HomeMy WebLinkAbout1982-07-20; City Council; 7095; Revisions to Employee Benefit ProgramZ
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CIT`► JF CARLSBAD — AGENDA diLL f f C!? 7
Ati# 10 9 TITLE i REVISIONS TO EMPLOYEE BENEFIT PROGRAM DEPT. HD.'•
MTG.- 7/20/82 CITY ATTY
DEPT. CM CITY MGR.
RECOMMENDED ACTION:
Adopt the revised employee benefit program. Direct staff to prepare contracts
of insurance to implement revised program effective August 1, 1982.
ITEM EXPLANATION:
City staff, the City's consultant, Mr. Michael Baker of the Wyatt Company, and
representatives of employee groups have worked together to develop a revised
benefit program. The City's group medical, dental, vision, life, and long-
term disability (LTD) plans have been examined and major revisions are recom-
mended for the program. The revised program provides for improvements in many
areas of coverage and should more adequately meet the needs of employees.
The revised program was developed after consultation with representatives of
employee groups. The fire, miscellaneous, and police associations concur with
the revision in the plan.
The major features of the revised plan are:
1. Revised medical insurance plan that will provide 90%/10% coinsurance for
hospital, surgical, and medical expenses.
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2. An improved dental plan that emphasizes preventive care and provides d
orthodontia coverage for dependent children.
3. Improved life insurance coverage for all employees. All employees will
have a minimum amount of life insurance equal to their annual salary.
4. Improved long term disability coverage.
5. Retirees will be eligible to participate in the group medical plan.
FISCAL IMPACT!
Through redesign and restructuring of the program, the premium costs of the
program will go up from $345,286 to $366,553 - an increase of $21,267.
The premium rates for medical insurance will increase 6.4%, the premium rates
for dental and vision insurance will remain unchanged. The premium rates for
life insurance will go down, but with more life insurance in force, the actual
cost will increase.
The City pays the premium for life and long term disability insurance. The
City shares the cost of medical, dental, and vision insurance dependinglupon
the agreements with various employee associations. The increased costs of
this revised program will come out of the compensation adjustments authorized
for fire, management, and police groups. The miscellaneous employee group will
pay the increased costs out of its benefit payment program that will continue
in effect until June 1983.
AB
MTG. 7 20/82
DEPT. CM
FISCAL IMPACT (CONTINUED):
The revision program provides for an improved funding concept that will
improve cash flow and allow dividends if the groups claims experience
is good. If the city had been on the revised funding concept for the
past three years, a cost saving of $85,000 would have resulted.
EXHIBITS:
1. Memo from Assistant City Manager/Administration dated July 9, 1982.
2. Memo from Assistant City Manager/Administration dated July 15, 1982.
DATE: JULY 9, 1982
TO: CITY MANAGER
FROM: Assistant City Manager/Administration
SUBJECT: REVISION OF EMPLOYEE BENEFIT PROGRAMS
The City has been concerned about the design and cost of its
employee benefit program for the past couple of years. The
employee benefit program which includes health, medical, dental,
vision, life insurance and long-term disability is a program
that has evolved over a period of years. Changes and modifications
to this program have occurred on a piece -meal basis. Coverage
under the various insurance programs has been changed in an attempt
to provide better benefits for employees and an opportunity to
select benefits as employees feel appropriate. However, as a
result,the evolution of this program has led to problems with
the existing insurance program that need to be corrected if the
City is to maintain a sound program at reasonable cost.
As an outgrowth of meet and confer sessions with the miscellaneous
employee group last year, the City attempted to establish an in-
surance study committee composed of representatives from the
miscellaneous, police, fire, and management employees. The purpose
of this study group was to look at possible modifications or im-
provements to existing programs. For a variety of reasons this
approach did not work out and subsequently, the City has engaged
the services of a nationally known actuarial and insurance con-
sulting firm, The Wyatt Company, to perform an analysis and
redesign of the City's employee benefits program.
The purpose of The Wyatt Company study, conducted by Mr. Michael
Baker, was to critique current plan benefits and funding concepts,
design a revised plan based on City personnel and financial
objectives, and negotiate with carriers to correct existing
deficiencies, improve plan design,and net cost arrangements.
Mr. Baker prepared a report dated February 16, 1982 which
recommended major revisions to the employee benefit program. A
summary of the report's finding and recommendations is attached.
The major finr".ings in Mr. Baker's report are:
1. The entire program requires redesign and
improvement.
2. $85,000 could have been saved over the last 3 years
using improved funding concepts.
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July 9, 1982 Page 2
Revision of Employee Benefit Programs
3. Medical, dental, vision, and life insurances plans
should be consolidated into one contract.
4. Current plan costs are reasonable based upon current
claims experience and anti -selection problems.
5. To improve the overall program, which includes re-
vising and improving existing plans, the City should
do the following:
a. stop allowing employees to pick and choose
coverages,
b. broaden benefits to make plan more meaning-
ful for all,
c. terminate the employee cash refund system,
d. require all employees to pay a reasonable
portion of their own and/or their dependents'
plan costs.
6. A dramatically improved program of life, medical,
dental, vision care, and disability income benefits
can be provided at only a slight gross cost increase
to the City.
Based on his findings, Mr. Baker is recommending that the City:
1. Adopt an improved program.
2. Change from a pooling to an experience rated concept.
3. Stop allowing employees to select against the plan(s).
4. Cease or phase out the employee refund plan.
S. Improve plan participation.
After preparation of Mr. Baker's report, it was reviewed by
representatives of employee groups and was explained at meetings
held with employees. After consultation with the presidents of
fire, miscellaneous, and police officers associations, a final
program was developed that is being recommended to the City Council
for adoption. The fire and police association have agreed to
the design of the program. The president of the miscellaneous
association agrees with the program design, however, the mis-
cellaneous employee association has not taken action on the
program as a group at this time. Mr. Baker and city management
have worked closely with representatives of employee associations
in an effort to develop a program that will be responsive to the
needs of employees at a reasonable cost.
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July 9, 1982 -
Reyision of Employee Benefit Programs Page 3
A summary of the revisions to the employee benefit program is
outlined below:
SUMMARY OF MAJOR REVISION
TO EMPLOYEE BENEFIT PROGRAM
MEDICAL PLAN: (Cost shared with Employees)
Present Program Reyi'-se'd Program
Coinsurance Rate 100% of first 90%/10% Coinsurance
$5,000 for Hospital/ of first $5,000 for
Surgical Hospital/Surgical/
80%/20% Medical
Coinsurance of
first $2,500 for
Medical
Retiree Coverage None - may convert May participate in
to individual plan group medical plan by
Deductible
$100 per person,
maximum 2 deduct-
ibles per family
DENTAL PLAN: (Cost shared with Employees)
Coinsurance Based on % of fixed
dollar schedule
Class I - 80%
Class IT - 80%
Class IIT - 50%
Deductible $25 per year per
i person for all
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classes,
orthodontia None
a,
paying medical premium
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$100 per person
$300 family maximum
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Based on usual, reason-
able,& customary charges
Class I - 80%
Class II - 80%
Class III - 60%
$50 per year per person
for Class 12 & III -
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no deductible for Class I.'
Maximum $150 deductible
for families
50%/50% Coinsurance.
Maximum $500 annual
benefit. Maximum
$1,000 lifetime benefit.
Only applies to
dependent children
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t July 9, 1982 l
'Revision of Employee Benefit Programs Page 4
SUMMARY OF MAJOR REVISION
TO EMPLOYEE BENEFIT PROGRAM 1
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Present Program Revised Program
VISION PLAN: (Cost shared with employees)
UNCHANGED
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LIFE INSURANCE PLAN (City Paid) 1
Police $2,000 Equal to Annual Salary 4
Fire $2,000 Equal to Annual Salary
c Miscellaneous $15,000 Equal to Annual Salary ,
Minimum of $15,000
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Management Equal to Annual Equal to twice Annual
Salary Salary
LONG TERM DISABILITY PLAN (City Paid) '
Maximum Monthly Benefit $900 $5,000
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} PREMIUM COSTS
? The current plan is divided into,two rates: employee only, and
? employee plus all dependents. Under the current plan, employees ;
must have medical insurance on themselves. The employee may take
dental and vision insurance on himself. The employee may also
choose to have medical and/or dental/vision insurance on his
dependents. Under the revised program, employees would be required
to take medical, dental and vision insurance on themselves, and
would not be able to choose between coverages. Likewise, for
dependents' coverage, they must take medical, dental, and vision
for dependents or have no dependents' coverage.
The purpose of this requirement is to establish a sound group
approach and eliminate the selection that was occurring that under-
mines the group approach to insurance.
.Aft�
' July 9, '1982
Revision of Employee Benefit Programs Page 5
The revised plan would be divided into three rates: employee
only; employee plus one dependent; and employee plus two
dependents.
COMPARISON OF PREMIUMS:
PRESENT PLAN REVISED PLAN (2)
(Divided into two rates) (Divided into three rates)
Employee Employee & Employee Employee
Only Dependents employee +1 +2 1
Medical $36.95 $112.53 $39.31 $89.31 $139.27
Dental 8.43 24.84 8.43 18.76 30.80
vision 2.19 6.17 2.19 4.70 7.20
TOTAL $47.57 $143.54 $49.93 $112.77 $177.27
(1) Employee +2 rate includes orthodontia coverage for dependent
children. If employee +1 is a man or woman with one child,
then add $1.70 to employee +1 rate for orthodontia coverage.
(2) Rates for the revised plan will be good for one year. Rates
on present plan can be increased every month.
Mr. Baker is recommending that the City continue with the existing
insurance carriers for the improved program. The City's existing
carrier, Crown Life, would continue to provide life, medical, den-
tal, and vision insurance. The City's long-term disability carrier,
Standard Insurance Company, would continue with the LTD program.
Although there has been some dissatisfaction expressed by certain
employees with the service provided by Crown, the consultant and
the City feel that Crown has responded well in matters of disputed
claims and provided that Crown continues to perform in a satisfac-
tory manner, there appears to be no advantage in changing carriers
at this time.
In order to deal with disputed claims, the City has agreed to
establish a voluntary claims review program for employees who have
questions about claims payments. Representatives of employees
groups and the City will review claims, if requested by an employee,
to determine if benefits have been paid properly. An Administra-
tive Order to implement this process has been issued. This process
will provide for peer review that will develop an understanding and
confidence in claims administration procedures amongst a larger
number of employees.
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July 9 , , 1982
Reyision of Employee Benefit Programs Page 6
The City's account has been a profitable one for Crown in the
past. They have been very responsive to the City's request to
revise the contract of insurance in order to keep the City's
business. The City's consultant, Mr. Baker, has negotiated a
revised contract with Crown which contains four important
changes:
1. The City will pay Crown Life 90 days in arrears, which
results in the City having use of the cash flow.
2. A retrospective premium rating arrangement will be included
in the contract. The City will only pay 85% of the conven-
tional monthly premium. The City holds the other 15% of
premium payments until the end of the year. At year-end,
Crown Life will perform an accounting of paid claims. If
the City's claims experience is good, the City will receive
a cash dividend. If the City's claims experience is not so
good, the City will be required to pay any amounts owed up
to the additional 15% of the conventional premium.
3. When enrollment in the revised plan is finalized, Crown Life
will evaluate the proposed rates for medical, dental and
vision plans. Present rate estimates are based on current
enrollment figures and as enrollment improves, and anti -
selection problems are eliminated, the rate may possibly be
decreased.
4. The revised insurance program will be written on a no commis- ;
sion basis and the City will deal directly with the insurance s
companies. The present commission arrangements provide for an
annual commission of approximately $15,000 on the program. ,
Mr. Baker's recommendation is to eliminate commissions and
deal ,directly with the company. Both Crown Life and Standard
Insurance Company are willing to do this and the rates they
have quoted are on a "no commission" basis. Mr. Baker indi-
cates that all of his clients deal directly with insurance
companies on a no commission basis and the practice in most
cities is to deal directly with insurance companies. In San ;
Diego County, almost all cities deal directly with the insur-
ance carriers, and do not pay commissions. #
Crown Insurance Company, as well as Standard, has group claims
representatives available to the City at any time to assist in
claims administration and processing. The companies have ade-
quate staff to work on any claim problems and the City should not
suffer any service loss by dealing directly with the companies.
City management does not feel it is necessary to have a broker
for this type of insurance and recommends that the insurance be
written on a no commission basis. When specialized services are
required, they can obtain the assistance of specialists in the
area of concern.
July 9, 1982
keyision of Employee Benefit Programs Page 7
Mr. Richard Nieves, the City's current broker for medical,
dental, vision, life and disability insurance has submitted
a proposal to continue to serve as the City broker. Mr. Nieves
is proposing to provide services as outlined in his letter of
June 4, 1982, a copy is attached to this report. Mr. Nieves
proposes a commission of 1' to 211 of total premiums paid (ap-
proximately $350,000 annually) or $5,250 to $8,750 plus a flat
fee to "research, market, study, evaluate and recommend to the
City Manager improved insurance coverages and alternate insur-
ance programs." The cost for this additional work would have
to be negotiated on an "as needed" basis.
The possibility of Mr. Nieves serving the City on an hourly
basis to provide assistance on resolving claims disputes was
discussed. However, Mr. Nieves would prefer to provide service
as outlined in his proposal.
In addition to the establishment of the voluntary claims review
committee, the City is strengthening its internal management and
control of the program. Administrative and accounting procedures
are being established to improve the program's management and
communication with employees. Improved employee communication
booklets are being prepared. The entire insurance program is
being simplified and employees should find it easier to under-
stand and use the program.
In addition to the revisions of the existing programs, employee
representatives and employee groups have expressed a continuing
interest in having a health maintenance organization available
as an option in the insurance program. A number of employees
have indicated an interest in having an HMO like Kaiser available
to employees as an option to the current indemnity program. It
is recommended that the City obtain proposals from certified HMO's
and, if feasible, enter into an agreement with an HMO to provide
services beginning possibly January 1, 1983.
COST CONTROL PROGRAM
The City is also becoming involved in a program designed to help
control escalating health care costs by participating in the San
Diego Employees Coalition Action Program (CAP).
The CAP program provides for a pre -admission hospital review and
in -hospital concurrent review program. Crown Life is paying for
the entire cost of the program. The program is designed to make
physicians aware of the need to consider costs as well as other
factors when treating patients. No claims or costs will be
denied as a r:sult of this program. The emphasis is on making
determinations of the medical necessity of treatment before it
occurs, not the payment of charges after the treatment is received.
A description of the program is attached.
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July 9, ' 1982
Revision of Employee Benefit Program Page 8
FISCAL IMPACT
The revised program recommended for adoption by the City
Council will have a premium cost of approximately $366,553.
The premium costs for the existing program -is approximately
$345,286,, an increase of $21,267.
The increased costs of the revised program will be paid out
of funds set aside for compensation adjustments for fire,
' management, and police employees. The increased costs for '
1 miscellaneous employees will be paid out .of the $115 a month
provided to each employee in that group as part of a benefit
Payment program.
The recommended revised program is the result of a long and
oftentimes tedious process that has provided for input from
all interested and concerned employees. The revised programs
provide substantial improvement in coverage for employees, and i
is supported.by the majority of the employees.
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FRANK N. MANNEN t
Assistant City Manager/
Administration ;
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Attachments
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` Sune 9, 1982
JUNIS82
Frank 'I. "annen v'
Assistant City ;'anager/Administration i CITY OF CARISRAD
City of Carlsbad UT 9,j^
Carlsbad, California 92008
Dear Frank: 6�gl�l9l �l VZti�ti
I wish to formally note in response to your letter of April 12, 1982 that
I ai most happy to respond with a proposal. This response is also based on
the meeting that we had last week in the city managers office with the 'iayor.
