For your consideration, please read the minutes from the Human Resources Committee Meeting held on Thursday, August 20, 2020 at 10:30 a.m. in the Commission Meeting Room.
To read the minutes, please open or download the pdf from the link above, or you may see more below.
Brunswick-Glynn County Joint Water & Sewer Commission
1703 Gloucester Street, Brunswick, GA 31520
Commission Meeting Room
Wednesday, May 20, 2020 at 10:30 AM
HUMAN RESOURCES COMMITTEE
Donald Elliott, Committee Chairman
Cornell Harvey, Commissioner
Wayne Neal, Commissioner
Andrew Burroughs, Executive Director
Ben Turnipseed, Commission Chairman
Bob Duncan, Commissioner
Charles Cook, Commissioner
John Donaghy, Director of Finance
LaDonnah Roberts, Deputy Director
Catina Tindall, First Coast Benefits Solutions, Inc.
Daphne Gable, Teamwork Services Inc.
Janice Meridith, Exec. Commission Administrator
Media Present – None
Chairman Elliott called the workshop to order at 10:30 AM.
PUBLIC COMMENT PERIOD
There being no citizens that wished to address the Committee, Chairman Elliott closed the Public Comment Period.
- Minutes from April 15, 2020 Human Resources Committee Meeting
Commissioner Harvey made a motion seconded by Commissioner Neal to move to approve the minutes from the April 15, 2020 Human Resources Committee Meeting. Motion carried 3-0-0.
Commissioner Cook commented about the measurable comparison as to the current health plan and the self-funded option that is being discussed in this meeting. He recalled that the current plan is with United Healthcare, the employees seem relatively positive about the insurance, and that JWSC is paying about $2.2M in premiums each year. He noted that a disadvantage for JWSC is that we are a small group, and that with the pandemic going on, it is unknown if the costs could go up. Commissioner Cook then asked John Donaghy if the annual budget prepared to begin in July, includes an expected increase in healthcare premiums that occur in March, and Mr. Donaghy responded that an expected increase is included. He explained that the insurance renewals take place on March 1st for the upcoming budget year, and eight months of that budget year are already set, with the exception of circumstances that may cause an employee to change coverage, and include projections of a 15 to 20% increase in premiums. Commissioner Cook added that the 15 to 20% increase is an ongoing thing, and not just a one-time deal. He further noted that looking at the self-funded insurance for a three year period, this would essentially be about a 45% increase which is on the lower end. He then provided that the $2.2M per year goes to over $3M per year, and Mr. Donaghy said as far as budget, yes. Commissioner Cook also commented about the factors that JWSC cannot control, but the insurance company does control, such as size or number of the group, what is going to happen with Obamacare, and the case pending in Supreme Court could have an impact on insurance and insurance rates. He provided his thoughts in that the Commission almost feels vulnerable and that a possible 45% increase is beyond belief, and while that morning there were hundreds of cars lined up for food, there is no way the rates could possibly go up while people are scraping to pay their bills. He added that JWSC needs to find a way to have some control over this, and his hopes are that the plan being presented will make an impact and give some control as insurance is a benefit that has to be here; it is great for recruiting and for repaying people; and with this climate that we are in it is essential for people to have health insurance. Our employees do have health insurance and a pension and that is good.
- Self-Funded Health Insurance Proposal – C. Tindall
Catina Tindall began her presentation by commenting that there seems to have been positive about the numbers that have been seen so far in the discussions on self-funding; there is a possibility of a savings more often than not; and in those times where we do have a cost versus savings, the cost seems to be more minimal than the savings in claims. It makes a lot of sense on paper. For this presentation, Mr. Burroughs did some simulations so the Committee could see many different ways of looking at what the possibilities could look like; and then looked at those actual numbers and gave those comparisons as well. The Commissioners were sent via e-mail a five year comparison, clarification of all the terms in the language used, as well as some other generic information to what the numbers would look like. The focus on today will be reviewing those annual numbers to determine where JWSC would be in a self-funded plan. Mrs. Tindall asked if there were any beginning questions on the pros and cons or terms used in self-funding. Commissioner Elliott inquired as to why the section on the State of New York was included, and Mrs. Tindall provided that when an organization signs up for self-funded insurance, they have to sign up with the Department of Insurance in New York. It is a separate contract to state that if any of your employees on this plan visited New York and accessed healthcare services, that they would actually be charged a reduced rate. This is simply a part of the paperwork that has to happen. In the previous month’s HR Meeting, COVID-19 was discussed as to the effect on healthcare and claims since people have not been going to hospitals and getting their regular healthcare. It is anticipated that as soon as things relax people will get back to having their surgeries which were put off before, and there could be an influx of claims seen. Mrs. Tindall did remind the Committee that there would need to be a “seed” account set up internally to cover the claims payments. Commissioner Cook inquired as to having a person who would ensure there is HIPPA security, and Mrs. Tindall advised that there was actually a team at Teamwork Services to handle HIPPA. They are experts in their field and along with the on-staff persons, Mr. Burroughs and Mrs. Roberts, there will be ensured security of information.
