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HomeMy WebLinkAbout06-13-2016 Finance Committee MinutesDUBLIN CITY COUNCIL FINANCE COMMITTEE MEETING OF THE WHOLE Monday, June 13, 2016 Council Chambers Minutes of Meeting Mr. Keenan, Finance Committee Chair, called the meeting to order at 5:30 p.m. Council members present: Mr. Keenan, Mr. Lecklider, Ms. Alutto, Mayor Peterson, Ms. Amorose Groomes, and Vice Mayor Reiner (arrived late). Ms. Salay was absent (excused) Staff present: Mr. McDaniel, Ms. Mumma, Ms. Kennedy, Mr. Rogers, Mr. Nahvi, Mr. Shawn Smith, Mr. O’Brien. Mr. Keenan moved to approve the minutes of the meeting of April 25, 2016. Mr. Lecklider seconded the motion. Vote on the motion: Mayor Peterson, yes; Ms. Amorose Groomes, yes; Ms. Alutto, yes; Mr. Keenan, yes; Mr. Lecklider, yes. Mr. Keenan stated that the topic of tonight’s agenda is the continued discussion of Employee Benefits. Jason Nahvi, Benefits Administrator stated that tonight, Part 2 of the City’s benefits and wellness program will be reviewed. Part 1 was an overview from where the program began to where it is today. Part 2 will:  Compare the costs of the City’s current self-insured program compared to a fully-insured benefits program.  Compare Dublin’s health care plan to the cities of Westerville and Gahanna, to the Central Ohio Health Care Consortium (COHCC), the Franklin County Cooperative, and the private sector.  Highlight certain aspects of the current plan.  Review recent Equal Employment Opportunity Commission (EEOC) ruling including how it will impact the City’s wellness program.  Present potential courses of action, including staff’s recommendation, for the City’s benefits and wellness program. Comparison of Self-Insured vs. Fully Insured Plans Self-Insured:  The City of Dublin has been self-insured for over 13 years. The City operates its own health plan instead of paying a premium to the insurance carrier, UnitedHealthcare, to run a structured plan for the City.  There is always the risk of incurring larger, catastrophic claims, which the City must pay. These types of claims are not indicative of whether the plan is working or successful. • Fixed costs include the stop-loss premiums, administrative fees to the insurance carrier or the City’s third party administrator, Oswald Companies. • Variable costs include the monthly payments of the members’ healthcare claims. The City pays dollar for dollar for any health care claims up to $150,000. The City pays only up to that amount because it has purchased stop-loss insurance, as it is self-insured. UnitedHealthcare reimburses the City the difference for claims that exceed $150,000. Finance Committee of the Whole June 13, 2016 Page 2 Fully Insured: • The City would pay a premium to the insurance carrier (UnitedHealthcare) for the City’s benefits program. • UnitedHealthcare would control the plan and pay the medical claims per the plan design. This would be a more hands-off approach than what the City has now with its self-insured plan. • The premium rates are fixed for a year, based on the number of employees enrolled in the plan each month. • The monthly premium only fluctuates during the year if the number of enrolled employees in the plan changes. • Typically, the employees have co-pays for doctors, emergency room and urgent care visits. Estimated Cost of Self-Funded Plan for 2017 UnitedHealthcare and Oswald put together the potential costs of a fully-insured plan compared to the City’s self-insured plan. The City’s paid claims from May 2015 through April 2016 were used to calculate a 2017 estimated cost of $4.3 million. That estimate was reached by taking the total paid claims of $5.2 million and adding the annual administrative and stop-loss fees for a total of $6.3 million. From that amount, the $2 million reimbursement for stop-loss claims was subtracted, resulting in the estimate of $4.3 million for the City’s self-insured medical plan in 2017. Estimated Cost of Fully-Insured Plan for 2017 The UHC monthly estimate for premiums would $448,352, for an annual total of $5.3 million. This is what would be used to pay medical claims. This amount is based on the number of employees on the City’s plan and the City’s claims experience. Comparing the cost of $4.3 million for a self- insured plan versus $5.3 million fully-insured indicates that the City would pay over $1 million more per year for a fully-insured plan. The City’s self-insured plan was compared to the health plans of the cities of Westerville and Gahanna, the Central Ohio Health Care Consortium (COHCC), the Franklin County Cooperative, and the private sector. Plan Design for each of those entities  City of Westerville – Self-insured; High Deductible with Health Savings Account; 1,300 members; UHC provider; voluntary wellness program.  City of Gahanna – Traditional preferred provider organization (PPO); self-insured; 296 members; UHC; voluntary wellness program.  Franklin County Cooperative – PPO plan; self-insured; 16,000 members, of which 115 are SWACO employees; UHC; voluntary wellness program.  Central Ohio Health Care Consortium – PPO plan; self-insured; over 2,200 members; UHC; wellness program.  