Before ray proposal, I wish to take this opportunity to note that I received
no response from ;lour office to my letter of April 2, 1932 wherby I have stated
fiy justification as the insurance broker for the City of Carlsbad. The :Myatt
Company report itself offers my strongest support. Please keep in rind however,
that rt Revised Insurance Program " to me, means r,igcier premii*ms, lower paid
claims, lower benefits, out of which comes consultants fees.
-y propsal is:
a. To oversee proper administration procedures of the insurance programs
b. Research, rarket, study, evaluate and recommend to tho City ?*anager
improved insurance coverages and alternative insurance programs
e. To eliniaate problems trAat have existed in the past concerning improper
infor-iatio3 to the employees within the departments themselves
d. One to three hours each week on site (City) servicing
e. to personally take care of excess or complicated cla:Lms
f. Standing ,' to 1 «our neetiiEe vith the City ;'angers office to discuss
or resolve insurance prowl- s on a weeIJ- y basis
g. To train and counsel maaageneat/personnel staff on claims and prerdun
admi;ni: tration
h. I will provide t..o service indicated Li ?.taw °B" above on a reasonable
fee basis
i. DesiCn pro,ramo to fit needs sad budgets. After study and ovaluatioia of
all Vie possibilities, detailed reports with reco-Tr_aendationc will to sub-
mitted so that mRanaQereat oayy make Vie appropriate decisions
j.:*y, fees for the above will either been a cornincio:i tasi3 or on a fee basis
a^ 1.. to 2-V , of the total paid promiums or convert it to a flat doI?ar
arloltnt
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;For ciy services indicated s,i,ove, Citr will provide the folloirinn.
a. A Broker of t?ocord latter .for one ,oar
b. To discus^ and re;otiate the renewal of the tlrolser of Record.,30 to 60
days prior to the vne yoaors conc3ttsion
c. City vial share i t,forration after• p\ ovidit� notice of city plevio to chance
and/or improve oti3or etty inouraoce plans Uo that T nay be able to compete ,
for Vie business
A1.1 of the above is subwtted i,L vood faiV�. AN the citys broker for the pact 12 ,
years, it is my* cincere desire and requirement to continue servicing the City of
t Carlsbad and it's employees. r
I feel privileged to be a lifetine local citizen and a, rne;7ber of tl,,e Carlsbad
co-MTOMity as troll as o minority contractor. Four ropy; to the above :rill be
jR�'x mated.
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Carl. -bad, 00iforaia 92008 i
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r�GROWN
LIFE INSURANCE COMPANY
i July 1, 1982
DISTRICT GROUP OFFICE
SUITE 214E 1764 SAN DIEGO AVENUE, SAN DIEGO, CALIFORNIr` 92110-1995
TEL: (714) 692-3350 TELEX #: 695.071
Mr. Frank Mannen
City of Carlsbad
1200 Elm Avenue
Carlsbad, California 92008
Re: Group Policy Number 24146
Dear Mr. Mannen:
Crown Life is pleased to announce its full participation in the San Diego
Eknployers Coalition Action Program (CAP) -- a hospital review program
administered by the San Diego Foundation for Medical Care.
We at Crown feel that CAP will return many times our expenses by controlling
health care costs and improving claims experience. These savings are ulti-
mately passed on to you.
Our strong belief in the effectiveness of this program inspires us to offer
CAP to you at no additional cost.
Enclosed is an overview of CAP procedures. We have also provided announcement
letters and CAP wallet cards for your employees.
Should you desire a presentation for your employees or have any questions,
please contact our office.
Kindest regards,�`��
Bradley E. Nerhus
District Manager, Group & Pensions
BN/11
encls.
GROUP INSURANCE AND PENSIONS
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*CROWN
l.F V1.1"t CONY
ATTENTION ALL E14PLOYEES
Effective immediately your employer has joined other businesses
in San Diego County in fighting the battle of escalating health
care costs by participating in the San Diego Employers Coalition
Action Program (CAP).
CAP physician advisors and nurses conduct reviews to determine
the medical necessity of hospital admissions and services
rendered. They also assess the appropriateness of lengths of
stay.
For all hospital admissions scheduled for you or any dependent
covered by your group health plan in a San Diego County hospital
you should be sure to do the following:
1. When ycur doctor tells you that hospitalization is
necessary, tell him/her that your employer participates
in the CAP program and show the doctor the enclosed
card which will remind Pim/her to call CAP prior to
admission. You should_'eep this card in your wallet
or purse,
2. Upon admission, tell the hospital admitting office
that your employer participates in CAP. After you give
these notifications of an admission, there is nothing
else you need to do.
Health care costs rose 19A last year to over $738 million in
San Diego. Hospital confinement represents 50 - 75% of that
total. Your participation in CAP will help decrease this
current trend.
The attached overview explains CAP. Please familiarize yourself
with these procedures because YOU MAKE THE DIFFERENCE.
Iq
OVERVIEW
SAN DIEGO CAP
A PRE -ADMISSION AND IN -HOSPITAL CONCURRENT REVIEW PROGRAM
CAP is an innovative San Diego hospital review program which Crown Life
is making available to your company. The program operating expenses
are fully funded by Crown Life with no additional cost to you.
CAP identifies and interrupts the provision of care that is not
medically necessary. Physician advisors conduct pre -admission review
and concurrent review of the hospital stays of covered employees and
their dependents. These physician advisors are in the private practice
of medicine locally. They are supported by CAP Coordinators -registered
nurses - who screen admission requests and the medical records of
hospitalized patients.
Pre -admission review identifies scheduled hospital admissions which
can more readily —be performed in another setting and redirects those
admissions to that setting. These alternative settings include the
physician's office and ambulatory (out -patient) surgical facilities
both hospital based and free standing. A.M. admissions (morning
admissions for surgery the same day) are also encouraged. The admitting
physician's office will notify CAP in advance of all scheduled
admissions. While the primary intent of pre -admission review is the
deterrence of unnecessary hospital admissions, an important by-product
of this review is the identification of proposed procedures that are
generally not covered by group health benefit plans (as surgery which
is, in fact, cosmetic surgery though described ir, non -cosmetic terms.)
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Admission review will be performed on all non-scheduled admissions
within 24 hours of admission in order to determine the appropriateness
of the admission as well as the need for continued stay. The hospital's
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admitting office will notify CAP of these admissions.
Concurrent review will be conducted periodically during each patient's
stay to order to determine the patient's need for continued stay. This
review will include level of care review in order to determine whether
a patient in intensive care should be more appropriately treated in an
acute care bed, or whether a patient in an acute care bed could be more
appropriately treated in a sub -acute setting (to include a convalescent
facility or home health care.) The physician advisor will discuss next -
day discharge with the attending physician in each case where further
hospitalization is thought to not be medically necessary.
Concurrent ancillarx review will be conducted at the same time as
concurrent review of length of stay and will include all services
requiring the written order of a ph—i cian (laboratory, x-ray,
inhalation therapy, physical therap, , etc.). Any services which do
not appear to be medically necessary wil. be brought to the attention
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of the attending physician by the physician advisor. Stop orders
for these services may then be written by the attending physician
to prevent these unnecessary ancillary services from being provided.
(This concurrent process is far superior to that of retroactive
denial by the insurer of care already rendered.)
CAP makes determinations of medical necessity, not payment. The
r7sults of each admission reviewed will be provided in a written
Statement of Medical Necessity to Crown Life. As currently
envisioned, CAP's review would not result in denial of payment
except in instances in which the attending physician concurred that ;
further stay was not medically necessary, but the patient chose to stay 9
after being informed that he may be responsible for the resulting
bill. CAP's major impact will be as a consequence of its substantial
deterrent effect on the provision of unnecessary hospital services.
1
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CAP
Participating Hospitals
Alvarado Hospital
Bay General Hospital
Clairemont Hospital
Comm. of Chula Vist Hospital
Coronado Hospital
E1 Cajon Valley Hospital
Fallbrook Hospital
#-drossmont Hospital
Hillside Hospital
Mercy Hospital
Mesa Vista Hospital
Mission Bay Hospital
Paradise Valley Hospital
San Luis Rey Hospital
Sharp Cabrillo Hospital
Sharp Memorial Hospital
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Southwood Mental Health Center
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University Hospital
Villa View Community Hospital
Vista Hill Hospital
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ACTUARIES AND CONSULTANT$
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LOS ANGELES PENSION EMPLOTCC
COMPENSATION INTERNATIONAL EMPLOYEE RISK
CALG
14EMPHIS PLANS OCN(I1T5
PROGRAMS SCNCL'1T5 COMMUNICATIONS MANAGEMENT
HALIFAXFAX
MIAMI
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MINNEAPOLIS-
OTTAWA
ST. PAUL
TORONTO
NEW YORK
VANCOUVER
SUITE 220
3366 NORTH TORREY PINES COURT
LA JOLLA. CALIFORNIA 92037
(114) 455-5350
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February 16,1982
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Mr. Frank Mannen
Assistant City Manager
CITY OF CARLSBAD
1200 Elm Avenue
Carlsbad, CA
Dear Frank:
Attached is our report of findings and recommendations to improve the City of
Carlsbad's employee group benefits program. This report focuses primarily upon
-KL improvements to the life, medical, dental and vision care plans underwritten by Crown
t Life Insurance Company. In addition, the Long -Term Disability Plan of Standard
Insurance Company is impacted by our recommendations.
Our report is based upon a thorough analysis of your current program's design, funding
concepts, cost subsidy, and participation levels and sets forth recommendations for
improvement. It is written in an executive summary format and supported by,in-depth
,I
exhibits where necessary.
OUR SUMMARY FINDINGS:
• Your entire program requires redesign and improvements in many areas.
- certain plans are inadequate or non-existent
- others are simply ill -designed or outdated
s Current funding and underwriting techniques are cost inefficient.
- approximately an $85,000 cost savings would have resulted during the last
three years using an improved concept
- the improved concept(s) can be provided using your current carrier(s)
• All improved Crown Life plans snould be consolidated into one improved funding
%"001 contract to reduce long-range costs.
1_,
Mr. Frank Mannen
CITY OF CARLSBAD
February 16, 1982
Page Two
• Current Crown life plan costs are reasonable based upon current claims
experience and an existing anti -selection problem.
the current program anti -selection, participation problem is acute.
• In an effort to improve the overall program, which includes revising and
improving existing plans, you should do the following:
- stop allowing employees to pick and choose coverages
- broaden benefits to make plan more meaningful for all
- terminate the employee cash refund system
- require- all employees to pay a reasonable portion of their own and/or their
dependents' plan costs
• A dramatically improved program of life, medical, dental, vision care and
disability income benefits can be provided at only a slight gross cost increase to
the City. The cost savings achieved will depend upon the cost subsidy levels and
funding concepts of the finalized program, as adopted.
- the improved program could be provided at no increase to the City if the
cash refund system is terminated
- additional cost savings may result if large numbers of employees leave the
Plan and/or decline future coverage
-- if the city requires employees to pay even a small portion of either
plans' costs, approximately 10% to 15% of these employees will most
likely drop the plan due to duplicate spouse coverages
-- an increase of dependents coverage, where the City plan pays as
secondary, would improve the programs loss ratios
• An improved employee communications program is required to assist in plan
understanding and to assure support of the improved program.
the City will also need a program to assist in salary negotiations with
employees
• Government legislation impacting benefits and costs requires attention. Your
new program will be designed to meet requirements at the most economical cost.
YMC "I ja 1 COMPANY
•
•� Mr. Frank Mannen
CITY OF CARLSBAD
February 16, 1982
Page Three
• You may also want to consider several types of voluntary, supplemental
employee -paid plans to make the total package more attractive to employee
needs.
we have included a voluntary supplemental life and accident plan in the
improved program
OUR SUMMARY RECOMMENDATIONS
• The City should adopt an improved group benefits program. The improved
programs will provide:
- improved life, medical, dental and vision care plan coverages
- an improved long-term disability plan
- a voluntary supplemental life and AD&D plans
• The City should change from a pooling to an experience -rated funding concept.
• An all out effort should be made to:
- improve plan participation
- stop allowing employees to select against the plan(s)
- cease or phase out the employee refund plan
Our in-depth findings and recommendations are as set forth in the following report.
We are prepared to present and discuss our report with management and City Council
at your convenience.
Sincerely,
THE WYATT COMPANY
Michael D. Baker
Consultant
MDB:ks
Enclosure
TNC/�aii COMPANT o�
I
SUMMARY FINDINGS AND RECOMMENDATIONS
S&
T.& a/a// c"..,
SECTION I
INTRODUCTION
The City of Carlsbad provides a group life, medical, dental, vision and long-term
disability plan for its employees and their eligible dependents. The LTD plan is
provided by Standard Insurance Company. The life and medical care plans consist of
life, medical, dental and vision care plan provided through the Crown Life Insurance
Company.
During the past three years, City staff and the Council have become increasingly
concerned about the City's benefit package, its design as well as rising costs. The
Crown Life plan benefits have been improved. Crown's costs have increased
significantly during the past three years, and medical plan costs are scheduled to
increase 25% effective March 1, 1982. Standard's rates have remained level and have
not increased because of a maximum benefit level in the plan's design.
One year ago, the medical, dental and vision plans were improved and an employee
cash refund system was implemented for management and miscellaneous employees.
Employees were also given the opportunity to select or decline coverages, at will.
When combined, the above practices are and will continue to result in signficiant if not
unacceptable program costs.
Based upon our evaluation of rising claims experience, we expect another rate increase
will be forthcoming in 7uly, 1982 or sooner unless perceived problem areas are
corrected. Actually, Crown Life can increase costs at any time by simply giving a 30-
day notice.
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SECTION II
PLAN DESIGN/BENEFITS
Current Plan
A. Basic Employee Life Insurance Plan (See Exhibit `1)
• The current basic employee life plan provides a death benefit on the life of
each employee, plus accidental death and dismemberment, AD6:D, as well
as a waiver of premium, W.P., _provision for disabled employees.
• The benefit amounts are based upon the following schedule:
Employee Insurance
Classification Amount
Managers I x Annual Pay up to $50,060
Safety Members $ 2,000
All Other Employees $15,000
• AD&D equals one times the basic life amount for accidental- death.
• Waiver of premium continues life insurance in force without premium
payments for totally and permanently disabled employees.
• Life insurance amounts remain level, unreduced, at age 65 and 70 for
active employees. There is no waiver of premium after age 60. There is
no life coverage after employment termination or retirement.
- employees may, however, convert to a permanent life plan if needed
at employment termination and retirement
• Recent legislation, the Age Discrimination in.Employment Act, ADEA, now
prevents certain discriminatory reductions in life plan amounts, except for
those made on an actuarially cost -justified basis.
• ADEA creates additional risk exposures for life plans which we have dealt
with in the plan design improvements section.
• As a solitary life plan for employees, this plan would be inadequate.
Especially for employees in the medium- to high -pay ranges.
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23
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B. Life Insurance For Dependents (See Exhibit 1)
• The City's plan provides dependents' life insurance of-$1,500.
C. Voluntary or Supplemental Life Insurance for Employees (See Exhibit I)
• The City's plan provides a voluntary or supplemental life plan benefit equal
to one times annual pay.
• Supplemental life plans are usually voluntary and are paid for by the
employee.
• They make available, at low group rates, supplemental life insurance
amounts for those employees finding a need for extra insurance.
• Most often the employee is allowed the option of purchasing an additional
life insurance amount equal to his or her basic life plan amount.
Supplemental life plan premiums can be arranged in several ways. The two
most common methods are:
- a single low rate for all employees
- step -rated rates, by five-year age categories, increasing with age
• Currently, the City's supplemental life plan has 48 employees enrolled in
the plan.
- this represents a 16% plan participation and indicates that probably a
step -rated plan will have to be adopted rather than the current group
rated plan
Improved Plan
D. Basic Employee Life Plan (See Exhibit II)
• Our findings indicate a need to provide improved life insurance benefits.