Mrs. Tindall then moved on to discuss the chart containing the Five-Year Review and Comparison with the Commissioners. She explained that the $50,000, $75,000 and $100,000 stop loss amounts were plugged into the past five years of claims history to reflect the case of it having been self-funded and the costs incurred by JWSC. She noted that by going to the self-funded, they will have to make a choice of either the $50,000, $75,000 or $100,000 stop loss. There were some significant differences in the costs reflected when the fully-funded plan was compared to the self-funded plan for the five years of claims history. The stop loss amount is an absolute fixed amount for the year, there is a stop-loss individually and a stop loss aggregately, but not per claim. After that stop loss amount, the insurance company does begin to pick up paying the claims. There is an administration cost that will be paid to the insurance company each year. Mrs. Tindall revisited a chart with proposals which was presented at the previous HR Meeting, and she directed the Commissioners to each section and again explained what each represented, and noted the various decisions that would need to be made in finalizing the details of the self-funded insurance proposal. Mrs. Tindall answered the Commissioners’ questions, and provided explanations of the differences in fully insured and self-insured plans and clarified the meaning of terminal liability coverage. She also briefly discussed the wellness program and reviewed some optional coverages to be considered as well. Commissioner Cook noted that it was important for the employees to know that their information would remain private and confidential. Previously the Committee had questioned the possibility of moving the timeline for enrolling in the new self-funded plan. Mrs. Tindall advised that a negotiation was made to extend the effective date to August 1st, but after that date the whole process would have to be restarted, and United Healthcare will requote the proposal. Within the proposed timeline an optimal 60 days or minimum of 45 days to enroll in the new self-funded plan is necessary in order to have the new ID cards provided to the participating employees by July 1st or August 1st. The individual employees will be given a full open enrollment where they will have the opportunity to make any desired changes to their previously selected plans or join in the insurance plan if not already enrolled, therefore time must be allotted for new open enrollments. Otherwise, the individual employees will not notice a difference in the insurance plans as offered to them earlier in 2020. The group number remains the same, and the ID numbers remain the same; the enrolled members will be provided with new ID cards.
Mr. Burroughs presented a discussion on “Self-Funded Insurance Simulation Results.” The first bar graph reflected no stop loss with JWSC paying all of the claims as they came up plus the bare minimum fixed costs available for the cost of the insurance. He stated that he was provided about 18 months of monthly claims data which he used as a random simulator, and also simulated the number of subscribers to between 122 and 128 to allow for fluctuations, normalized it and ran it 100 times. The annual cost for insurance is currently about $2.2M total for the package. There was one year where the total cost for the insurance and claims paid was $3.3M, as compared to the current actual of $2.2M. The average total cost on this simulation was $2.1M, which is near the current actual cost, however 32 of those trials came up with increases in costs. The second bar graph reflected the costs from 100 simulations using a $50,000 stop loss. Mr. Burroughs pointed out that out of the 100 simulations 78 calculated to cost between $1.48M to $1.76M, with the total average being about $1.6M. Also noted was that on this set, there was only one time that the total cost calculated was over the current actual insurance costs. The average cost for 100 simulations using $75,000 stop loss came to about $1.8M. The final bar graph represented 100 simulations using $100,000 stop loss, and that average came to about $1.9M. Based on the simulations calculated, Mr. Burroughs recommended that JWSC should go with the $50,000 stop loss so that staff can more closely predict the cost at the end of the year. He also mentioned that the percentage that JWSC pays and the percentage the employees pay has previously been discussed, and noted that the employees would still pay the exact same premiums as current, which will result in a higher percentage, but JWSC does take the risk in any years that there are increases. Commissioner Elliott asked Mr. Burroughs how he would cash flow in the initial year, and he responded that currently there is a capital reserve that JWSC funds at $300K in it, but at this time it has about $3M in it since it has been being funded since 2010 and not been used. This money could be transferred to the medical reserve to get the self-funded insurance system started, and the employees premiums would be deposited in that reserve rather than going to United Healthcare, and $2.2M has already been budgeted for medical insurance for FY2021. Commissioner Elliott asked the other Commissioners if they wanted to go with self-funding, if they were comfortable with the $50,000 stop loss, and if they were comfortable with placing any savings back into the reserve for the next couple to few years so the Executive Director can then structure a proposal for the Commission to review and vote on at the next day’s meeting. Chairman Turnipseed asked if the cost to the employees would be the same for the next 2 or 3 years, and he replied that essentially they would. Mr. Burroughs added that with the cost of insurance going up every year, if they were able to tell the employees that their insurance will not go up for 3 years, they would be “dancing in the streets.”