Private sector – Either High Deductible or traditional PPO plan; varied numbers of members; various providers; wellness program varies. All the public entities reviewed were self-insured, like Dublin. Private entities reflected both types of plans. All public entities used UHC as the insurance carrier; the private sector varied. Finance Committee of the Whole June 13, 2016 Page 3 Plan Design – City of Dublin:  City of Dublin – Self-insured; High Deductible with Health Savings Account; 990 members; UHC provider; voluntary wellness program. Deductibles and Out-of-pocket maximums Out of pocket maximums are typically the most an employee will pay in a year for medical -- and sometimes prescription claims -- before insurance covers 100%.  City of Dublin - $2,500 single and $5,000 family deductible with a $3,425 single and $6,850 family out-of-pocket maximum.  City of Westerville – $2,000 single and $4,000 family deductible and out-of-pocket maximums. City of Gahanna and Franklin County Cooperative have PPO plans, so their deductibles and out- of-pocket costs are much lower than Dublin’s.  City of Gahanna – $200 single and $600 family deductible with $1,000 single and $2,000 family out-of-pocket.  Franklin County Coop. – $200 single and $600 family deductible with $600 single and $1,500 out-of-pocket maximums.  Central Ohio Health Care Consortium – varies on plan design with each member.  Private sector companies with high deductible plans – had lower deductibles, and similar out-of-pocket maximums to Dublin.  Private companies with traditional PPO plans – had lower deductibles and out-of-pocket maximums than Dublin. Premiums  City of Dublin employees do not pay a monthly premium for their health care benefit.  City of Westerville – 15% monthly premium.  City of Gahanna – sliding scale of 15% - 10% - 6% monthly premiums, based on wellness program participation.  Franklin County Coop. – a $124 single and $253 family monthly premium with $600 single and $1,500 out-of-pocket maximums, determined by plan design.  SWACO – biweekly premiums ranging from $73.21 to $97.71. This kept the employer’s cost at 86.64% and employee’s cost at 13.36% of premium for 2015  Central Ohio Health Care Consortium – premiums vary based on plan design with each member.  Private sector companies – typically pay premiums Health Savings Accounts HSAs are only for high deductible plans. Westerville was the only other entity in the study with an HSA. They fund HSAs at 85% of their deductible. Dublin funds HSAs at 75% of their deductible. Westerville funds the HSAs at that amount with no required participation in a wellness program. Dublin requires employees to participate in the wellness program to earn those funds. Dublin believes there is the benefit of employees being more conscious of their own healthcare, and a driving force in keeping plan costs down. The private sector does fund HSAs, as well, depending on the plan design and size of the company. Finance Committee of the Whole June 13, 2016 Page 4 Total Out-of-Pocket Comparisons Dublin’s employees do not pay premiums, but the potential for an employee’s potential out-of- pocket expenses is the highest among all the entities reviewed. An employee with single coverage may pay $3,425.00; an employee with family coverage may pay $6,850 in out-of- pocket costs in one year. In comparison, Gahanna employees out-of-pocket are: single coverage - $1,000; family coverage - $2,000. Dublin’s plan has the highest out-of-pocket risk. Health Plan Costs Plan costs can be difficult to give an “apples to apples” comparison. Dublin’s diligence has kept its costs down. Plan costs vary, depending on the number of employees, claims experience, and plan design. Joining a cooperative or consortium involves paying a premium to the group. That premium is used to pay medical claims. Gahanna paid $1.9 million in premiums to the COHCC in 2015. The Franklin County Cooperative premiums would range from $1,104 to over $1,600 per employee per month. Stop-loss Thresholds  Dublin’s stop-loss threshold is set at $150,000 per claim.  Westerville stop-loss threshold - at $125,000 per claim.  COHCC stop loss-fees - $175,000 per claim.  Franklin County Cooperative - $1.0 million per claim. The Cooperative has over 16,000 total members, and the Consortium (COHCC) has over 2,200 total members. Plan Comparison Uniqueness  Westerville - Spouses must choose their own employer’s insurance as primary if available. Their United Steel Worker employees (50 total) are now on the national USW plan as of May 1, 2016. Employees do not have to participate in a wellness program to receive HSA contribution - $1,700 for single and $3,400 for family. • Gahanna - Paid Central Ohio Health Care Consortium $1,915,382 in premiums for 2015; United Steel Worker employees covered under national USW plan. Their Wellness plan is similar to Dublin’s wellness program • Franklin County Cooperative - Control of health plan is by Franklin County Benefits Department; the County Cooperative controls funds; the estimated premium for City of Dublin to join is close to $7 million dollars; the plan recently experienced a “spike” in costs due to increased claims in preventable conditions and increase in catastrophic claims. Wellness program is voluntary and employees/spouse/partner