• We recommend the following level of benefits be provided:
Employee Insurance
Classification Amount
Mayor Council Members
and Elected Officials $25,000
Manager, Assistant
Managers 2 x Annual Pay
All Other Employees 1 x Annual Pay
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1HE " %i �r COMPANY
• Council members have a benefit under the current life plan of $15,000 and
should be provided with a meaningful flat amount benefit.
• Two times pay, or more, is competitive for management staff.
• One times annual pay for all other employees is a reasonable death benefit
objective for a government agency sponsored plan.
- in today's economy, even the second income earners have a need to
replace their annual pay in event of death
- the City should deal with benefit objectives based upon the
occurrence of events (death, disability, etc.) rather than what the
insurance industry has sold you in the past, simply to be competitive
- at the same time, the City should not attempt to emulate other, ill-
conceived, government agency plans
E. Supplemental/Voluntary Life Plan (See Exhibit II)
• Provide a separate, voluntary, employee -paid supplemental life -plan for all
classes of employees of an additional one times the basic plan amount.
• Will require at least 50% participation if group rated; one rate for all.
• Can also be provided on a five-year, step -rate, age -bracket basis if 50%
participation fails or you desire to do so.
• Eliminate waiver of premium and AD&D on the supplemental plans
- one might ask the question, is an employee worth twice as much if
death is by accidental versus natural causes
- we do not believe this to be true
• If 50% participation is achieved, an average group rate of $.50 per $1,000
would probably be required to fund the plan.
F. Dependent's Life Plan (See Exhibit II)
• Provide $1,500 death benefit for dependent spouse and each child.
• No AD&D; no waiver of premium.
• California insurance code limits maximum amount to $5,000
THE '^"/Pl� G0M PANS
I
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• Employees who elect dependents' medical coverages would have this plan.
• We would suggest that employees pay for plan costs which we estimate
would be about $.75 per family, per month.
- Crown Life has proposed a $.99 rate which we feel is too high and
have requested a lower rate
G. Voluntary Employee/Dependents' ADD Plan (See Exhibit III)
• If the City finds the elimination of AD&D from the basic and supplemental
life plan attractive, you might consider sponsoring a voluntary AD&D life
plan as follows:
- provide a voluntary AD&D plan for employees and dependents
- employees select and they pay for this plan
• Amounts can range from $25,000 to $150,000 per employee in increments
of - $25,000.
• Spouse benefit equals 40%-50% of employee amount.
• Children benefit equals 10%-15% of employee amount.
• Special educational benefit of 2% of employee amount for children in
college.
• Costs about $.08 per $1,000.
• We would not recommend offering two voluntary life plans, initially.
• The City might also consider paying 33% of plan costs and have employees
pay 67% of plan costs. In other words, City pays for costs for the eight
hours while + ie employee is at work.
H. Medical Plan
Current Plan (See Exhibit IV)
• The current medical plan is a comprehensive major medical type plan
which provides a 100% benefit for in -hospital expenses and 80% for out -of -
hospital expenses.
Before Deductible
• The plan provides an accident expense benefit of 100% of usual, reason-
able, and customary charges without any deductible up to a $500 per
person, per year maximum.
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` Lt TNf Q/Jnll COMPANY
The Deductible
• Is $100 per person, per calendar year; $200 family maximum.
After the Deductible
• The major medical plan pays a percentage of most types of medical care
charges, including hospital, surgical, proiC-sional services, as well as
doctor visits and prescription drugs.
- for the first $5,000 of eligible in -hospital expenses, the plan pays
100% of usual, reasonable, and customary, URC, charges
- for the first $2,500 of out -of -hospital expenses, the plan pays 80% of
URC charges, plus
- 100% of charges in excess of $2,500 up to a lifetime maximum
• The lifetime plan maximum is $1,000,000 per participant.
• The plan is provided through Crown Life Insurance Company, and claims
are paid by their Los Angeles office.
We perceive this plan's primary problem to be one of design.
• By paying a 100% benefit for in -hospital charges which includes the
surgical, hospital room and board and miscellaneous charges, the plan
encourages hospitalization to receive the maximum, 100%, benefit reim-
bursement.
- with medical care costs escalating at a rate which exceeds most
other costs, we find that a plan change is necessary
- in -hospital and 'emergency room costs are the most expensive of all
medical care costs and they represent over 50% of total medical care
costs
• A plan which encourages out -patient service utilization appears necessary.
- the plan could pay 80% of all medical expenses or it could pay 100%
for out -patient services and 80% for all other including in -hospital
expenses
- historically, the latter plan will cost from 10% to 20% less
• We also find a need to provide a medical plan for retired employees and
their dependents.
- especially now that the City is out of federal social security
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J
i/if 111 COM LA%+
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Improved Plan (Se: Fxhibit V)
• Provide a tailor-made comprehensive major medical pian for your
employees and their dependents, as outlined in Exhibit V.
Before the' Deductible
• The plan payz 100% of the first $500 for medical charges related to
accidental injuries, outpatient minor surgery and diagnostic x-ray and
laboratory tests. There is no coinsurance and no deductible requirement
for this benefit feature.
The Deductible
• $100 per person, per calendar year; $200 family maximum; three months
carry over provision to meet next year deductible for charges incurred
during October, November and December.
- deductible is waived for accidents
After the Deductible
• The plan pays 80% of all covered medically necessary charges on a usual,
reasonable, and customary, URC, basis, up to a $1,000,000 maximum.
When $2,500 of charges are incurred in a calendar year, the plan pays 100%
of excess charges up to the maximum of $1,000,000 per person.
- guarantees no more than $500 in out-of-pocket expenses during the
plan year, per person for accidents; $600 for sicknesses
• Plan treats all in- and out -of -hospital expenses, including pregnancy, the
same as all other types of illnesses.
• Does not encourage hospitalization to maximize plan payments or favor a
particular service type.
• Traditionally costs 10% to 20% less than for the in -hospital plus major
medical approach.
• Allows other benefits and plans to be added and/or improved.
• Provide the medical plan for all currently eligible employees, plus the same
plan, at group rates for employees with 5 years of service, age 50. This
plan would be for retirees and their dependents and as a supplemental plan
- five years of service, age 50, would coordinate with your retirement
plan's early retirement feature
- the City currently does not offer this feature to retirta5
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TIIE 111r�0111 COMPANY
1.1
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I. Dental Plan
Current Plan (See Exhibit VI)
• The City currently provides a dental plan.
• We believe the current plan is competitive and provides adequate benefits.
0 Dental plans are popular with employees and are becoming common within
industry as well as government agencies.
• Employees have a real need for dental care plans and are able to receive a
tax-free benefit from the plan without dying or being disabled.
0 We find a need to increase the plan's deductible as well as adverse
selection problems to insure it's future availability.
Improved Program (See Exhibit VII)
• Provide a comprehensive dentaA program that pays a percentage of URC
charges by dental service class. We recommend the adoption of the
following plan:
Before the Deductible
6 Pays 80% of Class I -- Preventive Services.
The Deductible
• $50 per person, per year.
After the Deductible
• Pays 80% of Class II -- basic, therapeutic, and restorative services and
supplies (See Exhibit V for details of benefit categories).
• Pays 50% to 60% of Class III -- major restorative services and supplies (See
Exhibit V for details of benefit categories).
Plan maximum per person, per year will be $1,000.
- $1,000 is adequate and controls abuse and prior patient -neglect
exposures
- $1,500 would be a future improvement to be added for employees in
subsequent plan years
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• We
same as
medical
- see improved medical plan for eligibility recommendations
• In light of the $50 deductible, you should waive the deductible for
preventive Class I type benefits.
- this rewards employees for past and future good dental hygiene
- it is of no value to persons with prior patient -neglect
J. Vision Care Plan
Current Plan (See Exhibit VIII)
• The City provides a competitive vision care plan.
• In light of the other benefit changes, we recommend that the current plan
be continued.
Improved Plan (See Exhibit IX)
• Exhibit IX illustrates a recommended vision care plan. It represents 70% =
80%-reimbursement of URC charges and is identical to the current plan.
• The primary problem with the current plan is adverse selection. Less than
half of employees participate in the plan. Dependent participation is even
worse.
- this practice increases costs and will eventually make the plan
unaffordable
• We recommend eligibility be the same as for medical and dental coverages
and require participation in the entire program. This will prevent the anti -
selection problem.
K. Short -Term Disability
Current Plan (No Exhibit was prepared for this plan)
• Short-term disability is most often designed to replace income losses due
to short=term disabilities lasting from eight days to six or twelve months.
- sick leave covers day one through seven
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THE Q/11j GOMPAN�
• Salary continuation arrangements for management employees often cover
one to six months' medical leave periods.
• California S.D.I. covers your employees from day eight to nine months for
disabilities. (1)
• S.D.I: s weekly maximum is $154 as of January 1, 1980.
• California S.D.I. basically provides income replacement of 50% to 55% of
pay up to $14,900. After that income level, the plan stops accruing
additional benefits.
L. Long -Term Disability
Current Plan (See Exhibit 10)
o The City provides a long-term disability plan for its employees which is
underwritten through Standard Insurance Company.
• This plan provides income replacement for totally and permanently
disabled employees.
0 Pays 66-2/3% of basic monthly pay up to $1,350.
- maximum monthly benefit is $900
• Pays to age 65 for accidents as well as sickness. After age 65, the plan
reduces by paying the pre-65 benefit amount but for a limited payment
duration period: All benefits cease -at age 70.
- your pension plan will coordinate with, the LTD plans benefit
structure and continue benefits past age 70
• Benefits commence after a three-month, or 90-day, elimination period.
• Plan integrates, offsets, for full family social security, as well as other
group and state disability plans.
• The plan provides inadequate benefits for all employees earning more than
$16,200 annually.
- Federal and State tax supported plans favor lower -paid employees,
and basically do not provide benefits above the $16,000 to $18,000
per year pay level
- also, they replace a higher percentage of pay for lower -paid
employees
(1) Effective on January 1, 1980.
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THE Oil [f tOM kANr .31
• A separate plan benefit with more liberal eligibility and elimination periods
should be considered for management personnel.
- these employees are least apt to malinger or abuse the program
- the improved plan should be coordinated with your salary
continuation and sick leave programs
• A competitive LTD plan should replace a percentage of disabled employees'
current monthly pay.
- 50% to 70% is competitive when coordinated with social security
{
waiting or elimination periods range from 30 to 270 days depending
upon the circumstances, objectives, and need of a particular employee
group
- current gross income, less all other disability benefit payments, less
work related expenses and payroll taxes, deductions, etc., equals a
realistic LTD plan benefit objective
(
- benefits in excess of 70% of take home pay are excessive and equal in
{
value to more than current gross salary
3
-- this would encourage malingering
l — especially since LTD payments are taxed more favorably than
ordinary income
r• Also, LTD plans are particularly important to the younger, short -service
employees who usually have not had sufficient time to accumulate
meaningful disability benefits, if at all, under the City's pension plans.
a,
Improved Plan (Short- and Long -Term Disability)
See Exhibit XI
• The City should continue to provide a long-term disability plan for
' employees. The question is for whom and what type of benefits.
• We recommend a somewhat modified plan be continued for all employees.
provide a 60% of monthly pay up to $8,333 which would provide a
$5,000 monthly plan maximum benefit payment without any .evidence
of insurability
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the elimination or benefit waiting period (from day of employment to
date benefits commence) should be as follows:
— 90 days for management and selected group of manager, plus
police and fire types
— 270 days for all other employees earning less than $16,000
annually
— social or government subsidized plans favor lower -paid
employees by replacing a greater percentage of their pay (i.e.,
S.D.I. and social security) which makes a longer elimination
period for those employees justifiable
the eligibility waiting period should be as follows:
first day of the month following date of employment for
selected management group employees earning $20,000 per
year, or more
you could adopt a one-year service requirement for a.II other
employees. For the selected group of management employees,
participation should be immediate
a return -to -work incentive provision, paying an extra 10% or greater
benefit from all incomes, should be adopted to encourage employees
to attempt to return to work
a rehabilitation program is also an attempt to assist disabling
employees to return to productive employment. This program can be:
— any plan, formal or informal
— a new or current position with the City
— any type of gainful employment or training plan
See Exhibit XI for other recommended provisions, such as:
— dismemberment benefit
— death benefit
— definition of disability
— deductible benefits
— pre-existing conditions
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THE �/11 �l COMPANY
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SECTION III
PROGRAM FUNDING AND UNDERWRITING CONCEPTS
(Special Attachment "A" Discusses Various Types of Funding Concepts)
A. Current Funding Concepts
0 The Crown Life program consists of life, medical, dental and vision care
underwritten under three separate contracts.
• Each plan is fully insured on a partially pooled and partially experience -
rated basis as follows:
the plan is partially experience -rated based on the City's experience
and partially pooled -rated. The pooled -rated portion represents
claims experience of Crown's total book of other similar -sized pooled
contracts
non -benefit related costs such as the carriers normal retention
charges, are not identified
- the City's premium, claims experience, as well as plan reserves data
are available
- dividends or excess margins are not refundable
- under this concept, the carriers profit or retention charges are
always equal to the excess of premium over incurred claims
s The City's program has had excellent claims experience during the past
three year period from July 1, 1978 through June 30, 1981.
0 The results of your paid premium to paid claims ratios for the past three
years are set forth in Exhibits A and B attached. A summary for all plans
is as follows:
Paid Loss
Year Paid Premium Paid Claims Ratio %
1978-79 $ 134,355 $ 80,173 60
1979-80 208,344 163,190 79
1980-81 246,953 170,225 69
TOTAL 589 652 413,588 70
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THE Q1/Q11 COMPA%y 31(
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♦ Under the pooling concept, it can be easily demonstrated that those groups,
such as the City, with consistently good claims experience, pay for other
employer's bad experience and costs.
♦ One of the primary objectives of this study was to evaluate the potential
cost savings available to the City if you established an experience -rated or
improved funding concept.
- Exhibit H is a financial illustration of results, or cost savings,
available to the City under an experience -rated program based upon
your past three-year plan financial data
- the three-year result is that a $84,512 cost savings would have been
achieved using an improved funding concept known as fully
experience rating on a retention charge basis.
♦ Exhibit C and D provide the three-year accounting results of the Life and
Long -Term Disability plans which during that time were underwritten by
Standard.
- Standard now underwrites only the LTD plan
- the City's past life plan experience was more or less in a breakeven
position
- the LTD experience was favorable
♦ Due to good LTD plan experience, we perceive that the City can probably
provide the improved program at the same or less than current plan costs.
♦ All of the above indicate that the City should change funding concepts by
negotiating with existing carriers for imore cost efficient contracts.
B. Improved Funding Concept
♦ Based upon the City's current group size, the most likely type of funding
concept best suited to your needs would be a fully experience -rated,
retention charge basis contract.
♦ Under the experience rating concept, your program's net cost is based upon
your own claims experienre plus a reasonable expense factor to administer
and underwrite the program.
- benefit expenses are paid claims plus reserves. Paid claims plus
reserve adjustments for a given time period equal incurred claims
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THE l OMP'AN t
_IJ
non -benefit expenses are known as retention charges. Retention
charges are those monies retained by a carrier to pay administration
expenses, premium taxes, underwriting and risk charges, plus provide
a margin for profit (1)
... if commissions are paid to a broker or agent, these costs are
paid from the retention formula
- in addition to retention charges, most plans of your size purchase
special risk and/or pooling insurance at various levels to protect
against excessive shock or catastrophic types of claims. These
charges represent pooled premium to the carrier and a pooling
expense to the policyholder's plan
0 In any plan year that plan income exceeds plan expenses, all excess plan
margins are refunded to the policyholder.
- they may also be used to forego rate increases, set up special
reserves, and may be held by the carrier in a high interest type
reserve.
