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Home My WebLink AboutItem #5 FY24 Health Trust/ ao", t*- \ CHUBBUCK 1 A A H A To: Council Members From: Scott Gummersall Date: September 5, 2023 Re: Health Plan Funding FY24 Council Members, City of Chubbuck Health Plan Trust 290 E Linden Avenue, Chubbuck, ID 83202 208.239.3279 The Trustees for the City of Chubbuck Health Plan Trust are requesting Council approval to fund the Trust for the plan year beginning October 01, 2023 as presented. The requested contribution is as recommended by the Plan Actuary in the Contribution Certification letter dated August 30, 2023. Council approval should be conditional upon approval of the contribution rates by the Idaho Department of Insurance. Monthly Contribution Rates per the Plan Actuary The Plan Actuary states in the Contribution Certification letter that "...we have determined that the recommended contribution rates are reasonable and provide a margin for adverse experience and all costs of operations. The recommended contribution rates are neither inadequate or excessive nor unfairly discriminatory. They are appropriate for the classes of risk for which they have been computed." Attached are excerpts from the pro -forma financial statements prepared by the Plan Actuary as part of the Contribution Certification letter. The 14% increase in operating costs is driven by inflation and a sustained high level of claims. The Plan Actuary has also added approximately 10% for additional employees to be hired in FY24 and has assumed full staffing for FY24. Using the recommended rates and the staffing projections, annual City contributions for FY24 are estimated to be $1,742,366 (Exhibit 6). At that contribution level, the Plan Actuary estimates that even in a worst-case scenario, surplus will be maintained and is estimated to be $1,032,211 at the end of FY24 (Exhibit 5). This is well over the estimated statutory minimum surplus level of $435,591 (Exhibit 5). Operating results of the Trust for FY24 are estimated to be an increase of $10,653... essentially flat (Exhibit 6). For the FY24 Plan year, there are no planned changes in deductibles or out-of-pocket maximums paid by the employees, and as in the prior year, there is no planned employee participation in the contribution rate. Monthly Prior Contribution Monthly Rate Contribution Effective Percentage Coverage Rate 10/0023 Increase L nplovee Only 556.06 630.68 13.4% I_.inployee and Spouse 1,062.31 1,21044 13.9% L nployee and Children 969.51 1,104.13 13.9% Fanilv 1,410_39 1,609.00 14.1'."D Overall Kate Increase 14.0% The Plan Actuary states in the Contribution Certification letter that "...we have determined that the recommended contribution rates are reasonable and provide a margin for adverse experience and all costs of operations. The recommended contribution rates are neither inadequate or excessive nor unfairly discriminatory. They are appropriate for the classes of risk for which they have been computed." Attached are excerpts from the pro -forma financial statements prepared by the Plan Actuary as part of the Contribution Certification letter. The 14% increase in operating costs is driven by inflation and a sustained high level of claims. The Plan Actuary has also added approximately 10% for additional employees to be hired in FY24 and has assumed full staffing for FY24. Using the recommended rates and the staffing projections, annual City contributions for FY24 are estimated to be $1,742,366 (Exhibit 6). At that contribution level, the Plan Actuary estimates that even in a worst-case scenario, surplus will be maintained and is estimated to be $1,032,211 at the end of FY24 (Exhibit 5). This is well over the estimated statutory minimum surplus level of $435,591 (Exhibit 5). Operating results of the Trust for FY24 are estimated to be an increase of $10,653... essentially flat (Exhibit 6). For the FY24 Plan year, there are no planned changes in deductibles or out-of-pocket maximums paid by the employees, and as in the prior year, there is no planned employee participation in the contribution rate. The approved FY24 budget for the City will cover the total increase in cost. The budget for the health plan includes the 14% increase in operating costs and the increase due to added staff and full staffing. The Plan Trustees unanimously