earn a monetary reward. City staff met with the Director of Benefits and Risk Management and the Senior Budget Analyst to learn about the Cooperative. It was estimated that Dublin would pay the higher end of the premium with its size and claims experience. There is an estimated premium cost of $1,600 per employee per month. Total premiums would be over $7 million to join the Cooperative compared to Dublin’s total health plan budget of $6 million. With the Cooperative, the employee wellness program is voluntary. Finance Committee of the Whole June 13, 2016 Page 5 The City would have less to no control over its plan design and no control over the premiums being paid into the fund. The Franklin County Cooperative made mention in their “Spotlight” Benefits & Wellness Newsletter from February 2016 that their health plan had experienced a spike in costs over the past 12 months from a number of claims exceeding one million dollars. There is concern with the increase in claims for conditions that are preventable, such as diabetes and back injury/surgery. They felt these claims were avoidable and directly related to how the employees managed their health.  Central Ohio Health Care Consortium - The Board of Directors sets and approves all benefit programs and premiums; each member of the COHCC has a rep on the Board of Directors; members must stay on plan at least three years; members pay a premium based on number of covered lives and claim experience. With the COHCC, the monthly contribution is determined for each member in accordance with the number of covered employees and dependents and the prior loss experience of the respective member group. The members' contributions represent an amount in excess of the expected costs of the Plan, which has allowed the Plan to establish reserves for future operations. • Private Sector – Varies depending on the company. Used Dublin’s current plan to benchmark other plan designs. City of Dublin Highlights: • Recipient of the 2015 UnitedHealthcare “Well Deserved Leadership Award”. Only two UnitedHealthcare customers in Ohio and 11 nationwide won this award. The City was recognized for its commitment to its wellness program. • Recipient of the American Heart Association’s Gold Fit-Friendly Worksite award for building a culture of wellness and providing employees with more options to make healthy choices. • Dublin has been able to keep its costs low and reduce the per employee cost per year. More important, however, are the preventive care screenings. Employees are catching acute illness early, resulting in better outcomes for members. This keeps plan costs down. EEOC (Equal Employment Opportunity Commission) Update The EEOC recent ruling will have an impact on the City’s wellness program, but not as severely as first anticipated. • On May 17, 2016, the EEOC issued a change in rules effective for the plan year starting January 1, 2017. The rules were set to ensure wellness programs were complying with the Americans with Disabilities Act (ADA) and the Genetic Information and Nondiscrimination Act (GINA). It is protecting employees who might not be able to meet guidelines set by a wellness program due to a disability. • The City consulted with Oswald, the City’s third-party administrator and City attorneys for the most accurate information regarding these changes. • The rule states when a wellness program is open only to employees enrolled in a particular plan, then the maximum allowable incentive an employer can offer with the wellness program is 30% of the total cost for self-only coverage (Dublin’s COBRA rate) of the plan in which the employee is enrolled. • If spouses are included in the incentive plan, employers are limited to 2x the self-only coverage (Dublin’s COBRA rate) instead of 30% of family premium for a wellness incentive. Finance Committee of the Whole June 13, 2016 Page 6 An employee with family coverage with no spouse will receive 30% of the total cost of self- only coverage (Dublin’s COBRA rate) for a wellness incentive. This is a significant change. Currently, the City doubles the money paid into an HSA for an employee with a family plan and no spouse. Under the new rule, Dublin cannot apply the 2x rule for 30% of the COBRA rate when there is no spouse on the plan. THE EEOC ruling specifically states that an employee or spouse only can be incentivized. • Dublin can incent an additional 20% due to the tobacco incentive with the EEOC ruling. A wellness program that merely asks employees whether or not they use tobacco (or whether they ceased using tobacco by the end of the program) is not a wellness program that asks disability-related questions. Therefore, the rule's 30% incentive limit does not apply and, an employer can offer an incentive up to 50% (for tobacco only). Ms. Alutto asked if there would be a difference if the City did administer a test to prove no tobacco use. Mr. Nahvi responded affirmatively. It would need to remain at the 30% level. • The EEOC ruling changed how the City can fund HSA accounts for participating in the wellness program. Dublin can continue to incent employees’ HSA accounts at $1,875 for single coverage and $3,750 for family coverage with a spouse per year. The COBRA rate for single