- however, all excess margins belong to the policyholder and are
usually subject to call at any time
• If the plan's expenses exceed income, a deficit occurs which is usually
recouped in the form of a rate increase and/or from future plan year
surpluses.
- dividends are not paid until the deficit is recouped by the carrier
Our findings indicate that the City should improve indemnity plan design
and seek to increase that plan's participation levels.
- the plan's cost wilt then be based upon your own experience and
benefit payments
- you can also design your own benefit plans and better manager long-
range costs
• All plan coverages should be combined under one contract where feasible.
- the current Long -Term Disability plan requires a separate contract
with an LTD and/or specialty risk carrier
(1) Retention charges for your program should not exceed 10% of paid
premiums, an industry benchmark. Our comparison Exhibit H used a 12%
retention factor to allow for commission payments to the broker.
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IML Wall CQM PAN
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life, dental, and vision claims experience, which are historically good
risks, will serve to offset medical claims experience fluctuations
carrier profit and expense margins will be reduced
commission payments can be eliminated or reduced to futher reduce
costs
• We find no reason to leave the Crown Life or Standard to obtain these
funding concept advantages.
• At our request, Crown Life has proposed an experience rated, retention
charge concept which appears to be competitive.
- their retention charges as a percentage of premium range from 9
percent to 10 percent based upon past and projected future loss ratio
figures
• In addition, we find the City should evaluate other alternative funding
concepts such as delayed premium and retrospective rating. These are plan
cash flow efficiency techniques.
- under a retrospective rating' arrangement, the City would pay the
carrier, prospectively, a rate which is from 10% to 20% below normal
insured rates.
... after the plan year accounting is completed a surplus or deficit
will occur
... if a surplus occurs, the City receives a refund or dividend equal
to the surplus
... if a deficit occurs, the City pays an additional premium equal
to the discounted, retrospective premium. Any excess deficits
must be carried forward by the carrier
... the City could leave the carrier and thus not pay the deficit
delayed premium usually involves paying the carrier in arrears by two
to three months of premium
both of the above techniques serve to place -plan cash flow into the
hands of the City rather than the carrier. When combined, they are
equal to holding your own plan reserves and can represent from 25%
to 40% of plan income
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7NE Jn(l COM RAyY
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SECTION IV
PROGRAM PARTICIPATION AND PERCEIVED ANTI -SELECTION PROBLEMS
A. Current Plans and Procedures
Under the current arrangement, all employees are required as a condition of
employment to have basic life, LTD, and medical coverage for themselves.
Employees can select dependents medical, dental and vision care plus dental and
vision care for themselves.
s Group benefit plan rates are based upon a minimum level of eligible
participants being enrolled under the plan.
when this does not occur, you have in effect reverted to individual
benefit plans and anti -selection by only those most needing the
benefits occurs
• On a national average, 55% of the population requires eye care.
- if given the option, it stands that only 55% of a given group would
select vision coverage
- when and if this occurs, normal plan rates double
- the same or similar situation occurs with optional dental
0 When anti -selection occurs in a medical plan, whether it be employees or
dependents, the claims experience results are often devastating to plan
costs.
• Employees are quick to evaluate spouse coverages, out-of-pocket costs and
potentials for selecting a plan for a given year at a too low cost thus
actually profiting from the plan.
• These profits came at the expense of the employer and the current and
future group of employees.
0 The attached "Summary of Employees Active as of October 1, 1981"
indicates the following participation levels for each plan:
POTENTIAL PARTICIPANTS ACTUAL PARTICIPATING
Coverage
Category 100% Medical Dental Vision
Employees 300 300 187 179
Employees with
Dependents 222 123 101 102
-17-
55% of employees with dependents have coverage
62% of employees have self dental coverage
45% of employees have their dependents covered for dental
60% of employees have self vision coverage
45% of employees have their dependents covered for vision care
• The above indicates a severe anti -selection situation currently exists with
the City's group.
• This problem is now resulting in a mid -contract year rate increase of 25%.
- we anticipate it will continue and the situation will get worse, not
better.
• The Life and LTD plans do not have these problems. There costs are also
stable.
B. Improved Plans and Procedures
We recommend the City adopt a new participation requirement as follows:
• Every employee must have Basic Life and Medical, Dental, Vision and LTD
coverages.
• Employees can be allowed to refuse medical, dental, vision coverages but
only if they provide proof of other medical coverage.
• Employees can elect medical, dental and vision coverages for their
dependents but if they do they must insure all eligible dependents for all
coverages.
• Allow employees to refuse dependents coverage but if employees refuse
dependents coverage, they must refuse all coverages.
If adopted, the above will correct the anti -selection problem and return the plan
to a more stable financial position.
• If the situation is not corrected, the carrier will simply keep increasing
rates and the plan will eventually reach a cost prohibitive condition.
• Under the current contract, Crown life can increase plan costs at any time
and frequency by giving 30-day notice to the City.
• Fortunately, this problem is just starting to surface and can be corrected
with new participation rules.
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THE �li%Iif c0"PAr1V
SECTION V
PROGRAM COSTS AND SUBSIDY LEVELS
Cost Subsidy Levels
A. The Current Plans
The City currently subsidizes plan costs as follows:
• Miscellaneous and Manager :ent Employees
city Pays
- the City pays 100% of Basic Life plan costs
- the City pays 100% of LTD plan costs
- the City pays 100% of medical, dental and vision plan costs for
employees and dependents up to a $115 per month maximum credit
- the City refunds, in cash, to the employee any unused plan costs
which are less than the $115 credit
Employees Pay
- employees pay the excess cost, if any, of medical, dental and vision
care
- employees pay 100% of supplemental life plan costs
• Fire Employees
City Pays
- the City pays 100% of Basic Life plan costs
- the City pays $33.14 of medical, dental and vision plan costs
- there is no cash refund of unused plan contributions provision
Employees Pay
- employees pay 100% of Supplemental Life plan costs
- employees pay all medical, dental and vision care plan costs which
exceed the $33.14 monthly credit(_0
r��—" — 3 18 2
—19—
.. T11E a/I% l( COMHANI - --
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we find these out-of-pocket costs to be excessive as well as not tax
efficient from a compensation and benefits standpoint
... the "Summary of Current Plans, Costs, and Subsidy Levels"
section of our report documents actual individual employee and
City costs
Police Employees
0 Police employees are treated in the same manner as fire employees except:
- their monthly credit for medical, dental and vision plan costs is $70
per month
- the out-of-pocket cost for dependents coverage is less than'for police
but is still too high
• The proposed as well as future rate increases will further increase police
and fire employees out-of-pocket costs unless an improved cost sharing
Ievel is adopted.
B. Improved Plans
We find the ultimate goal of the City should be to improve the cost subsidy
levels by reducing employee out-of-pocket premium costs and an eventual
termination of the cash refund system. Perhaps this can not be achieved
immediately due to contracts with the miscellaneous and management group.
We recommend the following test subsidy levels for the improved program.
All Employees
City Pays
• 100% of Basic Life plan costs.
• 100% of LTD plan costs.
• Medical/Dental/Vision program.
- employee
... 100% of costs in excess of $5 to $10 per month
- employee with one dependent
... 100% of costs in excess of $17 to $34 per month
-20-
T04E Q11afl COMPANY
I/ I
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Illustrations of individual and total plan costs summaries are provided attached
to this report under "Summary of Improved Plans, Costs and Subsidy Levels"
number 1 and 2, respectively.
• Our findings indicate that these cost levels are competitive realistic and
cost efficient.
- they facilitate the concepts of improved participation requirements
previously discussed in Section IV
Discussion
In the interim, for miscellaneous and management employees, we suggest that if the
cash refund system and anti -selection is permitted to continue for these employees,
the City should increase or have a separate rate for this group.
Another consideration is to provide the improved benefits package but use any
increases in costs to apply against the cash refund or credit, now.
For a group of only 300 employees, we find that flexible benefits options and cash
refunds defy the spirit of group underwriting and benefit planning.
Program Costs
A. Current Plans
• Current plan monthly premium rates, by plan,_ are outlined in Exhibit "E".
These rates were effective as of October 1, 1981.
- Crown Life notified the City of a 25% medical plan increase to
become effective March 1, 1982 (see Exhibit F for March 1, 1982 plan
rates if medical plan costs increase 23%) 61)
- otherwise they will seek the full rate increase April 1, 1982 and
possibly more increases will follow on July 1, 1982
- Standard Insurance Company has not proposed any rating action on
the current plan
B. Improved Plans
• Improved plan monthly premium rates, by plan, are outlined in Exhibit "G".
Ll r2AW 5 -`dAeA6
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-21-
_THQ gl,lJif COMPANY
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• The Crown life and Standard plan costs for the improved plans will result
as follows:
- life rates decrease 28%
- medical rates increase 11.3%
- dental and vision rates are unchanged
- LTD plan rates decrease 2396
Current and improved plan costs under the various cost subsidy level
alternatives are set forth in special cost Exhibits K-1 and K-2.
- K-2 outlines annual plan costs by plan
- K-1 outlines annual plan costs broken down between the City and
employees
• The "cost summaries" attached to this report provide data as to individuals
versus City costs.
• Our findings indicate an overall improved program can be.provided at only
a slight cost increase the City depending upon the subsidy level adopted.
- total elimination of the cash refund system will reduce City costs
below the current cost level for the iml
-222_
, k //
F
SECTION VI
GOVERNMENT LEGISLATION IMPACTING
GROUP BENEFIT PLANS AND THEIR COSTS
• The Federal Pregnancy Disability Act requires your group medical plan to cover
pregnancy the same as any other illness.
- with only an average female content in your current group, you do not have
a significant exposure to increased costs due to pregnancy
- you should, however, adopt a more restrictive pre-existing conditions and
extended benefits provision clause to prevent over -utilization of your
program in the future
• The Age Discrimination Employment Act, ADEA, requires your plans to continue
existing coverages for the protected group, age 40 to 70, in a non -discriminating
manner.
- active employees continue to be covered to age 70
- no reductions in benefits or increases in costs are allowed, except those
which can be cost -justified
- life insurance past age 60 or 65 with no reductions exposes the plan to
higher death and waiver of premium exposures
- medical, dental, and vision plans are less affected by this practice
... medical plan can coordinate with a Medicare plan at age 65
- eliminating waiver of premium and AD&D, plus a cost reduction of about
8% per year in life amounts at age 60 or 65, are effective ways of
minimizing exposures and lowering long-range life plan costs
... making a. one-time reduction at age 65 of 35% with the reduced
amount continuing to age 70 is another acceptable reduction method
• The Health Maintenance Organization Act, HMO, of 1973
- this federal law requires employers with at least 25 employees to offer an
HMO type plan to their employees if they also have an indemnity type
medical plan
- the HMO plan is a pre -paid health care plan of one of two types. Either a
group practices model, like Kaiser, or an individual practice association,
IPA, like the General Medical Centers Health Plan
-23-
THE 'Unto[ f A M PAN v
qi(
you have an exposure to offer one of each type of plan in each HMO
service area where you have at least 25 employees
t
the City has never been mandated by a HMO
HMO plans, traditionally, are more expensive than indemnity type plans.
They should be even more costly as they phase into federally mandated
coverage levels, start paying back government subsidy loans, eta
since HMOs provide no accountability for plan benefit dollars and based
upon other employers experiences with HMOs, the -City may wish to curtail
or discourage future HMO penetration
having a broad -based indemnity benefits package at a lower than HMO plan
cost is the most effective HMO deterrent
• Summary of Legislation Matters
t -
- we have purposely designed the City's improved program to coordinate,
comply, and be competitive with the above government legislation. The
improved program should also assimilate well with the proposed National
t ' Health Insurance plans of the future
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-24-
THE V//P11 GOM PAN
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SECTION V1I
EMPLOYEE COMMUNICATIONS
A. Current Procedures
• Your current employee communications program consists of plan booklets
prepared by Crown and Standard.
- as a government agency, you are exempt from the Summary Plan
Description requirements of ERISA
- we anticipate the passage of a Public Employees Plan law in the
future which will require a Summary Plan Description as well as
reports and filings to the government agencies such as IRS and DOL
- your booklets are written in somewhat complex legalize language
- meeting with employees will be required to communicate the
improved plans and how they work
• Group benefit plans now represent a substantial part of employees non -cash
compensation.
- the value of providing excellent benefits for employees is often lost
in poor communications
B. Improved Program
• We recommended the development of an improved employee
communications program for the City's employees. Included should be:
- meetings with all employees and their representatives to explain the
improved program
- develop effective plan booklets which describe your plans in layman's
language
- develop simplified, one -page graphic illustrations of each plan
- provide assistance with improved program enrollment
-25-
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_ CURRENT GROUP BENEFIT PLANS
THE V/,/(W C 0 M PANE
L� _._ ___ _ __
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TYPE OF PLANS
UNDERWRITTEN BYs
SCHEDULE OF BE NEFITSt
Employee Life Insurance
Supplemental/Voluntary Life
`Dependent Life
se
ChU en
Accidental Death Benefit
Dismemberment Benefit
Yoluntsry AD&D Benefit
Yaiver of Premium
Termination of Insurance
Conversion Privilege
at Termination
Maximum Coverage
Witt" Insurability
Reduction of Insurance
Eligibility
Plan Effective Date
Retiree Coverage
(1) tip to a S)0,000 per person mak.,mum.
EXHIBIT 1
CITY OF CARI.SBAD
SCHEDULE OF BENEFITS AND PROVISIONS
OF YOUR CURRENT EMPLOYEE CROUP LIFE PLAN
Life and Accidental Death & Dismemberment (AD&D) Insurance
Crown Life Insurance Company
Amount by Employee Classification
Classification s C-
Managers 1 x annual pay(1) 1 x annual pay(1)
Safety Members $ 2,000 $ 2,000
All other Employees S 13.000 $ 13,000
Yes, Employee may purchase up to 1 x annual pay
SI,300
f 100 up to 6 months; $1,000 thereafter
One times basic Hle Insurance amountl none for voluntary or dependents life plans
One times basic life Insurance amount for loss of both hands, feet, sight of eyes (or any combination of
one eye and one hand, etch 1/2 of basic life Insurance amount for loss of one hand, foot, sight of eye
None
Yes - total and permanent disability prior to age 7D
Date of Termlri..�on or Retirement
Yes - may convert all amounts but without AD&D or Waiver of Premium
None for Basic Plan; evidence required for supplemental plan amounts
Basic and AD&D benefits reduce by 30% at age 70. AD&D ceases at age 70
Same as Medical Plan
Same as Medical Plan
None - may convert to Individual plan
Y IIE Q�0 f! COMPANY
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EXHIBIT IV
CITY OF CARLSBAO
SCHEDULE OF BENEFITS AND PROVISIONS
OF YOUR CURRENT CROUP MEDICAL PLAN
TYPE OF PLANt
Comprehensive Major Medical Plan
UNDERTRITTEN BYt
Crown Life insurance Company
,SCHEDULE OF BENEFITS PROVIDE.Dt
Spedsd Accident Expense Benefit
(no deductible, no coinsurance)
$300 (Includes hospital room and board, hospital miscellaneous services and supplies.
