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HomeMy WebLinkAbout2024 Healthi o w H 0 CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST r_1-11QkI=111al►r_10[a] r_AI=►TAI=1kik&I AS OF SEPTEMBER 30, 2024 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2023 HEALTH PLAN TRUST TABLE OF CONTENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 Page TITLE PAGE 1 TABLE OF CONTENTS 2 FINANCIAL STATEMENTS Independent Auditor's Report 3-5 Statement of Proprietary Net Position 6 Statement of Changes in Proprietary Net Position 7 Statement of Cash Flows 8 Notes to Financial Statements 9-12 SUPPLEMENTARY INFORMATION 13 Statement of Surplus 14 COMPLIANCE SECTION 15 Report on Internal Control Over Financial Reporting 16-17 Schedule of Findings and Responses 18 Deaton & Company, Chartered Certified Public Accountants 215 North 911, Suite A 34 Pocatello, ID 83201-5278 (208)232-5825 Members of the Idaho Society of Certified Public Accountants Members ofthe American Institute of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Board of Directors City of Chubbuck Health Plan Trust Chubbuck, Idaho Report on the Financial Statements Opinion We have audited the accompanying financial statements of the business -type activities information of City of Chubbuck Health Plan Trust, (the Plan) a component unit of City of Chubbuck as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the Trust's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business -type activities information of the City of Chubbuck Health Plan Trust, as of September 30, 2024, and the respective changes in financial position, and, where applicable, cash flows, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Chubbuck Health Plan Trust, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Chubbuck Health Plan Trust's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Plan's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Required Supplementary Information Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Chubbuck Health Plan Trust's basic financial statements. The schedule of surplus is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance thereon. We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the Trust's basic financial statements for the year ended September 30, 2024, and we expressed unmodified opinions on the respective financial statements of the fiduciary fund information. That audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Trust's basic financial statements as a whole. The summarized comparative information is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 30, 2024, on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Trust's internal control over financial reporting and compliance. Pocatello, Idaho December 30, 2024 CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST STATEMENT OF PROPRIETARY NET POSITION AS OF SEPTEMBER 30, 2024 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2023 2024 ASSETS Cash on hand $ 1,521,724 Prepaid expenses - Uncollected rebates 6,405 1,528,129 LIABILITIES Accounts payable $ 8,504 Health claims incurred but not reported 129,738 Unearned contributions 144,650 282,892 FUND BALANCE/NET ASSETS Fiduciary Net Position N 2023 $ 1,271,780 37,456 1,309,236 $ 215 108,801 120,409 229,425 $ 1,245,237 $ 1,079,811 The accompanying notes are an integral part of these statements CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST STATEMENT OF CHANGES IN PROPRIETARY NET POSITION FOR THE YEAR ENDED AS OF SEPTEMBER 30, 2024 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2023 1,919,799 1,992,780 1]=1Billet 1101kq K Stop -loss coverage 2024 2023 ADDITIONS 1,126 1,112 Contributions $ 1,630,966 $ 1,388,144 Stop loss recovery 204,245 209,397 Rx rebates collected 42,655 23,408 Interest income 41,933 22,140 Other income - 349,691 1,919,799 1,992,780 1]=1Billet 1101kq K Stop -loss coverage 372,408 331,127 Taxes 1,126 1,112 Broker fees 25,260 24,080 Professional service fees 33,961 17,919 Continuation fees 500 500 Change in IBNR 20,937 15,261 Bonded insurance expense 303 295 Immunization 6,720 8,400 Claims administration 62,972 56,799 Claims incurred 1,230,186 1,140,432 1,754,373 1,595,925 INCREASE (DECREASE) IN NET POSITION 165,426 396,855 PROPRIETARY NET POSITION EMPLOYEE HEALTH PLAN - BEGINNING OF YEAR 1,079,811 682,956 PROPRIETARY NET POSITION EMPLOYEE HEALTH PLAN - END OF YEAR 7 $ 1.245.237 $ 1.079.811 The accompanying notes are an integral part of these financial statements CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST STATEMENT OF PROPRIETARY CASH FLOW FOR THE YEAR ENDED SEPTEMBER 30, 2024 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from revenues Cash paid to suppliers Cash received from interest Net cash provided by operating activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS BEGINNING CASH AND CASH EQUIVALENTS ENDING CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS ARE REPORTED AS: Cash and cash equivalents 2024 2023 $ 1,908,917 $2,022,611 (1,700,906) (1,581,158) 41,933 - 249,944 441,453 249,944 441,453 1,271,780 830,327 $ 1,521,724 $ 1,271,780 $ 1,521,724 $1,271,780 RECONCILIATIONS OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES 2024 OPERATING INCOME $ 165,426 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Increase) decrease in assets Accounts receivable Prepaid expense Increase (decrease) in liabilities