coverage is $449.86. Multiplying that by 30% is $134.958. That number is multiplied x 12, which equals $1,619.15. That amount is how much the City can incent an employee’s HSA account who has single coverage and participates in the wellness program. If there is a spouse on the plan, that number can be multiplied x2, for a total of $3,239. The tobacco incentive with this ruling will allow the City to increase the numbers. It can switch the $300 incentive that it gives employees for meeting the BMI incentive to the tobacco incentive and only incent the BMI for $150. That way, not taking tobacco into account the total annual incentive would be $1,575 ($1,125 for completing wellness activities and $150 for blood pressure, $150 for BMI/Waist, and $150 for cholesterol) which is less than $1619.50. The City would be compliant with the 30% rule. The additional $300 for non-tobacco status allows the City to incent the HSA account at the current $1875 for single and $3750 for family, which makes the employee whole and keeps the City under the additional 20%. • Employees with a family plan and no spouse on the plan will be impacted. The EEOC ruling only allows employers to incent employees and spouses on the plan. With no spouse, employees with family coverage and no spouse would only be able to receive $1,875 for their HSA funding. This will impact 49 employees on the City’s plan. Final Comparisons Westerville vs Dublin: • Both have a high deductible plan with a Health Savings Account. Westerville has more covered members on their plan. Both are self-insured through UnitedHealthcare. Plan costs are similar and budgets are close. • They charge employees a premium while Dublin does not. Westerville’s budget for medical premiums, not including their HSA funding, dental, vision and life insurance is $5.5 million. Dublin’s total budget for all its healthcare is $6 million. Finance Committee of the Whole June 13, 2016 Page 7 • Westerville funds their HSAs at 85% with no wellness participation. Dublin funds at 75% with participation. • Westerville’s plan cost per employee is $7,412/single; $23,000/family. Dublin - $10,195/single; $23,000/family. • Westerville also requires spouses to choose their insurance as primary. The USW employees switched to the union’s national plan. Gahanna: • Gahanna has a PPO plan through the COHCC. They are self-insured through United Health-Care. They have fewer total members on their plan at 296 compared to Dublin’s 990. They pay a premium to the COHCC and medical claims are paid through the premium. • They have a strong wellness program. They do charge their employees a premium based on wellness participation. • Gahanna’s total budget was $2.4 million, with less employees, compared to Dublin’s $4.9 million for medical only. • Gahanna’s USW employees moved to the union’s national plan. • They do not have an HSA, because they have the traditional PPO. Franklin County Cooperative: • The Cooperative’s plan is a traditional PPO, they are self-insured, and covered through UHC. If Dublin joined the Cooperative, Dublin would have no control over plan design or the money paid into the fund. Our estimated premiums would be over $1,600 according to the Cooperative, which puts us at over $7 million dollars a year in premiums compared to our total budget of $6 million for our health plan. Employees are charged a premium and Dublin could determine the premium for employees. • There would be no HSA with this plan. Central Ohio Health Care Consortium: • It is a traditional PPO through UnitedHealthcare and they are self-insured. • Premiums are based on the number of covered employees and spouses and claims experience. If Dublin joined the Consortium, its premiums could be around $5 million dollars. There are options with the plan, and Dublin would be part of the Board of Directors making decisions about the Consortium as a whole. The wellness program could be continued. • There would be no HSA with this plan. Private Sector: • Information varies based on the company. Benchmarked companies similar to Dublin in size. Numbers show Dublin is in line with private sector deductibles and plan costs. Private sector companies do charge employees premiums. City of Dublin Fully-Insured: • The fully-insured plan would cost an additional $1,050,850 more than the current self- insured plan. Finance Committee of the Whole June 13, 2016 Page 8 Assumptions The following list of principles and/or assumptions in the past have served as a guidepost for the City’s benefits and wellness program: • Be an employer of choice by providing competitive compensation to include a benefits and wellness program that will attract the best and brightest candidates to the City of Dublin. • Promote a benefits plan that is both fiscally responsible and provides access to programs and services that address the needs of our employees. • Maintain a high employee awareness of their health and develop strategies for providing benefits that are long-term in focus and sustainable over time. • Focus on cost containment of the benefits and wellness program. Keep costs in line or lower than other plans comparable to the City of Dublin. • Design a benefits and wellness program that has the agility and flexibility to act, respond, and mitigate the impacts of rising costs in healthcare, changes in government rules and regulations, and the evolving needs of employees. • Prepare for the upcoming operating budget process. • Communicate openly, honestly and timely with employees regarding potential adjustments to the existing benefits and wellness program. Possible Courses of Action 1. Keep current High Deductible Plan and adopt Equal Employment Opportunity Commission (EEOC) ruling to incentivize wellness program up to the 50% limit with tobacco adjustment. No employee premiums. Potentially saves the City $91,875.00 by accepting the EEOC ruling re HSA funding for family plan with no spouses, not making up the HSA funding, and putting that money back into the budget. 