Including emergency room, surgeon and doctor fees, diagnostic X-ray and lab and
nursing care services)
Dedtctible
$100 per person, per calendar $200 family maximum (three month carry overXI)
(not applicable to hospital, surgical or DXL)
NA)OR MEDICAL EXPENSES
A"M THE DEDUCTIBLES
Major Medical Plan Maximum
$1,000,000 per person, lifetime
CoWumna Rate
100% of first $3,000 for Hospital/Surgical charges plus 10% of first $21300 of all
other covered expenses during calendar year, expenses durlr4 the calendar year, up
to the maximum for the following
Hospital Room and Board
Up to semi -private room rate
Hospital Services and Supplies
Usual, reasonable, and customary
Intensive Cue/Cardlac Care Unit
Usual, reasonable, and customary, up to three times seml•prlvatt room rate
Extended Care FacUlty(2)
30% of semi•prlvate room and board rate
Doctor Visits In or Out of Hospital
Usual, reasonable, and customary (Includes office visits)
CWAWIlr,g Physiclans/Speclausts
Usual, reasonable, and customary (Includes office visits)
Surgeon and Assistant Surgeon
Usual, reasonable, and customary
Anesthetists
Usual, reasonable, and customary
Diagnostic Laboratory and X-ray, DXL
Usual, reasonable, and customary (In or out of hospital)
X-ray and Radiation Therapy
Usual, reasonable, and customary
(1) Deduetlble carryover for charges Incurred during October, November and December to meet next year's deductible.
(2) M EFC licensed In California whose primary purpose Is to provide services timllar to a hospital, but for the recoupment from an
Illness or Injury where normal hospitalization Is not required. Must follow a hospital stay and enter facility within 14 days of
hospital discharge.
THC Pyal'l COMPANY
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EXHIBIT IV
Page t
MA7OR MEDICAL ZXPENSES
ARTPJt THE DEDUCTIBLE
ont rtue
Oxygen, Anesthetics and
Their Administration
Usual, ceasonable, acid customary
Blood, Plasma, and
Their Administration
Usual, reasonable, and customary
Prescription Drugs
Usual, reasonable, and customary
Ambulance Service
Usual, reasonable, and customary (Including air ambularxe)
Rental of Iran Lung
or Other Durable
Therapeutic Equipment
Usual, reasonable, and customary
Prosthetic Appliances
Including Artificial Limbs
Usual, reasonable, and customary (replacement not covered)
Mental and Nervous Olsordirtm
bs.Hospltsl
Usual, reasonable, and customary
Out of Hospital
Doctor visits and consultations - 50% of covered charges up to $60 per person, per
visit, $1,500 maximum per calendar year - $23oOOO lifetime per person maximum
Christian Science
Practitioners
Usual, reasonable, and customary
Nursing Care
Usual, reasonable, and customary (registered, graduate nurse)
Prelnsncys
Normal
Usual, reasonable, and customary (except well -baby csreX1)
Complicated
Usual, reasonable, and customary (elective typea of caesarean, miscarriage, and
abortion not covered unless the result of a complicated pregnancy)(l)
Elective Sterilization
Usu*l$ reasonable, and customary for tubal Illations and v►seetomles
Pap Smears
Usual, reasonable, and customary foe nors-routine odnckups (must Include M.D.'s
diagnosis)
Cosmttle Surgery
Accident only
Dental Services
Accident Only
Eye Care
Accident Only
Limitations
Sect Pregnancyl Outpatient Psychlatrlel and Coordination of Benefits Provlalons
(1) Same coverage tot employees as wall as dependents.
Q
ExHtsIT Y
Pap )
MlA�30RTHZ MWIIC�AL FXPENSk3
n—ued)—�_
(Continued)
Exeluslons
Routine physicals, well -baby care, excessive or medically w4ceuary charges,
abortion, non -accident -related dental services, cosmetic surgtrY or treatment
except for accident -related Injuries, eyeglauts and hearing aid% Ilnciuding exams,
flttings, tests, eta), all free services, sickness or accidents relm"' to an act of war,
expenses Incurred prior to plan effective date, hospital room u.. board charges In
exces' of daily semi -private room rate, and custodial or rest care
OTHER PERTW ENT INFORMATIONS
Rsotoratlon of Plan Maximum
Not Applicable
lore-axisting Condition
No payment for services provided In connection with prtaxlsting medical conditions
during first 12 months of plan coverage for which treatment was proscribed or
adminlstertd during a period of six months prior to, plan effective date) all
conditions covered thereafter (or after a f04ay treatment•frot period, whlchever Is
earller). Waived for existing plan participants
Csotdintlon of bemfIts
Yts—other group plan and all other similar programs Including Medicare
Conversion Privilege for Terminating Employees
Yes, msy convert to an Ind(vidual policy of !nsurance
Rttlree Coverage
Yes. To be ellgtble, participant must have five years of continuous service with the
City and attained age 30. between ages 30 and 67 coverage Is existing group
medical plan. At age 63, plan supplements Medicare 01
l"an Ellglbi0ty Re"Irementu
Employ"
All full-time employees scheduled to work at least 30 hours per week
Dependents
Spouse an, dependent children to age If (up to *;a 21 If dependent upm employee
for at least 30% subsistence, physically/mentally handicapped and full-time college
students)
Flan Effective Dates
Employee
On the first day of :he month following date of employment cad actively at works
otherwise, the day the employ" return to work
Dependents
Same as employ" and rat confined at home or In a hospitall otherwise, the day of
recovery
Termination of Plan benefits
30 days following date of employment termlMtlon, or retirement
Prevision for Plan Continuation During
Authorlsed Leave of Absence
Yet, as established by the personnel office for all types of medical haves (three
months outomatiq renewable monthly, not to exceed six months)
lxtentlon of benefits
tf Disabled
Plan coven the 4sabling condition for up to 12 months. Convenlon plan, If elected,
covers all other condition
Contlnustion of Coverage for Dependents
of Deceased Employ"s
Covered dependents of a deceased employte, who are otherwise eligible, may have
continuous coverage under the Plan, provided contributions continue to be paid by
the participant to the employer) however, all coverage will cease on the date of en,
survlving "set remarriage, or after six (6) months, whichever occurs first.
(1) Employ" pays 100% of plan onto for refer" coverages.
1
EXHIBIT YI
CITY OF CARLSBAD
SCHEDULE OF BENEFITS AND PROVISIONS
OF YOUR CURRENT EMPLOYEE CROUP DENTAL PLAN
LYPE OF PILAW
Scheduled Dental Plan
UNDERWRITTEN BYs
Crown Life Insurance Company
SCHEDULE OF BENEFITSt
Annual Maximum
$1,713 per person, per calendar year
Deductible
$23 per person, pet calendar year for all classes
Coinsurance Rate
Class 1 services . 80% of a scheduled dollar maximum per procedure or service (1)
Class 11 services .10% of a scheduled dollar maximum per procedure a service (1)
Class 111 services . 30% of a sche6uled dollar maximum per procedure or service (1)
Class 1- Preventive
Cleaning of teeth (ore per person per six (6) month perlod)l flouride treatments (one every six (6)
Services and Supplies
months); space malntalners and fittings for children.
Clan p - Basic
Dlagnostics office visits, oral exams, X-rays (Including full mouth), tests, and
Services and Supplies
lab exams (2)
Basic Restorative and Therapeutics Fillings - amalgam, sillicate, acrylic and plastlq gum treatments,
extractions, Impacted teeth, pulp app(ngl malntenana of bridgework and dentures, recementatlau,
rebasingl oral surgery and anestheslal emergency treatment of Pain
Class 111- Mayor
Ma Restoratives Root canals, fillings and crowns - gold foil, gold inlays, procelain, acrylic. sliver.
Services and Supplies
stainless steell preparation and installation of bridgework and dentures- full uppers, lowers, partials,
and pontics (limited to five-year age factorU as well as endodontles
Waiver of Premium
No
Coordkstlon of Benefits
Yes
Termination of Insurance
Same sa Medical Plan
Extenalon of Benefits
at Termination
nlrty days for certain types of services In process
Conversion Privilege
at Termination
No
Retirees Covered
No
Eligibility
Some as Medical Plant participation is voluntary
Plan Effective Date
Same as Medical Plan
Pre -Treatment Review
Procedure
Yes, for all courses of treatment over $100
(1) Schedule equals approximately 10% to 60%of
San Diego Area dentists usual, reasonable and customary charges.
(2) X-ray$ are limited to one set per 21 month
period and only for persons age II and over.
(3) Initial Installation must ocarr after the and of insured first insurance year.
N
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7-1
C. I
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ExHIBlr.va
CITY OF CARLSBAD
SCHEDULE OF BENEFITS AND PROVISIONS
OF A RECOMMENDED GROUP DENTAL PLAN
jYrE OF PLAN
Comprehensive Dental Plan
UNDERWRITTEN BY
Crown Life insurance Company
SCHEDULE OF BF1dEF1 fS
A.Wwal Maximum
$1.000 per person, per calendar year (1)
Deductible
0 per person, per calendar year for Claues 0 and Ili (see below) (2 do 3)
V30
maximum for families (three per person, per year)
Coinsurance Rate
Class I services . 3096 of usual, reasonable, and customary charges
Class 11 services ■ 20% of usual, reasonable and customary charges
Class III services ■ 60% of usual, reasonable, and customary charges
Clue I - Preventive
Servicaa and Supplies
Cleaning of teeth (one every six (6) monihs)I flourlde treatments (one every six (6)
monthsh space maintainers and fittings for children, office visits and exams related
to preventive are
Claw It- We
3ervicas and Supplies
Diagnostics office volts, oral exams, X-rays (including full -mouth), tests, and lab
exams
Buie Restorative and Therspeutiet Fillings - amalgam, silicate, scry0e and plastiq
root canals, gum treatments, extractions, Impacted teeth, pulp ceppingl main.
tenance of bridgework and denturesl recementatloes, rebasing; oral surgery and
anetheslal emergency treatment of pain
Claw III - Major
Services and Supplies
Major Restorative Flllings and crowns - gold foil, gold inlays, porcelsin, silver,
stainless steell preparation and Installation of bridgework arid dentures - full uppers,
lowers, partials and panties (Umlted to five-year age factor)
Waiver of Premium
No
Coordination of Benafits
Yes
Termination of lmurance
Same as Medial Plan
Extension of Benefits at Termination
Thirty days for certain types of services In process
Conwralon Privilege at T.rmlmtion
No
Kati" Covered
None
Eligibility
Same as Medical Plan
Plan Effective Date
Same as Medial Plan
fire Treatment Review Procedure
Yes, for all courses of treatment over $U0
(1) Speeiflatlons will include a $t,300 annual maximum plan, as well as a 30% $300 annual orthodontia benefit alternative,
(2) Deductible waived for Claw I services.
(3) Deductible carry over for charges Incurred during October, November, and December to meet next years deductible.
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eXHIBIT nR
CITY oF,cARLSBnD
r r
scfleouLe of BeNePrrs AND PRonsroNs
f..
J
(
OF YOUR CURRENT CROUP VISION CARE PLAN
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TYPE OF PLANt
Scheduled Vision Care Plan
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UNDPRVRITTFN BY.
Crown Life Insurance Company
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SCHEOULe OF BFNEWSs
Examinations dt Fittings
(includes glaucoma tests) g
Opt$S31.50
Optometrist metrbt $37.30
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Materials h Supplies
Lenses Lenses,
Each A pair
Single vision prescription $13.30 $27.00
Bifocal prescription
111.73 37.30
Trifocal prescription 23.00 30.00
Lenticular prescription
100.00 200.00
{
Contacts (neeessaryXl k 3) 200.00
Contacts (cosmetic) (1,2 &3) None 40
i
Frames
None
$23
Eligibility
Same as Medical Planl participation Is voluntary
i
Retirees Coverage
None
}
Ltrt)(tatlons
Exams - one per person, per 12-month
24-month period, Lenses - two Period; Frames . one pperson per
Fair
t
per person, per 12-month peer riod
�
E>!duslons
benefits Provided by another r
Prescription sunglasses, medical or plan,
r
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placeementpofilost
at brokeglasses and frames, duplicate glasses, teases or frames, prescrip.
drugsflon
(1) Contacts (Plan I and Plan
11) must be medicail
,
Ical tion al lenses, at following cataract surgery as Certified by physielan,to eorvwshen treatment on to Is required be0 in the better causetof aonmed.
(2) Special Ballow (such
for elective�contact or l nenses not ottherwise covered (see (1) above).
0) Lifetime maximum is $230 for contacts.
NOTES Current schedule equals approximately % of San Diego area usual, reasonable and customary chargef.
THE /�((f� C 0 M PANY
i
FJ(IfIBIT X
CITY OF CARLSBAD
SCHEDULE OF BENEFITS AND PROVISIONS
OP YOUR CURRENT LONGTERM DISABILITY PLAN
TYPE OF PLANS
Long -Term Dbablilty Plan
UNDERWRITTEN BY:
Standard Insurance Company
SCHEDULE OF BENEFITSg
Monthly Benefit
Slxtyslx and two-thirds (66 213) of basic monthly earnings up to $11330 (see definition of
basic monthly earnings on page two) up to plan maximum while totally and perms ently
disabled, subject to integration with all (family) federal snelal security benefits, state
disability plans and other Income such Income replacement plans providing non lump -sum
disability benefits (see definition of other Income below)
Maximum Per Month
$900
Minimum Per Month
None
Benefit Payment Period
Accident and Sickness
Age At
Begiming Of Maximum
Total Disability Benefit Period
61 or younger To age 63
62 3 years, 6 months
63 3 years
60 2 years, 6 months
63 2 years
66 1 year, 9 months
67 1 year, 6 months
69 1 year, 3 months
69 1 year
70 or older 0
Ellminnitlon Period
90 days
Death Benefits
Disability benefits are continued for three months 11 disabled employee dies and are
payable to surviving spouse and/or any one or more surviving children (not subject to
deductible benefits reduction)
Special Dismemberment Benefits
Lou of the following will be construed to be total and ptwmamnt disability for benefit
payment purposess
1) Complete severance of both entire hands, feet, tight of both eyes, or one entire hand
and toot for a live (3) year period
2) One hand, one foot, or one eye for a six-month period
Waive. of Premium
Yes
Vocational Rehabilitation Program
Yes, as established and approved by Insurance carrier (formal or InformaD
Rehabilitation Program Earnings
IA)
Monthly rehabilitation earnings deducted from gross earnings (see Return -To -Work
Incentive II)
THE ar"I'll COMPANY
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PXIIJBIT X
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TANG -TERM DISABILITY
Mont.)
Definition of Deductible Benefits
(integration or correlation of other Income benefits)
Reduced by the following benefits payable under other programs:
U All eligible federal social security benefits (family)
2) Rehabilitation program earnings
3) Current or future employer -sponsored benefit plans (disability provisions)
a) Workers, compensation
3) All other earnings from employment (or self-employment)
6) Slckleave
7) Government -sponsored plans, such as Veterans Administration, armed form, etc.,
providing Income replacement
Definition of Disability
Total and permanent disability as certified by a licensed physician and unable to engage In
gainful employment as followst
First two earrsst Unable to perform any and/or all duties of present occupation during 2%
consecutive months Income payment period
After two ears: Any occupation for which suited based upon prior work experience,
e t on, an or approved work rehabilitation program after 24 consecutive months
Income payment period
Definition of Basic Monthly Earnings
Basic monthly salary (excluding overtime, bonuses, commissions and extra compensatlew
effective on date of disability
Social Security Freeze
For deductible beneflt purposes, the social security benefit (reduction) will be (remain the
same as) the amount in effect on date of disability
Return -To -Work incentives
1) While disabled person Is working under an approved rehabilitation program,
the rehabilitation earnings are deducted from gross earnings (at disability) before
�.
applying the 60%formula. Examplet Employee at $1,000 monthly earnings level
receives $160 extra benefit payment (rehabilitation plus long-term disability) as an
Incentive toward rehabilitation
2) Return to work during elimination period - may attempt to return to work without
renewal of eliminatlon period as followst five (3) days for each 30 days of elimination
period allowancel under a plan with a two -month elimination period, 10 days Is the
total allowance possible
3) Recurrent disability provision - It disabled emloyee returns to work and later
becomes disabled due to same condition within six (6) months, the elimination period
Is waived
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EXHIBIT X
.3.
