Agenda 09/23/2008 Item #10DItem # 10D
September 23, 2008
Page 1 of 2
EXECUTIVE SUMMARY
Recommendation to approve a budget amendment to Fund 517, Group Health and Life
Insurance, in the amount of $2,002,600 to recognize the receipt of reinsurance
proceeds and pay anticipated claims expenses for the remainder of Fiscal Year 2008.
OBJECTIVE: To gain approval from the Board of County Commissioners of a budget amendment in
the amount of $2,002,600 to Fund 517, Group Health and Life Insurance, to recognize the receipt of
reinsurance proceeds and to pay anticipated claims expenses for the remainder of FY 2008.
CONSIDERATIONS: Pursuant to Florida Statutes 112.08, the Risk Management Department
administers a partially self- funded group health insurance program for the County's eligible
employees and dependents. Actual paid claims cost has been higher than the forecast claims
budget in fiscal year 2008 due to a large number of catastrophic claimants that materialized in the FY
2007 fiscal year and continued into the 2008 fiscal year. Also contributing to this increase in cost is
the fact that the average cost per catastrophic claimant is 28% higher in than in FY 08. The number
of claimants with losses exceeding $50,000 can be demonstrated as follows:
Claimants Exceedin $50,000 in Paid Claims
Fiscal Year
# of Claimants
% Increase
Paid Claims
Average Cost of claims
greater than $50K
FY 08
38 through 7/31/08 annualized)
- 26.67%
$5,768,778
$151,809
FY 07
65
39.96%
$7,654,025
$117,754
FY 06
56
na
1 $5,683,424
1 $101,486
In order to protect the Fund against catastrophic losses, specific excess insurance is purchased.
Specific excess coverage contains a $175,000 self- insured retention per covered member per year.
The Health Fund is reimbursed for paid losses that exceed the self- inured retention to a limit of
$2,000,000 per claimant.
Paid claims in FY 2008 are expected to be approximately $25,600.000. The claims budget is
$24,700,000. Therefore, a budget amendment of $900,000 is needed to pay expected claims
through the end of the fiscal year.
To date in FY 08, the Health Fund has received reinsurance proceeds of $2,002,613 from its
reinsurance carrier. These funds will be used to offset these increased claims costs. The remainder
will be deposited into reserves.
FISCAL IMPACT: The budget for insurance claims will be increased by $900,000, and the Reserves
for Group Health and Life will increase by $1,102,600. Due to the prudent purchase of reinsurance in
2007 and 2008, funds are available from reinsurance proceeds already received within Fund 517,
Group Health and Life.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this
item.
RECOMMENDATION: That the Board approves a budget amendment to Fund 517, Group Health
and Life Insurance, in the amount of $2,002,600 to fund anticipated claims expenses for the
remainder of FY 2007.
`� PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Director, Department of Risk Management
Item # 10D
September 23, 2008
Page 2 of 2
To gain approval from the Board of County Commissioners of a budget amendment in the amount
of $2,002,600 to Fund 517, Group Health and Life Insurance, to recognize the receipt of reinsurance
proceeds and to pay anticipated claims expenses for the remainder of FY 2008. (Jeff Walker, Risk
Management Director)
Prepared By:
Department Date
Risk Management 8/29/2008 10:51:49 AM
Approved By:
Department Approval Date
Administrative
Services Approved 8/29/2008 11:21 AM
Approved By:
Department Approval Date
Office of
Management Approved 8/29/2008 4:32 PM
and Budget
Approved By:
Department Approval
County Approved
Manager's Office
ATTACHMENTS:
Name: Description:
❑ Executive Summary_ Fund
51.7 Group Health and Life Executive Summary
BA_doc
Date
8129/2008 6:38 PM
Type
Executive Summary