support this contribution request. Please let me know if you have questions. Thanks, Scott Gummersall I Trustee City of Chubbuck Health Plan Trust 5160 Yellowstone Avenue Chubbuck,ID 83202 Copy: Paul Andrus Rich Morgan Exhibit 5 City of Chubbuck Sclf-funded Medical Plan Proforma Surplus Reconciliation and Surplus Adequacy - Aggr City ofChubbuck5eH-fundedMedralPlan Jun -Z3 Jul -23 Aug -Z3 5ep-Z3 Oct-" NWWZI Dec -Z3 Jan -Z4 Feb -Z4 w1ar-24 Apr -Z4 May -24 lurk -Z4 Jul -24 A1104 5ep•24 Ramndliation of Surplus Total surpl us, Beginning of period 682,955 936,521 526,091 915,403 1,021,557 1x015,636 1,019,547 1M3,585 1,024,045 1,410,995 1,015,000 1x017,109 1,021,246 1A25,355 1,027,492 1029,101 Total NetgairV (loss) 253,665 (1D 531) {10,889} 106,155 X5,921} 3,961 3,988 461 {13,150} 4,105 2,109 4,137 4,109 2,137 609 4,109 Total surplus, end of period 935,621 926,091 915,403 1,021,557 1,015,635 1,019,597 1,023,585 1,024,045 1,010,$95 1,015,000 1,017,109 1,021„246 1,025,355 1,027,492 1,028,1o1 1„032,211 Adeq uacy of Su rplus Total Surplus, end of period 93021 926,091 915,403 1,021,557 1,Di5,636 1,019,597 1,023,595 1,024,045 1,010,$95 1,015,050 1,017,109 1,021„246 1,025,355 1,027,492 1,i 28,101 1,03 ,211 Minimum requirifdsurplus 351,574 351,574 351,574 351,574 435,591 4#5,591 435,591 435,591 435,591 435,591 435,591 435,591 435,591 435,591 435,591 435,591 EXCeSS (deficient) reserves 5$5.048 574,517 553,829 669,984 590.045 584,005 597.993 588,454 575304 579,404 581x518 585,655 559.764 541,9DD 594510 596,619 Exhibit 6 City of Chu bbuck Self -Funded Medical Plan Proforma Income Statement • Aggregate Stop Loss Attachmet city ofchuhburkSelF-fundedMediralPlan mn-23 Jul -23 Aug -23 Sep -Z3 Oct -23 Nov -23 Der -23 lain -24 Fe6-24 Mar -24 Apf-24 May -24 mn-24 hft•$4 Aug -24 Sep•24 Statement Of IAroma 328,114 365,381 4,680 2045 {20,#80} {1.$,000} 7010 64,$91 22x929 64,150 13'133 13,63$ 208 1,06$ 1,41SrO82 1,731,712 Operating Revein ue 1,653 338,602 10,653 Contributions ffom Emplayef 1,04,177 120,960 122,578 122578 139,724 141,964 191,954 141,964 145,414 145,414 147,654 147,654 147,654 147,654 147,657 147,554 5tap Lass Recovered - - - - - - Dthef Revenue 347,389 I - - I - I I - -- Total Operating Revenue 1,187,566 12[,960 122,578 12257$ 139,724 141,964 141,964 141,964 145,414 145,43A 147,654 147,654 147,654 147r654 147,654 147,654 Opefatin Expenses Claims Paid 920,692 95,761 96,985 96,986 95,986 98512 98,512 9$512 100,872 100,872 102,399 102,399 102,399 102'399 102,399 102,399 Smp Lass Reroyerie5 (139,590) (121,343) - ChangeinlBNR 39,585 818 845 845 818 845 818 845 845 791 845 818 845 818 845 845 Claimslnrumnd 82,683 96r581 97,831 (23512) 97,804 99r358 99,330 99r358 101,717 101r663 103,244 103r217 103,244 103,217 103,244 103,244 Stop Lass roverage expense paid • specifir 245,711 26,905 27,249 27,249 29,119 29,781 29,781 29,781 30,494 10,494 30,955 #0,955 30,955 30r955 30,955 10,955 Stop Lass coverage expense paid - aggregate 1540 1,570 1570 1,749 1,782 1,782 1,782 1,832 1,8#2 1,865 1,865 1,865 1,965 1,865 1,$65 Pharmacy Rebates (15,880) (1500) {1,5001 (iso0) (1,500) (1500) {1,500} (1500) (1,500) (isoo) {1,500} (1500) {1,500} (1,500) {1,500} (150X) ClainUadeniiniStiatleMrWA Fens paid 60,262 4,7$8 4,8$0 4,M0 5,172 5x20 5,26$ 5x69 5,416 5,416 5,513 551# 5,513 5,513 5,513 5513 Ma AagernentjProfessloAalSefvicefees paid 12,109 2080 2,120 6,520 11,970 2r160 2,160 5,160 19,420 2,220 4,260 "61) 2,260 4r260 5,760 2r260 Taxes paid 10,012 1027 1,047 1,047 1,047 1„067 1,067 1,567 1,095 1,096 1,116 1,116 1,115 1,116 1,115 1,116 ACA - PCCIRI Fee 68 70 70 $5 87 87 87 89 89 91 91 91 91 91 91 Other operati v expenses Total OperatiMg ExpenSeS 1,133,901 1#1'491 133,265 1 16e424 145,645 1#800# 137,975 14150# 158,567 141,309 145,544 143rS17 143,5 -0# 145517 147,047143r544 Operating Gain (Loss) 253,666 (105#i) {1,6$8} 1!56,155 (5,921} 3,961 3,988 461 (13,150)1 4,105 21109 4,137 4,109 2,1#7 609 4,109 NetlintOFIW (LOSS} 253,666 X10531) {1,6881 1D6,L45 {5,9211 3,951 3,988 461 (13, 150)1 4,105 2,109 Ar137 4,104 2,137 609 4,109 Oct -22 Jn Oct -23 to Sept -23 Sep -24 1'406'294 1,742,#66 347,389 1,753,6,13 1,742,366 1,215,426 i,2o$,66o (260,932) 42,094 9,980 991,588 1,218,640 328,114 365,381 4,680 2045 {20,#80} {1.$,000} 7010 64,$91 22x929 64,150 13'133 13,63$ 208 1,06$ 1,41SrO82 1,731,712 338602 1,653 338,602 10,653 Em 0