Regular permanent full-time employees scheduled to work at least 30 tours in a 40 hour
week are eligible on Date of employment (U
Same as Eligibility date
Yes, for any accident or sickness for which treated within six (6) months of plan
effective date; no benefits for twelve (12) consecutive months of coveragel thereafter, all
conditions covered (1)
Benefit payments are restricted to a 24-month period In the case of non-conflned mental
and nervous dlto(dei related dbabilltics
No benefits are payable for the folowingt
1) Benefit accruals, if any, during eligibility or elimination period
2) Benefit payments while disabled person Is outside continental Utnits of U.S., Hawaii,
Alaska, or Canada unles: disabled person returns upon request for physical evaluation
and disablement certification
3) Disabilities caused or contributed to by war (declared or uxdectared)i self-inflicted
in)wles (sane or lntane); alcoholism and drug addictlon
Yes, as determined by tlm personnel office
Yes, may be continued for one month
THE 0111 �E COMPANY
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. PROPOSED IMPROVED GROUP BENEFIT PLANS
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EXHIBIT a
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COP_•_ITY _,_ CARLSBAD
SCHEDULE OP BENEFITS AND PROVISIONS
OF IMPROVED/RECOMMENDED CROUP LIFE PLAN
TYPE OP PLAN,
Life Insurance
UNDERWRITTEN BYt
Crown Life Insurance Company
SCHEDULE OF BENEFITS:
Basic Employee Life Insurance
Employee Class Insurance Amount
Mayor, Council Members $23,000
and Elected Officials
Manager, Assistant Managers
and Department Heads 2 x Annual Pay
All other Employees I x Annual Pay
Dependent ure:
Choose
ChildrensI,300
$1,300
Voluntary Supplemental Life Insurance
Employee Class insurance Amount
All Additional I Times Basic Amount
Acch.enul Death Benefit
No
Dismemberment Benefit
No
Waiver of Premium
Yes(1)
Termination of Insurance
31 days following employment termination or retirement
Conversion Prlv!lege at Termination
Yes
Maximum Coverage Without insurability
To be negotiated with carrler(2)
Reduction of Insurance
Eligibility
33% Insurance reduction at age 63, level to coverage age 70, and $1,000 at age 70
Same
Same as Medical Plan
Plan Effective Date
Same as Medical Plan
Retiree Coverage
Yes
ld
no
(2) Amountconsider
l ging from $200,0000 to $300. 0emium p would be
A normal Carrier,Benefit
evvidence
maximum forfor a use of this site.
THE v//Y9,111 COMPANY
CITY OF CARLSBAD EXHIBIT BI
SCHEDULE OF BENEFITS AND PROVISIONS
OF A RECOMMENDED/IMPROVED GROUP VOLUNTARY AD&D LIFE PLAN
TYPE OF PL
Accidental Death and Dismemberment (AD&D) Insurance
UNUERNRITTEN B
To be selected
SCHEDULEOFBENEFITS VIDED,
Personal Accident Life Insurance
Employees may select any of the following plants'
Special education,
Employee Spouse Each Child Per Child
Plan A
Plan B
23,000 I2,300 (1)
1,230 12) 300 (3)
Plan C
30,000 23,000 (1)
113D
2,300 (2) 1,000 (3)
Plan 0
73,000 37,"0 (1)
),730 (2) 1,300 ())
000 73,000 (1)
7,300 (2) 2,300 (3)
SpeC!U Dismemberment Benefits
All Plash-
One times PAI amount for loss o1 both hands, feet, sight of both eyes (or any
mbinatlon of - one eye and one hand, etch 1/2 of PAI amount for ton of one
foot, or sight of one eye.
OTHER PERTINENT INFORMATION,
waiver of Premium
None
TermlMtlon of Insurance
31 days following employ t termination or retirement
Conversion Prlsllege at Termination
Yet
Maximum Coverage without Insurability
To be negotiated with Carrier
Reduction of Insurance
None
Eligibility
Same as Medical Plan
Plan Effective Date
Same as Medical Plan
Retiree Coverage
None
COST PAM BYs
Employer Pays(,
Pays at work IS hours per day) cost which Is 3)% of Personal Accident Life Plan
Costs
Employee Pays`I >
Pays not at work (16 hours per day) cost which Is 67%
e The plan maximum can not exceed 10
times annual employee earnings. For example, an employee earning $10#000 or less could select A, Be and C but not Plan 0
(1) 30% of employee amo,ntl 40% It children Insured under family plan.
Cr (2) 3% of employee amount; 1096 It no spouse coverage exists.
(3) 296 of employee amountl It attending full-time college or university uIs to $2000 maximum, per child
Cf � CITY qw:D
,THE O0-11 COM PANT
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CITY OF CARLSBAD EXHIBIT Y
SCHEDULE OF BENEFITS AND PROVISIONS
OF IMPROVPD/RECOMMF_WED CROUP MEDICAL PLAN
TYPE OF PLANS
Comprehensive Major Medical Plan
UNDERWRITTEN BYs
Crown Life Insurance Company
SCHEDULE OF BENEFITS PROVIDEDs
pry
Special Accident do Outpatient Misr Surgery do DXL
Expense Benefit (no deductible, no coinsurance)
$500 (Includes hospital room and baud, hospital miscellaneous services and supplies,
Including emergency room, surgeon and doctor fees, diagnostic X-ray and lab and
nursing care services)
Deductibles
$100 per person, per calendar $300 family maximum (three month carry overXI)
MA70R MEDICAL '"PENSES
AFTER THE DPDUCTIBLEs
Major Medial Plan Maximum
$1,000,000 per person, lifetime
Wroursnce Rate Lf
ar, plus 100% of
20% of first $2,100 of covered expenses during calendarremaining
covered expenses during the alendu year, up to the maxim
maximum(2)
Hospital Room and Board
Up to semi -private room rate
Hospital Services and Supplies
Usual, reasonable, and customary
Intensive Care/Cardiac Care Unit
Usual, reasonable, and customary
Extended Care Facility (2)
Usual, reasonable, and customary
Doctor Visits In or Out of Hospital
Usual, reasonable, and customary (Includes office vlsltsX0
Consulting Physicians/Specialists
Usual, reasonable, and customary (includes office visits)
Surgeon and Assistant Surgeon
Usual, reasonable, and customary
Anasthetists
Usual, reasonable, and customary
Laboratory and X-ray
Usual, reasonable, and customary (in or out of hospital)
X-ray and Radiation Therapy
Usual, reasonable, and customary
(1) Deductible arryover for Borges Incurred during October, November and December to meet next year's deductible,
(2) Also covered at 100% through next calendar year for a continuing disabling condition.
(3) An EFC licensed in California whose Is
primary
Illness or Injury where normal hospitalization
purpose to provide services similar to a hospital, but for the m=wment from an
b not required. Must follow a hospital stay and enter facility within 1/ days of
hospital discharge.
(4) Includes podiatrists.
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MA30R MEDICAL FXPENSPS
AFM THE DEDUCTIBLE
tt:onnnuedr
Oxygen, Anasthetice and
Their Administration
blood, Plasma, and
Their Administratlon
Prescription Drugs
Ambulance Service
Rental of Iron Lung
or Other Durable
Therapeutic equipment
Prosthetic AppIl:nces
Including Artificial Limbs
Mental and Nervous Disorders
In -Hospital
Olt of Hospital
Christian Science
Practitioners
Nursing Care
Prgrsancys
Normal
Complicated
Elective Stetwx4tion
Pap Smeata
Cosmetic Surgety
Dental Services
eye Care
Limitation
(U Same coverage for employees as well as dependents.
EXHIBIT V
Pap 2
Usual, reasonable, and customary
Usual, reasonable, and customary
Usual, reasonable, and customary
Usual, reasonable, and customary (Including air ambulance)
Usual, reasonable, and customary
Usual, reasonable, and customary (replacement not covered)
Usual, reasonable, and customary
Doctor vlalts and con ultatlons - 30% of covered dwiles up to $30 per person, per
vbit, per calendar year - $2,000 annual per person maximum! $20,000 lifetime per
person maximum
Usual, reasonable, and customary
Usual, reasonable, and customary (registered, graduate nurse)
Usual, reasonable, and customary (except well -baby ureXl)
Usual, reasonable, and customary (elective types of caessnsn miscerrlals ; aid
abortion not covered unless the result of a complicated pregrancyki)
Usual, reasonable, and customary for tuba! Illations and vasectomles
Usual, reasonabM, and customary for non routine checkups (must Include M.D.%
dlsgnosts)
Accident only
Accident Only
Accident Only
Sees Prgnaneyl Outpatient Psychlatrlq and Coordination of Benefits Provblon
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MA30R MEDICAL EXPENSES
P�flA TH! DFDUCTIbL!
(Continued)
exclatlona
OTHER PERTINENT INFORMATIONS
Restoration of Plan Maximum
Praelbting Cooditlas
Coordkutlon of Densflb
Converslon Privilege for Terminating Employees
Retiree Coverall
Plan EUgtblUty It"Irements,
Employee
Dependents
Plan Effective Date
Employee
Dependents
Termination of Plan btn tilts
Provision for Plan Continuation During
Aui..,xized Leave of Absence
lxtenth n of benslits
U Disabled
Continuation of Coverall for Dependents
Of Dee04sed employees
(1) lmployte pay$ 100% of plan Costs for refine coverages.
Routine physicals, well -baby are, excessive or medically unnecessary Charla$,
abortion, non.accident•relatsd dental /ervlces, cosmetic surgery or treatment
excet ttiras tor efts, etc.), all fret se)rvlsei sickness or W-ldents rasses and elated toAida Mandsett of war,
exp..uts Incurred prior to plan effective data, hospital room and board dwln In
excess of dally seml•private room rate, and custodial or rest are
Not Applicable
No payment for services provided In connection with pro-exLsting medical crAdltlons
dring first 12 months of plan coverage for which treatment was prescribed or
admint+tered during a period of six months prior b plus effective datel all
conditions covered thereafter (or alter a 904ay treatment•Irae period, whichever is aariler). Waived for existing plan participants
Yes —other group plans and all other Similar programs Including MeacAn,
Yes, may convert to an Individual policy of Insurance
Yes. To be eligible, participant mutt have ten years of continuous $arvlCff with the
City and attained age 30. between else 30 and 43 coverall is existing group
medical plan. At sga 63, plan supplements Medicare (if
All full-time employees scheduled to work at least 3o hours pet week
Spoufor Atleast30% ssuib�lst�nee�, pthyesluU �metnu� ahhandica dependent rpm employee
students) y r cupped and fuU•tlme croUege
On the first day of the month following date of employment and actively at work,
otherwise, the day the employee returns to work
Same as employee and not confined at home or In A hospital, otherwise, the 4y of
recovery
30 days following date of employment turnlnatlon, or retirement
Yes, as established by the personnel office for all type$ of medical here$ (three
months automatic, renewable monthly, not to exceed six months)
Plan coven the disabling condition for up to 12 months. Cmvenlon plan, If elected,
Covers $11 other conditions
Covered dependents of a deceased employee, who are otharwise eligible, may have
Continuous Coverage under the Plan, provided contributions eontlnw to be pold by
the 3pant to
surviving
the employ$t1 however, all Coverege will Cease on the date of the
g spouse9 remarrege, or after six (4) month$, whichever occurs first.
('0M PAN
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PJtMBIT YU
CITY OF CARL58AD
SCHEDULE OF BFNEFtTS AND PROVISIONS
OP A RECOMMENOM GROUP DENTAL PLAN
TYPE OF PLAN
Comprehensive Dental Plan
UNDERWRIr"N BY
Crown Life Insurance Company
SCHEDULE OFBFNEFITSt Ll
Annual Maximum
$1,000 per person, per calendar year
Deductible
$30 per person, per calendar ye ur for Claws U and Ili (see below) U k 2)
ISO maximum for families (three per Person, per yew)
Colmurance Rate
Clan 1 service . 80% of usual, reasonable, grid customary charges
Clan It services . 90% of usual, reasonable and a stomuy charges
Clau III services . 60% of usual, reasontable, and customary charges
Clan I - Preventive
Services and Supplies
Cleaning of teeth (one every six (6) months)i flourlde treatments (one every six (6)
months); space maintaltrers NW fittings for chlldren, office visits and exams related
to preventive are
clan U - Basic
Service and Supplies
Dlaghosticn office vlsint,oral exams, %•rays (Including IUU.moutW, test, and lab
exams
Basle Restorative and Therspeutla Fillings -amalgam, slliate, &MUcand plasllty
root canals, gum treatments, extractions, Impacted teeth, pulp appingi main•
tenance of bridgework and dentures; recornentatlons, rebasingl oral surgery and
anethesla; emergency treatment of pain
Clan lU - Mayor
Service and Supplies
Mayor Restorativei Fillings and crowns - gold foil, gold Inlays, porcelain, silver,
stainless steel, preparation and Installation of bridgework and dariures . full uppers,
lowers, partials and panties (Umlted to five-year age factor)
Waiver of Premium
No
Coordination of Benelits
Yes
Termnation of Insurance
Same as Medical Plan
Extension of Benefits at Termination
Thirty days for certain types of services In process
Conversion PrlvUege at Termination
No
Retirees Corered
None
EllglbUlty
Same as Medical Plan
Plan Effective Date
Same as Medical Plan
Pro -Treatment Review procedure
Yes, for all courses of treatment over silo
Deductible for Clam I services.
t^ t2) Dedu;tlbts over
Az art for chat&*$ Incurred during October, November, and December to meet text yeori deductible.
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EXHIBIT EX
CITY OF CARISBAD
SCHEDULE OF BENEFITS AND PROVISIONS
OF A RECOMMENDED GROUP VISION CARE PLAN
TYPE OF PLANT Vision Care Plan
UNDERVRRTFN BYs Crown Life Insurance Company
SCHEDULE OF BFl1EFUSt
Examinations do Fittings
(includes glaucoma tests) Opthalmologist $)7.30
Optometrist 37.30
Materials & Supplies Lenses, Lenses,
each A Pair
Single vision prescription $13." $V.00
Bifocal prescription 111.73 37.30
Trifocal prescription 23.00 30.00
Lenticulu prescription 100.00 200.00
Contacts (recessaryXl do 3) 200.00 400.00
Contacts (=metic) (1,2 BJ) None None
Frames $23
ulglblilty Same as Medical Plan
Retirees Coverage None
Limitations Exams - One per person, per 12-month period, Frames - one per person per
24-month period, Lenses - two pair per person, per 12-month period
Exclusions Benefits provided by another group plan, vision training, orthoptica, plain or
prascrlptW sunglasses, medial or surgical treatment, replacement of lost
or broken glasses and frames, dupllate glasses, lenses Or frarras, preserlp.
tlon drugs
(U Contacta ruust bo %.edlcally rs:cessary to corrat vhiau to 20/10 in the better oye' with conventional lenses, or
followl%a cataract surgery as certified by phyticlan, or when treatment Is required beauty of a medial condition
(such as Kerataaws or r.nlsometropia).
12) Special allowance for elective oontsct lenses not otherwise covered (see (1) above).
()) Lifetime maximum is $230 for contacts.
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CITY OF CARLSBAD
PROPOSED SCHEDULE OF BENEFITS AND PROVISIONS
OFA RECOMMENDED LONGTERM DISABILITY PLAN
TYPE OF PLAN #
Long -Term Disability Plan
INSURANCE COMPANY/PROVIDER
Standard Life Insurance Company
SCHEDULEOP BENEFITSt
Monthly Benefit
60% of basic monthly earnings up to $3,333 Gee definition of bulc monthly earnings
below) up to plan maximum while totally and permanently disabled, subject to
integration with all (family) federal social security benefits# state disability plans and
other such Income replacement plans proving non lump•sum disability benefits (see
definition of other Income below)
Maximum Pei Month
$3,000
Minimum Per Month
Nona
Benefit Payment Period
Accident and Sickness
Age At
Beginning Of Maximum
Total Disability (1) Benefit Period
61 or younger To age 63
62 3 years, 6 months
6) 3 years
6i 2 years, 6 months
63 2 years
66 1 year, 9 months
67 1 year, 6 months
63 1 year# 3 months
69 1 year
70 or older 0
EUminatlon Period
90 days (three months) (IX2)
Death Benefits
Disability benefits are continued for three months if disabled employee dies and are
payable to surviving spouse and/or any one or more surviving children (net subject to
deductible benefits reductions)
Special Dismemberment Benefits
Loss of the following will be construed to be total and permanent disability for benefit
payment purposest
1) Complete severance of both entire hands, feet, sight of both eyes, or one entire hand
and foot for a Z-month period
2) One hand, one foot, or one eye for a six-month period
(1) Ninety -day elimination period toe employees earning $13,000 or more annually.