Accounts payable Health claims incurred but not reported Unearned contributions Total adjustments NET CASH PROVIDED BY OPERATING ACTIVITIES 0 See accompanying notes to financial statements (6,405) 37,456 8,289 20,937 2023 $396,855 49,756 (37,456) 32,298 84,518 44,598 $ 249,944 $ 441,453 CITY OF CHUBBUCK, IDAHO HEALTH TRUST PLAN NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 4) NOTE 1 - Plan Description The following description of the City of Chubbuck Health Plan Trust (the Trust) provides only general information. The Trust Agreement should be referred to for a more complete and thorough description of the Trust. A. General To qualify for benefits, a person must be and remain an elected official of the City of Chubbuck or a full- time employee of the City of Chubbuck who regularly works at least thirty (30) hours per week or a part- time exempt salaried employee working an annual average of at least fifteen (15) hours per week. Eligible dependents of qualified elected officials or qualified employees are also offered coverage. Coverage begins on the first day of the month after 30 days of employment. Coverage is extended after employment in accordance with COBRA. B. Benefits Medical coverage is available to participants of the Trust. Medical coverage includes medical claims and prescription drugs. C. Contributions All medical and prescription drug coverages are paid by the City through contributions to the Trust. The Trust determines the contribution rates to meet funding requirements. D. Self -Insured All Trust benefits are self-insured up to $50,000 with aggregate excess loss coverage of $1,000,000. Blue Cross of Idaho (claims administrator), selected by the Plan Trustees, administers the benefits and receives a fee per eligible employee for processing and paying claims. The responsibility for claim payments is retained by the Trust. The Trust utilizes a pharmacy benefit manager which makes monthly refunds to the Trust based on the actual utilization pattern of the drugs. All administrative fees and expenses are paid by the Trust through contributions from the City. Administration services are performed by the City to the Trust at no charge. In the future, the Trust may be charged an administration fee for services performed by the City. E. Insurance Premiums The Trust is insured by Blue Cross of Idaho against specific losses greater than $50,000 with aggregate excess loss coverage of $1,000,000. The attachment point for excess loss coverage is based on a set factor multiplied by the number of enrollees over a twelve month period. F. Plan Termination Although the City has no intent to do so, the City reserves the right to terminate the Trust. If the Trust is terminated, the net assets would be paid out after settlement of claims and expenses in accordance with the process defined by the Idaho Department of Insurance. 9 CITY OF CHUBBUCK, IDAHO HEALTH TRUST PLAN NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 4) NOTE 2 - Summary of Significant Accounting Policies A. Basis of Accounting The accounting and reporting policies of the Trust included in the accompanying financial statements conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Government Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants in the publication titled Audits of State and Local Governmental Units. The Trust is accounted for and reported as a proprietary fund using the accrual basis of accounting. Under this method, revenues are recognized when they are earned, and expenses are recognized when they are incurred. The statement of proprietary net position and the statement of changes in proprietary net position display information about the Plan. B. Assets, Liabilities, and Net Position Prepaid Expenses Prepaid expenses are future expenses paid in advance. The expenses will be recognized in the period incurred, and the prepaid asset will be reduced. Receivables The Trust could be eligible to receive a recovery against their aggregate stop loss coverage. The Trust would apply for the recovery from Blue Cross of Idaho. The amount of the recovery not received in the declared period is considered receivable. If the actual recovery is different than the estimated amount, that difference can be adjusted in the next fiscal year. Payables Expenses should be paid in the period in which they are incurred. A payment that is not made in the period incurred is considered an accrued payable. The accrued payable is expected to be paid the next period. Payables for the fiscal year ended September 30, 2024 are as follows: September employee integration services Professional fees 10 $ 104 8,400 $ 8,504 CITY OF CHUBBUCK, IDAHO HEALTH TRUST PLAN NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 4) NOTE 2 - Summary of Significant Accounting Policies (Continued) B. Assets, Liabilities, and Net Position (Continued) Fund Equity Equity is classified as net position and displayed in three components: a. Net investment in capital assets - Consists of capital assets including capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages notes, or other borrowings that are attributable to the acquisition, construction, or improvement of these assets. b. Restricted - Consists of assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted - All other assets that do not meet the definition of "restricted" or "net investment in capital assets." Restricted assets include cash and investments of the general fund that are legally restricted as to their use. All assets are restricted for the employee benefits related to health insurance. Revenue and Expenses Prescription rebates are recorded as revenue when received. Claims payments are recorded when paid by the third -party claims processor. Amounts due to claims processors that have yet to be reimbursed by the Trust are recorded as claims payable in the accompanying statement of net position. Re -insurance premiums paid by the Trust are recorded as administrative expenses in the accompanying statement of changes in net position. Expenses of administering the Trust are the responsibility of the Trust. C. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the City to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 3 - Cash Equivalents A. Cash On -hand Bank statement balance Outstanding cash Book balance B. Custodial Credit Risk $ 1,536,293 (14,569) $1,521,724 Custodial Credit Risk for deposits is the risk that, in the event of bank failure, the government's deposits may not be returned to it. The Trust's deposits, at year-end, were covered by collateralized accounts or federal depository insurance up to $250,000. 11 CITY OF CHUBBUCK, IDAHO HEALTH TRUST PLAN NOTES TO FINANCIAL STATEMENTS (PAGE 4 OF 4) NOTE 4 - Medical Claims Incurred But Not Reported Medical claims incurred but not reported (IBNR) are claims that have occurred but are not settled and claims incurred but not reported. The liability is actuarially estimated based on historical claims experience and industry accepted actuarial methods and assumptions. It is assumed that most outstanding claims would be resolved in a three month period. Balance: October 1, 2024 Claims and changes in estimates Claims payment Balance: September 30, 2024 NOTE 5 - Risk Management $ 108,801 1,156,435 (1,135,498) $ 129,738 Regence Blue Shield of Idaho (claims administrator), selected by the Plan Trustees, administers the benefits and receives a fee per eligible employee for processing and paying claims. The responsibility for claim payments is retained by the Trust. (See Supplemental information for surplus break out). NOTE 6 - Subsequent Events Subsequent events were evaluated up to December 30, 2024, the date the financial statements were available to be issued. 12 SUPPLEMENTARY INFORMATION 13 CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST SCHEDULE OF SURPLUS FOR THE YEAR ENDED AS OF SEPTEMBER 30, 2024 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2023 Beginning surplus Net income (loss) Ending surplus 2024 $ 1,079,811 165,426 $ 1,245,237 2023 $ 682,956 396,855 $ 1,079,811 Total surplus, fiscal year end $ 1,245,237 $ 1,079,811 Minimum required surplus*' (407,742) (347,036) Excess (deficient) reserves $ 837,495 $ 732,775 Note: Although the Idaho Code §41-4010(3) stated to use the least amount of the two methods, the Health Plan Trust elected to use Method 1 based on their stop loss contract. *1 Minimum surplus is calculated by either method (1) or (2) under Idaho Code, §41-4010(3); see excerpt below: 41-4010(3): In addition to reserves required by this section, a self-funded plan shall establish and maintain in its trust fund surplus equal to at least: (1) The equivalence of three (3) months of contributions for the current plan year; or (2) One hundred ten percent (110%) of the difference between the total dollar aggregate stop- loss attachment point plus costs of operation and the total dollar expected contributions for the current plan year. Calculation of minimum required surplus: Method (a) Average monthly contribution x three Method (b) la Aggregate dollar stop loss attachment point lb Estimated total expenses (including stop loss premium) 1c Estimated contributions ld Difference (minimum of $0): la+1b-1c le 110% of difference: 1 d x 1.10 Lesser of method (a) and method (b) 14 $ 407,742 $ 1,163,891 494,746 (1,630,966) $ 27,671 $ 30,438 $ 30,438 COMPLIANCE SECTION 15 Deaton & Company, Chartered Certified Public Accountants 215 North 91h, Suite A Pocatello, ID 83201-5278 (208) 232-5825 Members of the Idaho Society of Cedified Public Accountants Members of the American Institute of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors City of Chubbuck Health Plan Trust Chubbuck, Idaho We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standardsd issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund, and the aggregate remaining fund information of City of Chubbuck Health Plan Trust, as of and for the years ended September 30, 2024, and the related notes to the financial statements, which collectively comprise City of Chubbuck Health Plan Trust's basic financial statements, and have issued our report thereon dated December 30, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit, we considered City of Chubbuck Health Plan Trust's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Chubbuck Health Plan Trust's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Chubbuck Health Plan Trust's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Trust's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Chubbuck, Idaho December 30, 2024 CITY OF CHUBBUCK, IDAHO HEALTH PLAN TRUST SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED SEPTEMBER 30, 2024 Findings Of Significant Deficiency And Responses NONE