Maryville city employees turned out in large numbers, attending the employee health insurance discussion meeting held before the regular city council meeting September 25, in hopes to give their opinions to the city council when they were choosing insurance providers.
The city’s current insurance with United Health Care was set to see an approximate increase of 30 percent to employee premiums. During the open floor session of the meeting, employees mentioned that their monthly premiums were set to double, increasing to almost $800 a month and their out-of-pocket expenses were expected to be raised as high as $14,000 annually. Employees expressed their concerns with being able to withstand the increase.
City Manager Greg McDanel stated that one of the reasons for the increase was due to the fact that the city “had a very unhealthy group in the last couple of years.”
“Our claims history is so high that no other private insurance companies quoted us this year and our current provider offered the same benefits we had with a 30 percent increase,” McDanel said.
Councilman Jerry Riggs spoke to the crowd that he did not foresee health insurance costs decreasing any time in the near future and encouraged employees to be thinking about how to handle insurance increases. He also went on to say that if a benefit is not helping an employee, it ceases to be a benefit.
AJ Gallagher and Company benefit services representatives, President Scott Cawley, Kansas City, and Benefits Consultant Mike Keller, Wichita, KS, were also in attendance. AJ Gallagher currently performs several services for the city including helping to find affordable healthcare insurance and assisting with rate renewals.
The council heard a presentation by Matthew Brodersen, executive director for Missouri Intergovernmental Rick Management Association (MIRMA). MIRMA traditionally has provided property, liability and worker compensation insurance for the city of Maryville. Two years ago, the company expanded into providing health insurance.
MIRMA’s plan is not a traditional fully-funded insurance plan, but is a self-funding plan, meaning that each city is financially responsible for their plan.
There are three parts to the MIRMA plan. Using a formula based on the number of participants, the total maximum amount the city employees would be required to pay is approximately $613,000. That amount is then divided into 12 monthly premium payments throughout the year.
First, the city funds $25,000 for each participant in the coverage. Once a particular member’s claims reach the $25,000 individual maximum, the second part, called a specific stop-loss captive, kicks in. The stop-loss will reimburse the city for any claims that exceed an individual’s maximum. Once the city reaches the total maximum of $613,000, the third part takes over. The aggregate stop-loss carrier reimburses the city for any expenses over the total maximum.
Brodersen stated that the money the city pays each month remains the city’s money. If the city has a good year, with little claims, any money left in the account is still available to use the following year, unlike a traditional insurance company, where the payments made are gone.
The stop-loss organization can be risky for the city. If an individual went to the doctor, but the claim was not submitted until the period of reimbursement had ended, the city could be potentially liable to pay all of the bill and not get the reimbursement.
Councilwoman Renee Riedel asked crowd members if they knew of the risk to the city before they came to give their support of the new plan. Members in the crowd said they were aware of the risks, but that the company seemed to have several options to reduce the risk involved.
To prevent scenarios like the one above and to reduce the risk the city faced, McDanel recommended choosing a 24/12 agreement with the company, which means the re-insurer allows an additional 12 months at the end of the policy period to pay for covered services that occurred in the 12-month policy period. MIRMA representatives assured council members that all major claims were usually turned in a few months after a policy year and that allowing the additional 12 months should be enough to cover any slow incoming claims.
Riedel made a motion to go with AJ Gallagher and Company, continuing the United Health Care plan. The motion died for lack of a second. Riggs made a motion to change the city’s health insurance to MIRMA. The motion passed 4-1 with Riedel voting no.
The MIRMA health insurance will keep benefits and expenses for employees relatively close to the current plan.