(2) Two Hundred and Seventy days elimination perlod for employees earning under $13,000 annually.
THE Vll1lal COMPANY
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LANG-TERM DISABILITY
ont.
Waiver of Premium
Yes
Vocational Rehabilitation Program
Yes, as established and approved by Insurance carrier (formal or informal)
Rehabilitation Program Earnings
Monthly rehabilitation earnings are deducted from gross earnings
Definition of Deductible Benefits
(integration or correlation benefits)
Reduced by the following benefits payable under other programs,
I All eligible federal social security benefits (family)
2) Rehabilitation program earnings
3) Current or future emp;oyer-sponsored benefit plans (disability provisions)
4) Workers' compensation
3) All other earnings from employment or self-employment
6) Sick leave
7) Government -sponsored plain, such as Veterans Adminbtratlenr armed faces, eta,
providing Income replacement
Definition of Disability
Total and permanent disability as certified by a licensed physician and unable to engage in
gainful employment as follows,
First two ecru Unable to perform any and/or al) duties of present oceupallon durleg 24
consecut ve months Income payment period
ter two ears: Any occupation for whlch suited based upon prior work -experience,
educatlont or approved work rehabilitation program alter 24 consecutive, months
Income payment period
Definition of Basic Monthly Earnings
Basic monthly salary (excluding- overtime, bonuses, commissions and extra compensation)
effective on date of disability
Social Security Freeze
For deductible benefit purposes, the social security benefit (reduction) will be (remain the
same as) the amount In effect on date of disability
Return -To -Work Incentives
t) While disabled person is waking under an approved rehabilitation program# the
rehabilitation earnings are deducted from gross earnings (at disability)before
�iesthe 6tntiis, level
eves $160exra benefit payme(rehablitIon Plus lublty; as an
Incentive toward rehabiltatlon
2) Return to work during elimination period - may attempt to return to work without
renewal of elimination period as followst five (3) days for 30 days
each of elimination
period aliowancei under a plan with a two -month elimination period, !0 days Is the
allowance possible
3) Recurrent disability provision - It disabled emloyee returns to work and later
becomes disabled due to same condition within six (4) months, the elimination
Is waived period
THE q aff CO.PANY
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OTHP.R PERTINENT WFORMATiONt
Eligibility
Employees earning $20,000
or more per year
All others
Plan Effective Date
Pre -Wiling Conditions Limitation
Limitatfons
Exclusions
Continuation of Plan
During Leave of Absence
Medial Leave of Absence
Nan-Medlcal Leave of Absence
(1) Requests waiver for existing employees only.
11�1'4 ,
IXMIHT XI
_3-
First day of employment
First day of the month following 12 consecutive months of employment
Same as eligibility date
Yes, for any accident or sickness for which treated within six (6) months of plan effective
(late; no benefits for 12 consecutive months of coveragq thereafter, all condition
covered (1)
Benefit payments are restricted to a 24-month period In the cast of non confined mental
and nervous disorder related disabilities
No benefits are payable for the folowingt
1) Benefit accruals, If Any, during eliglbility or elimination period
2) Benefit payments while disabled person Is outside continental limits of U.S., Hawaii,
Alaska, or Canada unless disabled person returns upon request for physical evaluation
and disablement certification
)) Disabilities caused or contributed to by war (declared or undeclared), set( -inflicted
Injuries (sane or Insane)[ alcoholism and drug addictlon
Yes, as determined by the personnel office
Yes, may be continued for one month
• .1 r r!lJ {, 01! . o ,... -
PAST
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INCOME
Premium
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EXHIBIT "A"I
CITY, OF CARLSBAD
Recap of Medical Plan Financial Results for the Period
July 1, 1979 through June 30, 1981, Under the
Current Funding Concept
Three Years
1978-79 1979-80 1980-81 Totals 55
134 355.15 $164,784.22 $195,387.93 $494,527.30 zo.0
id Claims
$ 80,172.60
$140,437.82
$145,170.08
$365,780.50
74.0
ginning Reserve
(34,061.55)
(39,452.17)
(39,963.73)
(34,061.55)
N/A
ding Reserve
39,452.17
39,963.73
46,528.49
46,528.49
N/A
:urred Claims
85,563.22
140,949.39
152,246.40
378,759.00
M 6
tention Charges
48,791.93
23,834.94
_ 43,141.53
115,768.30
23.4
tal Expenses
111IL155.15
$164,784.22
$195,387.93
$494,527.30
100.0
nual Contract Gain or
Loss
N/A
N/A
N/A
N/A
N/A
oidends Paid
-0-
-0-
-0-
-0-
N/A
mulative Contract
Gain or Loss
N/A
N/A
N/A
N/A
N/A
Crown Life understated Reserve by $511.63
which equals the increase in reserve for the
79 year. $47,040.05 is the actual/correct reserve on hand per Wyatt figures.
�4
Exhibit "A" (continued)
f' REAKDOWN OF RETENTION Three Years
CHARGES 1978-79 1979-80 1980-81 Totals %
immissions
$ 1,547.51
$ 5,075.35
$ 2,305.58
$ 8,928.34
fministrative Services
N/A
N/A
N/A
N/A
:quisitions Costs
N/A
N/A
N/A
N/A
her Expenses
19,479.07
11,452.50
13,188.68
44,1M.25
xes
3,157.35
3,872.43
4,591.62
11,621.40
sk & Contingency
Charges
N/A
N/A
N/A
N/A
l Other Retention
Charges
242608.00
3,434.56
23,055.65
51,098.21
tal Retention Charges
JILZ91.93
LLLL34.84
43 141.53,
$115,768.20
serves as a % of
Paid Claims
49.0%
28.0%
32.,0%
N/A
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Exhibit "B" I
CITY OF CARLSBAD
Recap of Dental/Vision Plans Financial Results for the
Period July 1, 1979 Through June 30, 1981 Under
Current Funding Concept
Two
Year
INCOME 1979-80 1980-81 Totals %
Paid Premiums $ 432559.73 51 565.87 95 125.60 100.0
EXPENSES
Paid Claims
Beginning,Reserves
Ending Reserves
Incurred Claims
Retention Charges
Total Expenses
nnual Contract Gain or
Loss
ividends Paid
umulative Contract Gain
or Loss
$ 23,472.17
24,335.85
47,808.02
50.0
(-0-)
(6,288.32)
-0-
6,288.32
8,327.41
8,327.41
N/A
29,760.49
26,374.94
56,135.43
59.0
13,799.24
25,190.93
38,990.17
41.0
43 559.73
51 565.87
95 125.60
100.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A N/A N/A N/A
2
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Exhibit "B" (continuecO
REAKDOWN OF RETENTION
Two Year
CHARGES
1979-80
1980-81
Totals
Commissions
$ 3,245.20
$ 3,501.31
$ 6,746.51
Administrative Service Fees
N/A
N/A
N/A
Acquisition Costs
N/A
N/A
N/A
Other Expenses
6,163.71
5,749.59
11,913.30
Taxes
1,023.65
1,211.80
2,235.45
Risk & Contingency Charges
N/A
N/A
N/A
All Other Retention Charges
3,366.68
14,728.23
12,094.91
Total Retention Charges
13 799.24
25 190.93
38 990.17
Reserves as % of Paid Claims
27.0%
34.0%
N/A
_
THE Qlll ll COMPANY
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CITY OF CARLSBAD
Recap of Grout) Life Plan Financial Results for the
Period July 1, 1974 Throug June 30, 1981 Under the
Standard Insurance Company Contract
INCOME
Paid Premiums
$ 122,939
EXPENSES
Paid Claims
123,000
Beginning Reserves:
ACL(1)
IBNR(2)
Ending Reserves:
33,0003�
ACL(1)
IBNR(2)
3,603
Incurred Claims
159,603
Retention Charges4/
28,516
Conversion Charges
1,800
Total Expenses
189,919
Cumulative Contract Gain
or Loss
(66,980)
1/ Active claim reserve for currently disabled
persons.
2/ Incurred but not reported, or paid, claims reserve.
3/ Represents a reserve for waiver of premium for disabled
employees.
4/ BREAKDOWN OF RETENTION CHARGES:
Commissions
$ 8,417
Premium Tax
2►767
Other Expense & Risk
Charges
17,332
Total Retention Charges
28,516
Exhibit "C"
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Exhibit "D"
CITY OF CARLSBAD
Recap of Long -Term Disability
Plan Financial Results
f_or the Period September 6, 197Z Throutth June 30 1981
Under the Current Concept With Standard
INCOME
Amount
%
Paid Premium
251,461
100.0%
EXPENSES
Paid Claims
$ 89,640
36.0(memo)
Beginning Reserves:
ACR
(_a)
IBNR
Ending Reserves:
ACR
31,122
IBNR
14,692
Incurred Claims
135,454
54.0
Retention charges(1)
54,859
22.0
Contingency Charge (includes
profit margin)
61,148
24.0
Total Expenses
251,461
100.0
1/ BREAKbOWN OF RETENTION CHARGES:
Commissions $ 27,386
Premium Tax 5,906
Other Expense do Risk
Charges 21.567
Total Retention Charges 54,859
I xr COMPARISON OF CURRENT VERSUS IMPROVED FUNDING CONCEPTS
" F. Q T lflflll , 13 1.1 F, I I V
K-
EXHIBIT "IT'
CITY OF CARLSBAD
Comparison of Current VersusIm2rroved Funding Concepts
for the Past Three Years for the City's
Group Benefits Program
• Medical/Dental/Vision Plans, Life Plan Excluded(!)
Cost
Difference
"Pooling"
"Experience Rating"
or Cost
INCOME
Current Concept_
Improved Concept
Savings
Paid Premium
589,652
$ _ 589,652
EXPENSES
Paid Claims
$ 413,588
$ 413,588
Beginning Reserve
(34,061)
(34,061)
Ending Reserve
54,855
54,855
Incurred Claims
434,382
434,382
Retention Charges
155,270
70,758
Total Expenses
$ 589,652
J_ 505,140
Annual Contract Gain/Loss
N/A
84,512
Dividends Paid
N/A
84,512
Cumulative Contact Gain/Loss
-0-
84,512
Plan Net Cost
$ 589,652
$ 505,140
84,512
(1) This exhibit represents a
simplified version
of the concepts; it does not include
the Life Plan which would be combined for accounting purposes; an average
retention of 12 percent.of premium was assumed.
H E . i:�!-1 '- DM FH%Y
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CITY OF CARLSBAD
Statement of C..trrent Monthly Plan Costs,
By Plan, as of October _ 1, 1981
Life Plan
Basic Employee Life and AD&D (per $1,000
of insurance)
Supplemental Life (per $1,000 of insurance)
Dependents Life (per unit of coverage)
Medical Plan
Employee
Dependents
Employee plus dependents
Dental Plan
Employee
Dependents
Employee plus dependents
Vision_ Plan
Employee
Dependents
Employee plus dependents
Long -Term Disability Plan
Rate as a % of Covered Payroll
�z)�`7S.$g �F�c't'ri�E 31�1Sz
l3)al�z,s3 �ri�� WZ
Exhibit "Ell
Monthly Rate/Cost
$
.39
.55
.75
$
33.14 C1�
65.99 CZ�
99.13C•'1)
$
8.43
16.41
24.84
$
2.19
3.98
6.V
.75%
-
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wr,
`
Exhibit "F'
CITY OF CARLSBAD
Statement of Current Monthly Plan Costs,
By Plan, to Become Effective on March 1,
1982 �1)
Life Plan
Monthly Rate/Cost
Basic Employee Life and AD&D (per $1,000
of insurance)
$
.39
Supplemental Life (per $1,000 of insurance)
.55
Dependents Life (per unit of coverage)
i
.75
I
Medical Plan
Employee
$
41.43
Dependents
82.48
Employee plus dependents
123 M
Dental Plan
-Employee
$
8.43
Dependents
'16.41
Employee plus dependents
24.84
Vision Plan
Employee
$
2.19
Dependents
3.98
Employee plus dependents
6.17
Long -Term Disability Plan
Rate as a % of Covered Payroll
.75%
�J "�p e4S OyF � f � %$Z/Q�j�'�'F"V.4C.. /3'lE�lG4-<- iZAa'F-=••JC.�rSt3
t'b._;CO_ �GLt+'E�•�il nlf • o M. Na'� f
/1 d
IMPROVED PROGRAM COSTS
1 E Qlllh�lll C Q M il A N Y
ft_ ---- -; -- -
I
Exhibit "G"
CITY OF CARLSBAD
Statement of Moniiuy Plan Costs
For The Improved Plans Effective 4 1/82
Life Plan Monthly Rate%Cost
Basic Employee Life and AD&D (per $1,000
of insurance) $ .28
Supplemental Life (per $1,000 of insurance) N/A (1)
Dependents Life (per unit of coverage) .86
Medical Plan
Employee $ 36.95
Dependents 73.58
Employee plus dependents 1,10.53
Dental Plan
Employee $ 8.43'
Dependents 16.41
Employee plus dependents 24.84
Vision Plan
Employee $ 2.19
Dependents 3.98
Employee plus dependents 6.17
Long -Term Disability Plan
Rate as a % of Covered Payroll .58%�?.�
(1) Because of lack of participation, Crown Life will no longer offer this plan at a
1~riWaL, 4uOTO- F'24►rA s1—.9.u(b.ia& =.,-iS . '-s .4l8nq
471) j`.cu4AO;,K iS COOA- Df>J4?s;L Cl., i z H 5"r7i7V--
&16
, 1dt� '0010�
THE ll%1 COM PA t�FY
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f
1
Exhibit "G"
preset group rate. Plans can now be made available on a 5 year step rated basis.
Supplemental Life Plan Monthly Premium Rates
Age Group Per $1,000
Under 30 $ .10
30-39 .11
40-44 .21
45-49 . M
50-54 .58
55-59 1.03
60-64 1.64
65 or Over 2.46
I
1, ,
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IM CURRENT PROGRAM i
m
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-- A
EXHIBIT "I"
Explanation of Current Program
Cost 5ubsidy Levels
Plan City Pays Employee Pays
Basic Life 100% -0-
Supplemental Life -0- 100%
Dependents Life -0- 100%
Long -Term Disability 100% -0-
Medical/Dental/Vision:
Fire 33.14(1)(2) Remainder(2)
Police 70.00(1)(2) Remainder(2)
Miscellaneous 115.00(l)(2) Remainder(2)
(1) For Medical/Dental/Vision, employee is allowed a credit of up to the specified
amounts.
- miscellaneous and management employees can receive a cash refund if
their actual cost is less than the credit
- police and fire personnel are not given cash refunds
(2) The employee pays the remainder of plan costs in excess of the credit amount.
Note: As part of this arrangement, employees are permitted to select those plan
coverages he/she wants and to decline unwanted plan coverages. This results
in sizable cash refunds for certain categories of employees in the
"miscellaneous" category. It results in large out-of-pocket costs for certain
Fire and Police categories with families.