2. Keep current High Deductible Plan and adopt Equal Employment Opportunity Commission (EEOC) ruling to incentivize wellness program up to the 50% limit with tobacco adjustment. We would also charge employees a bi-weekly premium at 15%, 10%, or 5% of the current plan costs -- $10,195 for single and $23,080 for family. This would be additional savings to the plans as the employee premiums paid would be put back into the budget. 3. Keep current High Deductible Plan. No employee premiums. Incentivize Health Savings Account (HSA) up to Equal Employment Opportunity Commission (EEOC) 50% limit with tobacco adjustment. The City would contribute the difference to the employee’s HSA account to make those employees whole, who would be impacted with the no spouse ruling. This would cost the City the $91,875 it would have gained with the EOOC no spouse provision. 4. Join the Central Ohio Health Care Consortium (COHCC). We would have a member of the staff sit on the Board of Directors to give input on plan designs. We would go back to a traditional PPO plan and would still have our wellness program. 5. Join the Franklin County Cooperative. The City would allow their actuarial to review our claims costs. Members would have a monthly premium. According to the Cooperative, premiums would be over $1,600 per employee per month and for the year over $7 million. The City would switch to a traditional PPO, and control of the plan design and the premiums paid into the fund would be with the Franklin County Benefits Department. 6. Explore options for employee’s spouses on the City’s benefits plan. Spouses are the City’s highest cost claimant (on a net basis) when compared to employees and dependents. Option 1: Spouses with insurance through their employer must choose their employer’s insurance as primary. Finance Committee of the Whole June 13, 2016 Page 9 - Used the 2015 per employee per year cost for a spouse of $3,951. Reviewed the cost savings if 30%/20%/15% of spouses came off of our plan. - 30% - 65 spouses off the plan for an estimated savings of $256,830 - 20% - 43 spouses off the plan for an estimated savings of $169,903 - 10% - 22 spouses off the plan for an estimated savings of $86,927 Option 2: Allow spouses with insurance through their employer to stay on our plan but charge a spousal surcharge of $150 per month. - Monthly surcharge of $150 and annual surcharge of $1,800 - 30% - 65 spouses pay the yearly surcharge of $1,800 for a savings of $117,000 - 20% - 43 spouses pay the yearly surcharge of $1,800 for a savings of $77,400 - 10% - 22 spouses pay the yearly surcharge of $1,800 for a savings of $39,600 Option 3: Pay employees $2,500 for spouse to elect employer’s insurance. - True savings would be the difference between option 1 and option 3 - May run into a discrimination issue and have to pay $2,500 to all employees who have a spouse on their own employer’s insurance - Dublin pays spouses $2,500 to take coverage with employer - 30% - 65 spouses receive the $2,500 payment for a cost of $162,500. This will give the City $94,000 in savings. - 20% - 43 spouses receive the $2,500 payment for a cost of $107,500 - 10% - 22 spouses receive the $2,500 payment for a cost of $55,000 7. Switch to a fully-insured plan under UnitedHealthcare (UHC); switch from a high-deductible health plan to a traditional PPO. Recommendation • Keep current high deductible health care plan with a Health Savings Account attached through UnitedHealthcare (UHC) • Keep the Healthy By Choice wellness program – continue to move program toward outcome based over the next three years • Incentivize HSA up to EEOC limits and provide HSA contribution up to previous level prior to EEOC ruling – keeps employees whole • No employee premium – remain an employer of choice and competitive with recruiting • Explore spouse options with health plan coverage • Bargaining units consider looking at national health plans through their union • Continue to assess cost savings initiatives with health plan Council Discussion Ms. Alutto inquired: 1. Is there any benefit in joining a larger group -- a cooperative or consortium? Mr. Nahvi responded that there is. If the rest of the group is having a good plan year, the City would benefit from that positive experience. Rates might be better. At the same time, the City takes on a risk. 2. Does the Consortium look at the total claims as well as individual claims experience? Mr. Nahvi responded affirmatively. 