Commissioner Duncan commented that he thought JWSC has a good plan for the employees, and the premiums need to be stabilized and this is a way to get us there. We can take the risk. We have good cash flow and we have managed the company very well, so we can do that. Further he said that any savings that we get from budget we move that into the reserve for the time period that we commit so whether we commit for 3 years or 5 years, we put that savings into that reserve. After 3 years, we can review that because there were a few places in these simulations that the cost would far exceed the budget, and we need to prepare for those times that it can occur; and that is what we’re about doing is managing that risk. We are really managing it for our employees instead of just passing that cost on. After year 3 as the trend continues to improve is that we do offer that rebate to our participants that are in the program because they are the ones that are generating the savings by having lower costs. Commissioner Duncan said that is what he would support.
Commissioner Neal commented that would help if we add to that reserve and the rebate could be tied around health with the smoking cessation and the fitness incentives. He added that he thinks it is an excellent program and is the way to go with a $50,000 stop loss.
Mr. Burroughs said that if there is an August renewal, they may announce at the renewal meetings that in 1 year the BMI and tobacco testing would begin. This would give them a year, and we could start offering some level of incentive on the monthly premium for those people, as we have discussed in the past. But again, we would give them a year’s notice to prepare.
Commissioner Duncan said that he would be willing to support the presentation. What I would expect to come out of this is a recommendation from staff. He also stated that in his view, he would be ready to cast a vote in support of it at the Commission Meeting on the next day.
Commissioner Harvey commented that he agreed with all that had been said. He further noted that he also agreed with putting the funds in a reserve and stabilizing it first before we start to give an incentive since we do not know what is going to happen yet. We have to figure out the trend as to how this will go. We may have a spike or something may happen that we have to use those reserve funds; and if we have given them out in incentives already, we would have to go back and borrow some more money from some other place. So, I think the way we are going is fine. Commissioner Harvey also provided that the City of Brunswick has a self-funded program and we have been doing fine with it. Every once in a while we have a blip, but we can manage that; you manage your risk. Stop loss has really been effective for us, and helped us to go through that gap in the insurance. Commissioner Harvey agreed that this should be placed on the Commission agenda for the next day.
Commissioner Cook stated that he thought this is a great opportunity for us to take something that is very difficult, and we are a disadvantage with insurance companies, and be proactive about it. We find a good solution that is going to be good for the employees and good for the organization. Commissioner Cook noted that he is all for it.
Commissioner Neal commented that he knew this had been a lot of work, and he expressed his thanks to all who have participated in bringing this information to the Commission. He added his thoughts that it will be a huge benefit to JWSC over the coming years.
Mr. Burroughs thanked Commissioner Neal, and added that Commissioner Cook had made a point in the beginning that we could be budgeting a 45% increase over the next 3 years which would be about $3.2M on the budget versus the current amount being spent. Mr. Burroughs recalled that in the numbers on the presentation, the worst case scenario for a year is still about $800K less than that. He also mentioned that if looked at from a rate perspective that is a sizeable amount of money that we won’t have to pass on to our ratepayers. Commissioner Cook added that the employees would have ended up having to take more money out of their pockets, and this will make a big difference.
Commissioner Elliott then suggested that a motion was needed to direct the Executive Director put forth a program that keeps the money that we don’t pay in the program, how long that would be which is 5 years, and with consideration at 3 years to offer rebates to the employees; and bring it forth to the Commission the next day.
Commissioner Harvey made a motion seconded by Commissioner Neal to move the matter above to the Commission.
Commissioner Cook expressed his thanks to Catina Tindall for her presentation, all of the efforts she has made and all of the work she did to come up with a great plan. He added that all appreciated her efforts.
Motion carried 3-0-0.
Commissioner Elliott commented that he would like to add his congratulations to Catina and Teamwork’s staff, and the JWSC staff for putting this together. He noted that he was not sure where this would go when it was started and just wanted to investigate to see if it made sense, which it appears to make a lot of sense. Commissioner Elliott added that he was very happy with all of the work everyone had done.
Commissioner Duncan commented that he would echo that comment, and noted the work they had done made it easy for the Commissioners to make a decision; the analytics are simple, straightforward and it helped to understand the risks, what’s out there, and the worst case scenario, making it very easy to make a decision on this. Commissioner Duncan included that the work they had done really to set up the positive outcome that will help JWSC’s employees and help the ratepayers.
With no further business to discuss, Committee Chairman Elliott adjourned the meeting at 11:20 a.m.