"
ni{S
t 64r 4> rnu nntir
t, - e - -- -- — - -
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rt
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IMPROVED PROGRAM COST SUBSIDY LEVELS
,
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M
EXHIBIT 113"
CITY OF CARLSBAD
Explanation of Improved Monthly Program Cost
S si y Lev as Proposed
by The Wyatt Company
Level #1
Plan
City Pays
Employee Pays
Basic Life
100%
-0.
Supplemental Life
-0-
100%
Dependents Life
100%
-0-
Long-Term Disability
100%
-0-
Medical/Dental/Vision:
o All Employees
Remainder(1)
$ 5
- Employee only
- Employee + one dependent
Remainder(1)
10
- Employee + two dependents
Remainder(1)
17
Level 02
Basic Life 100% -0-
Supplemental Life -0- 100%
Dependents Life 100% -0-
Long-Term Disability 100% -0-
Medical/Dental/Vision:
o All Employees
- Employee only Remainder(1) $ 10(2)
- Employee + one dependent Remainder(1) 20(2)
- Employee + two dependent3 Remainder(1) 34(2)
(1) City would pay remainder of combined program costs in excess of drnployed,
contribution requirement.
(2) Employee could refuse all coverages or elect a!! coverages as follows:
- employees without dependents would have Basic Life, Medical, Dental,
Vision, and LTD for a cost of $5 or $10 per month, for self only
- employees with one dependent would have Basic Life, Medical, Dental,
Vision and LTD for a cost of $10 or $20 for self and one deperdent
- employees with two or more dependents would have Basic Life, Dependents
Life, Medical, Dental, Vision and LTD for a cots of $17 or $35 per month
for self and all dependents
- employees with dependents coverage must insure all dependents
Note: Employees would not be allowed cash refunds and the credit amount per
employee system would be abolished.
r�
SPECIAL COST EXHIBIT K-1
CITY OF CARLSBAD
Comparison of City and Employee
Group Benefit Program Costs Using Current and
Revised Costs, Benefits and Cost Subsidy levels
#1
#2
Eniployee Cost
$ 31,130
$ 87,345
City Cost
272,485
290,453
TOTAL COST
$323,615
$377,798
% of Payroll
5.8%
6.8%
Cash Refunds
$ 99,353
$ 84,831
City Cost
272,485
290,453
CITY TOTAL COST
371 838
$375,234
% of Payroll
6.7%
6.8%
#3 #4 #5
$ 64,676 $ 50,358 $ 67,818
286,414 300,732 283,272
351 090 351 090 351 090
6.5% 6.5% 6.5%
$ 91,658 $ 91,657 $ 91,657
286,414 300,732 283,272
378 072 112L389 12ZIL929
6.8% 7.0% 6.7%
Explanation of Costs and Concepts:
• #1 represents current benefits, current premium levels and current cost subsidy
level.
• #2 represents current benefits, a medical plan only premium increase of 25% and
utilizes the current cost subsidy levels including the cost refund system for
miscellaneous and management employees.
0 #3 represents the proposed improved benefit plans, revised premium costs and
the current cost subsidy levels including cash refunds for miscellaneous and
management employees.
• #4 represents the proposed improved benefit plans, revised premium costs and
revised cost subsidy level #1 for police and fire employees.
• #5 represents the proposed improved benefit plans, revised premium costs and
revised cost subsidy level #2 for police and fire employees.
t„e%nff coy+PAN r
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1
11
�t
F
SPECIAL COST EX19BIT K-2
CITY OF CARLSBAD
Comparison
of Annual Group Benefit
Program Cobt, By
Plan
#1
#2
#3
#4
#5
Employee Life
$ 16,525
$ 16,525
$ 22,415
$ 22,415
$ 22,415
Supplemental Life
6,343
6,343
3,717
3,717
3,717
Dependent Life
1,998
1,998
2,637
2,637
2,637
LTD
33,663
33,663
32,316
32,316
32,316
Medical
216,705
270,888
241,624
241,624
241,624
Dental
38,806
38,806
38,806
38,806
38,806
Vision
9,576
9,576
9,576
9,576
9,576
TOTAL
323 2 615
377 798
$351,090
$351,090
12L2090
% of Payroll
5.8%
6.8%
6.3%
6.3%
6.3%
T..r of a// , n . on.,.
r � x
i
GROUP INSURANCE PROGRAMS
A Conceptual Discussion of Group
Benefit Plan Financing Techniques
1. Group Insurance programs consist of:
A. Health Care Reimbursement Plans
B. Dental Plans
C. Life and Accidental Death and Dismemberment
D. Short- and Long -Term Disability
E. Vision or Eye Care
F. Prescription Drugs
G. Prepaid Legal Plans
Tl a type of plan, due to its risk and design features, is an important factor in
determining the appropriate funding or underwriting concept utilized.
2. Funding Concepts
A. Pooled and/or Non -Experience
Rating Funding Concept
Under a pooled or non -experience rated group insurance program funding
contract, all of the premiums, claims, and expenses of the insurance
company's individual group contractholders are lumped together in a pool.
Premium rates are determined by the overall experience of the pool.
Individual contractholders are not provided with claims experience accoun-
ting information, and they do not share in any surpluses or gains as the
result of their own good claims experience. All surplus margins are kept by
the insurance company who, in turn, determines their usage. If the pool's
claims experience is poor, everybody gets a rate increase to make up the
deficit. Supposedly, if the opposite is true, rate increases are either
foregone or reduced.
In some instances, claims experience is provided to policyholders under
pooled contracts. There is also a concept called "a partial pooled, partial
experience -rated concept" where claims experience is accounted for;
retention charges are net accounted for. Blue Cross, for example, calls
this concept credibility pooling. Dividends are never payable under either
concept.
i"E QI�1111471ff COMPANY
__ -
-2-
It is easy to see that a policyholder who has consistently, year after year,
good claims experience, in fact, subsidizes other policyholder's costs.
B. Experience -Rated F inding Concept
Under an experience -rated funding concept, an indiviepal group contract -
holder's claims and expenses (retention) are accounted Yor separately. The
claims expereince of that group determines its costs (premiums). This is
also known as a net -cost concept becauzm the cost formula is as follows:
Claims (paid or incurred) plus expenses (retention) equals the pre-
mium (necessary to fund the cost).
Unlike the pooling concept, each experience -rated group program is
eligible to receive excess margins after applying the formula of:
Premium, minus claims, minus expenses (retention).
An accounting of the above is provided on an annual basis. Surpluses may
be returned to the policyholder in the form of a cash dividend, used to
purchase increased benefits, reduce current premium rates and/or placed in
a special interest bearing fund (reserve) to provide for overall program
financial stability. The definition of premium under this approach is simply
the carrier's actuary's best estimate of the amount of monies required to
pay claims, set reserves, pay non -benefit expenses and allow a profit
margin to the insurance company.
3. Self -Fun ' Conce is
including partial self -funding)
Self -funding (or self-insurance) of group insurance programs became popular in
the 1960s when the larger employers started looking for alternatives to reduce
group insurance plan costs (due to rising medical care costs which resulted in
higher premium dollar outlays). In 1964, the American Management Association
conducted an in-depth study of self -funding for group insurance programs. They
concluded that in order for self -funding to be feasible, the employee group size
should exceed 1,000 and consist of an annual premium of $500,000. This
benchmark is still used. Several special risk category coverages, such as life and
long-term disability, are usually too catastrophic in nature to self -insure at the
above levels, if at all.
There are two distinctly identifiable fixed and recurring cost savings to be
derived from self-insurance. They are:
A. Approximately 2 to 2.5% state premium taxes, and
r� THE W11-11 COMPANY
i
B. Interest earnings on cash flow gains and/or plan reserves which are held by
the, employer instead of the insurance company.
Another possible cost savings (contingency savings) is the risk and pooling
charges which are eliminated when the risk is transferred from the insurance
company to the employer. This savings can, however, be offset by having to buy
excess or stop -loss insurance coverage. Another area which makes the risk or
pooling charges a contingency savings is the fact that a shock claim may occur
which exceeds what the risk or pool charge would have been.
There are many variations of self -funding and each alternative should be
thoroughly studied to determine the most appropriate for a particular employee
group.
Several methods of self -funding are:
A. Fully self -funded without excess risk insurance
B. Administrative services only, ASO, contracts
C. Delayed premium payment (insured concept; offsets carrier reserves)
D. Retrospective rating contract (insured concepts C and D, when combined,
are often used to emulate self.; funding)
E. Minimum premium and split -funding
F. Self -funding with stop -loss or excess risk insurance
The above may be administered as follows:
A. Using an insurance company by purchasing their services, ASO
B. Contracting with a third party claims administrator
C. Self -administration and claims processing
D. A combination of the above
DEFINITIONS AND TERMS
a
t
4. Premium
Premium is the insurance company's best estimate of the monies required to pay
claims, establish financially sound plan reserves, pay plan expenses (retention)
and make a profit.
5. Retention
Retention is that portion of the premium dollars necessary to reimburse the
insurance company for expenses related to commissions, taxes, risk charges,
claims administration, booklets and contract forms, as well as a margin of profit
for the insurance company. Contrary to popular beliefs, retention is a negotiable
item. The brokerage commission is also negotiable. Retention charges can be
reduced through negotiations with the carrier, as well as non-payment of
commissions.
THC Q10
JQlf COMPANY
72 i
0
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i'
6. Claims Reserves
Claims reserves are established for the purpose of paying those claims which are
incurred during the plan year, but not reported (or paid) by the insurance
company until after the end of the plan year. The reserve is used by the carrier
to pay incurred or unpaid claims in the event of contract termination. This
+ reserve is adjusted annually (increased or decreased) according to actual claims
utilization and claims lag. The most often used name for this type of reserve is
derived from its primary purpose —incurred but not reported OBNR) claims
reserve.
7. Special Reserves
Special reserves are plan monies available to provide extra financial stability to
the plan. These monies are available to increase benefits, reduce costs, prevent
rate increases and provide overall plan financial stability. Special reserves are
sometimes earmarked for as special purposes (such as claims stabilization or
contingency reserves). Another special type of reserve is the waiver of premium
(W.P.) life plan reserve which is required by carriers to fund potential life plan
losses in cases where employees have become disabled and exercised the W.P.
provision. W.P. life reserves represent 75% to 100% of the insurance in force
when disability occurs and can require (tie up) a substantial amount of group
benefit premium dollars on a long-range basis. Special reserves, when held by
the insurance company, usually bear interest. The going rate for 1979 is 8-1/2%.
For 1980 — we have seen several offers of 9.5 - 10%.
8. Dividends
Dividends are excess premium collars after paying benefits (claims and reserves)
and expenses (retention).
If dividends occur consistently — premium too high!
SUMMARY
The contents of this material discusses the basics of group benefit program funding,
underwriting, and reserving practices.
Chapters and/or books could be written about any one of the areas discussed above.
Therefore, no final conclusions should be reached concerning a concept or its appli-
cability to a particular group case solely on the basis of this material.
s THE p# GOM PANV
a
14EMORANDUM
July 15, 1982
TO: CITY MANAGER
FROM: Assistant City Manager/Administration
F SUBJECT: CARLSBAD CITY EMPLOYEE ASSOCIATION (CCEA) POaITION
ON REVISED INSURANCE PROGRAM
I met with Tom Coleman, President of CCEA on Thursday, July 15,
1982 to clarify CCEA's position on the revised insurance program
being recommended for adoption by the City Council.
In a letter dated May 6, 1982, CCEA indicated they were opposed
to the changes in insurance coverage proposed by Mike Baker of
the Wyatt Company. CCEA also indicated another insurance
carrier be researched. A copy of the letter is attached.
In a letter dated July 13, 1982, CCEA recommended four changes
in the existing insurance program and no other changes be made.
A copy of the letter is attached.
In our meeting of July 15, 1982, Mr. Coleman indicated that
CCEA's present position is as follows:
1. CCEA is opposed to the changes in the program
' as recommended by Mike Baker.
a:
2. Opposed to Crown Life as carrier.
3. Wants a claims review panel established to review
disputed claims.
4. Wants Kaiser (HMO) coverage made available in January 1983.
5. Wants the present program to continue with changes -recom-
mended in their July 13, 1982 letter.
The revised program that the City staff is recommending for
adoption would meet the recommendation in CCEA's July 13, 1982
letter, however, the design of the program would change.
1. Kaiser or another HMO would be made available in January
1983, if feasible.
2. Retired employees would be eligible for group medical
insurance at the same rate as the employee rate.
3. The city has established a claims review committee.
I
..A�
13uly, -L 19i32
CCEA/Revised Insurance Program
Page 2
4. Improved claims processing procedures are being
developed by the Personnel Department.
In the Memorandum of Understanding (MOU) with CCEA which continues
in effect until June 1983, the city agreed "to jointly study
alternative health and medical, dental, vision, life, and long-
term disability insurance programs and recommend modifications
or improvements to the existing programs."
The City further agreed in the MOU "that the present level of
!, benefits for health and medical, dental, vision, life and long-
term disability shall not be reduced except as may be recommended
by the joint study committee. It is the intent of the City to
provide an insurance program that will provide optional choices
so that an employee may select coverage that will meet individual
needs."
The committee approach orif,inally contemplated in the MOU, did
not work out successfully. The city then proceeded with the
Wyatt Company study. After the Wyatt Company study was completed,
city management and Mike Baker met with the presidents of city
employee associations and developed the proposal being recommended
for adoption by the City Council. The fire and police associations
have agreed to the design of the program. Although the president
of CCEA worked on the committee to help design the revised program,
CCEA as an association is opposed to the revised program.
The study committee composed of association presidents, although
not the committee expressly outlined in the MOU, meets the city's
obligation under the MOU to jointly study and develop revisions
to the insurance program. The recommended program was developed
out of consultations with the committee.
In accordance with the provisions of the MOU with CCEA, employees
have optional choices on coverage. Employees may choose between
medical, dental and vision insurance on themselves or dependents.
Miscellaneous employees are only required to take medical insurance
on themselves. The revised program would require employees to
taka not only medica'1 on themselves, but also vision and dental.
In order to adhere to the provisions of the MOU with CCEA regarding
optional choices, employees represented by CCEA would be allowed
to select coverage of their choice as per the present practice.
Although this will hurt the group approach, it is necessary in
order to strictly adhere to the provision of the MOU.
FRANK IMANNEN
Assistant City Manager/
Administration
FM:gb
attachments
93,
CA'RLSEAD CITY EMPLOYEES ASSOCIATION
1200 ELM AVENUE
CARLSBAD, CALIFORNIA 92008
(714) 729-1181
May 6, 1982
Mr. Frank Mannen
Assistant City Manager/Administration t
! City of Carlsbad `•
1200 Elm Avenue
Carlsbad,CA 92008 ;
i Re: Proposed Changes in Insurance Coverage
(By Wyatt Company) i
The members of the Carlsbad City Employees Association,
yesterday, voted overwhelmingly in opposition to the
changes in our insurance coverage proposed by Mr. Mike
Baker of the Wyatt Company.
' The members also voted to request that another insurance !
carrier than Crown Life be researched. It is our
feeling that better coverage is available for group i
coverage, since we represent sufficient number of
people to qualify for such consideration.
Thank you.
TOM COLEMAN,
+ President CCEA
i
i
)
i
IL
1
CA':LSBAD CITY EMPLOYEES ASSOCIATION
1200 ELM AVENUE
CARLSBAD, CALIFORNIA 92008
(714) 729.1181
I
July 13, 1982
To: Frank Mannen, Assistant City Manager/Adminstration
From: Tom Coleman, President, CCEA
We recommend the following changes in the insurance program
be considered for adoption:
1
1. City t, offer employees the right to adopt Kaiser Plan
IL in January, 1983
2. Retiree coverage rate to remain same as when employeed
,i
3. Adopt review panel to start functioning immediately
4. Research better methods of submitting claims for individuals
to expedite claim payment
};
M OL Presi ent, CCEA
a
�7