3. What percentage of an FTE is represented by how much time it takes to complete the hands on management that Dublin is currently doing with its plan? Mr. Nahvi responded that management of the plan is handled by himself, as the Benefits Administrator, and the wellness coordinator. Finance Committee of the Whole June 13, 2016 Page 10 Mr. McDaniel stated that even if the plan were to switch, the City would still have the overhead administration of it. The City would still need the employee to manage the program. We would not lose any FTE equivalent. Mr. Keenan stated that the problem with joining a group is that the City can control many things within its own group. Demographics can change dramatically from one type of group in the county versus another. Some of the things the City does, for instance with its Workers Comp Program, has a big impact on our health insurance experience – beyond the Workers Comp. Those type of factors are very important. He has observed that with larger groups, there are always those who take advantage and cause a downward spiral within the group. Ms. Mumma stated that there is a difference between the two groups – the Consortium versus the Franklin County Cooperative. The Consortium is truly self-funded. The participants have an equity position, similar to our CORMA program. With the Franklin County Cooperative, the City would have no ownership of any savings gained. That is the difference between those two programs. Mr. Lecklider that, although it is not yet common knowledge, it is a matter of public record that Fairfield County, which is a member of the Cooperative, filed a Declaratory Judgment Action and has given their notice that they want to leave the Cooperative. Mayor Peterson inquired what the reason is. Mr. Lecklider responded that he believes that their position is that they are contributing too much in relation to their claims history. Their reserve, to which they are entitled, is in the range of $11 million. They are asking for a return of their premiums. Their work force is younger. Another county member of the Cooperative has a higher average age and a more negative claims history. Although Fairfield County is leaving the Cooperative, the question is whether the $11 million reserve will be returned to them. Mr. Keenan stated that, depending on the terms of their contract, they may take their claim with them and any tail that may follow for a year or beyond -- that is a cost that is very difficult to identify. There may also be some unknown claims coming. Mr. Lecklider agreed there is that aspect of that contract, which will be argued. Mr. Rogers stated that in terms of the difference between Dublin’s plan and the Consortium, since his employment with the City, he has received at least three appeals of denied claims. When he reviewed the reasons for the claim denials, it was less expensive for the City to approve the claims. The City has the ability to determine what is best for its employees, rather than letting a consortium determine. Mr. Keenan stated that is an important point. His biggest problem with the City’s plan is the high out-of-pocket for a family. Many plans have embedded a single deductible and a family deductible. With the City’s plan, it is necessary to satisfy the entire family deductible. Medical expenses can occur at the beginning of the year before the money has been distributed into the HSAs. For City employees who are making $40,000 - $80,000/year, $6,000 in expenses at the beginning of year is a real burden. This situation has occurred. There are ways to address that. The new EEOC ruling will impact some families, as well. Perhaps an embedded deductible takes care of that. Finance Committee of the Whole June 13, 2016 Page 11 Mr. Nahvi stated that the City also has a policy where, if an employee does have a high claim at the beginning of the year, they can request their HSA funding from the City upfront to help with some of those costs. Mr. Keenan responded that he is aware of that, but it is difficult. An amount of $6,000 out-of- pocket has a much greater impact on an employee making $40,000/year than on an employee making $100,000. He has never liked that part of the plan, which he has stated previously. Ms. Alutto continued: 4. In regard to Course of Action #6, Option 3, which is to pay employees $2,500 for spouse to elect employer’s insurance -- why wouldn’t the City simply pay the amount of the lost incentive to them -- $1,875? It is an incentive, but why over incent them? 5. She believes that working with the bargaining units to encourage them to consider looking at the union’s national health plan is a good idea. 6. What other areas around central Ohio do not charge employee premiums? Mr. Nahvi responded that the ones he is aware of are the City of Dublin and the Parks District. 