun Life Allegiance Collier County Government Stop Loss Cost Analysis Effective: 01/01/2024 wtwco.com © 2023 WTW. Proprietary and confidential. For WTW and WTW client use only. 16.E.1.a Packet Pg. 2198 Attachment: 2024 01 CCG Marketing-Final (27243 : Group Health Reinsurance)