7. If the City were to take a look at potential premiums, would the City evaluate the impact on employee’s take-home pay? Mr. Nahvi responded that would have to be evaluated. Plan design would be re-evaluated, as well, and perhaps consider moving to a traditional PPO. Mr. Keenan stated that the City could offset the deductible amount. If it were to begin charging a premium, it could lower the deductible threshold. Mr. Lecklider inquired what is the point of charging a premium if the deductible would be lowered. It is more appealing for the City to be able to say there is no employee insurance premium. Mr. Keenan stated that the EEOC ruling may have an impact on how the City’s plan is designed. All employees will not be able to receive the same amount of HSA money, which will have a big impact on some employees. Ms. Amorose Groomes inquired how the City would verify spousal opportunity to secure healthcare elsewhere. Mr. Nahvi responded that it would be determined by responses to a questionnaire, which would include the caveat that falsification of information could lead to termination of the employee – essentially, it would be based on an honor system. Ms. Alutto stated that it would be similar to tobacco use. There is no testing involved; it is also based on an honor system. Mr. Nahvi responded that is what Westerville does, as well. Ms. Amorose Groomes inquired if this is determined annually. Mr. Nahvi responded affirmatively. Mr. Keenan stated that it was discovered by ACA that, statistically, the number of people claiming they were tobacco free varied significantly from the general population statistics that were available. Finance Committee of the Whole June 13, 2016 Page 12 Ms. Alutto inquired if it is tobacco use only, or also nicotine. Mr. Nahvi responded that, currently, it is tobacco only. Vice Mayor Reiner stated that: 1. The City has a rich plan. Do job applicants appreciate the plan the City has? What is the feedback? Mr. Nahvi responded that it is used as a recruiting tool. Before receiving this promotion, as a business partner he used that when making a final offer to job applicants – no premium and 75% of the deductible is funded. It is an incentive to some applicants. 2. Referred to Course of Action #5 – Explore spouse option with health plan coverage. This option was of the most interest to him, and he believes it merits discussion. Mr. Nahvi stated that both Westerville and Upper Arlington have this provision in their plans, as do many public and private sector plans. Ms. Alutto stated she agrees this option should be explored, as there is the potential for significant savings. As good stewards of the public funds, any opportunity to save money should be considered, although not at the expense of City employees’ health. How often is this intense review of employee benefits conducted? Mr. Nahvi responded that it is done annually. 3. In regard to the healthy outcomes of the City’s health benefits program, are statistics available? Mr. Nahvi responded that the yearly reviews with UnitedHealthcare and Oswald provide those statistics. Vice Mayor Reiner inquired if those outcomes are the basis for the recognition the City’s plan has received. Mr. Nahvi responded that it is the aggressive wellness program, employee outcomes and the reduction in costs achieved by the program, as well. Vice Mayor Reiner stated that he and his wife have received beneficial guidance from the employee screening program. Mr. Nahvi responded that is the reason we want to make our wellness program more outcome based, not just participation. That is the only way the City will continue to have a positive impact on the cost of its plan, as well as employees’ health. Vice Mayor Reiner stated the City’s goal is healthy employees. Mr. McDaniel stated that as the City’s workforce ages, these investments will reflect future savings, as well. Mr. Keenan stated that in regard to the possible courses of action offered, he suggests:  The City plan remain self-funded, because it has worked well over the years, including with Workers Comp. The plan can be tweaked, as needed, in response to upcoming changes.  The only feature he does not like is the high deductible impact on a family. He considers $6,000 out-of-pocket for a family problematic. Mr. Rogers stated that one of the things that allows the City to have that high deductible requirement is that there is no employee premium. There is that counter balance. Finance Committee of the Whole June 13, 2016 Page 13 He noted that there are a couple other items he needs to mention:  The USW contract negotiations will be coming up within the next 75 days, which will include their benefits package.  The FOP negotiations will occur near the end of the year, as well.  There is a need to address the impact to the 49 single-parent families that will be affected by the recent EEOC ruling. Potential ways to address that include: o The way in which the City provides the HSA funding. The EEOC limitation is only for the part of the plan tied to a wellness program. The City of Westerville does not tie its HSA funding to any wellness program, so there may be a middle ground for that category of employee. o Modify how the deductibles are structured. Currently, the City has a Single and a Family coverage. Perhaps a middle tier for single-parent families could be created, and their deductibles would be somewhere between the other two. Staff will run an analysis on that and provide Council a recommendation. Ms. Alutto responded that there are several public entities that do have that additional level of coverage. Ohio State has moved to that, as well. This could incent a spouse into having separate coverage. It also can mitigate some of the pressure on a single-parent family. For a single parent with three children making only $40,000/year – being hit with that large amount early in the year is difficult. It would be beneficial to look at these options. Mr. Keenan stated that after the $3,000 HSA contribution, an additional $3,000 of the $6,000 family deductible remains that the employee must pay from “after tax” dollars. Ms. Amorose Groomes stated that she would like the City to look at requiring spouses to obtain their insurance from their employers. That is a reasonable requirement. Vice Mayor Reiner concurred. Mr. Lecklider expressed agreement with Mr. Keenan’s comments. He would also support a cash incentive for spouses. Southwestern Schools previously offered that incentive, and perhaps still does. He would not favor charging spouses any premium – that would detract from the City’s competitiveness. Mr. McDaniel stated that the spouse insurance coverage was suggested as an opportunity to explore and provide information to Council. Then, if Council determines to move forward in that direction, it would be rolled out slowly. That would provide plenty of advance notice and time to determine how to administer it. He would not recommend moving forward immediately, perhaps in the next budget cycle. It would also be a component of bargaining unit negotiations. Mr. Keenan inquired if the City has data on coordination of benefits. Mr. Nahvi responded that it can be obtained. Mr. Keenan stated that because it is free, employees often will elect to keep both plans. The “birthday rule” is to be used to coordinate benefits between the two plans. The City’s TPA should be able to tell us how many employees are actually coordinating their benefits – keeping two plans in place. Because the City has no premiums, it makes it easier for them to make that choice. Mr. Nahvi responded that staff would look into that. Mr. Keenan inquired if staff has the direction needed. Finance Committee of the Whole June 13, 2016 Page 14 Mr. Nahvi stated that there is one additional point in regard to the EEOC ruling. The City currently offers Healthy By Choice points for attending certain classes. We would have to consider those as part of that 30-50% rule. We would have to discontinue offering those points, if we wanted to keep the current HSA funding level. Currently, in addition to a T-shirt or mug, employees can use their points to purchase gym or pool memberships at a lower rate, and that is taxed. Mr. Keenan stated that at some recent legislative hearings in DC, Congressman Tiberi was very interested in that. He questioned why incentives are being taxed. There may be some other rule changes occurring. This subject has caught attention, much like the Cadillac tax, which he fully anticipates will be eliminated. Mr. Rogers stated that after talking to Oswald and the City’s legal counsel, the point to keep in mind is that this is the EEOC rule. It is actually in conflict with three other major departments – the Department of Labor, Department of Taxation, and Department of Health and Human Services. We are not sure what changes may occur, but will continue to watch them. Mr. Keenan inquired the target date for City plan changes for 2017 – October - November? Mr. McDaniel stated that the goal is to have this assessed before the 2017 Operating Budget hearings but perhaps earlier, as any changes would need to be made before bargaining unit negotiations. Ms. Amorose Groomes inquired if the City has already addressed the domestic partner vs spouse issue. Mr. Nahvi responded that was addressed earlier, before he became Benefits Administrator. Mr. Keenan stated that it was addressed approximately two years ago. Mr. Rogers stated that domestic partners are included in all City plans and contracts. No additional movements occurred on that topic this year. Ms. Amorose Groomes stated that she had heard that several entities were removing domestic partners, since same sex marriage legalization. She would like to see the City look at removing domestic partners in favor of spouses. Mr. Keenan stated that he would like to have more input before that is pursued. Mr. McDaniel stated that he believes a policy decision was made that domestic partners would not be removed from the City’s plan. Ms. Amorose Groomes inquired if that was determined after the same sex marriage legislation. Mr. Keenan stated that it was. That discussion occurred in January of his second term as mayor. Mr. McDaniel stated that he does not believe that was a legislation action. Mr. Keenan stated that Council did not adopt anything, just decided not to act. Ms. Amorose Groomes stated that she believes it would be good to look at what others are doing. Mr. Rogers stated that earlier this year he looked to see how many City employees will claim domestic partnership, and, currently, it is minimal. Ms. Amorose Groomes stated that she was referring to what others are doing in the insurance realm. Mr. Rogers responded that there is movement on that, because it was never part of our state law. Many places around Ohio have dropped that language because it is no longer necessary due to the Supreme Court ruling.