November 23, 2020 Special Commission Meeting Minutes
Mayor John Garcia called the meeting to order with Vice-Mayor Aaron Thompson, Commissioner Jay Dee Brumbaugh, Commissioner J. J. Howard and Commissioner Gary Farris responding to roll call.
Also present from the City were Dustin Bedore – Director of Electric Utilities, Joshua Jordan – IT Director, Frank Hayes – Police Chief, Kenton Keith – Director of Streets and Facilities, Neal Thornburg – Director of Water and Wastewater, LeAnn Taylor – Municipal Court Judge/Clerk, Danny Krayca – Director of Parks and Recreation, Mary Volk – City Clerk.
Mayor Garcia led Pledge of Allegiance
- Executive Session – Under the authority of KSA 75-4319(b)(1) for personnel matters for nonelected personnel – Mayor Garcia made a motion at 5:01 p.m. to recess into executive session under authority of K.S.A.75-4319 (b) (1) for personnel matters for nonelected personnel not to exceed three minutes. I request only the Commission be present. Commissioner Farris seconded the motion. MOTION carried by a VOTE of 5-0. Meeting resumed at 5:04 p.m.
- Swearing in of City Manager –Mayor Garcia stated, the Commission has been forwarded final draft of contract for review. ON A MOTION by Commissioner Farris to approve two year contract with Alan Lanning as City Manager, with a base salary of $96,000 per year seconded by Commissioner Brumbaugh. MOTION carried on a VOTE of 5-0. Mayor Garcia introduced Alan Lanning as the new City Manager for the City of Goodland and welcomed him to the City. Mary administered Alan his Oath of Office. Mayor Garcia stated, we had twenty seven applications to narrow down. I commend the Commission for their professionalism in the decision to hire Alan from Hayden, Colorado, a community next to Steam Boat Springs. Alan has a lot of municipal experience especially with Planning and Zoning and has previously spent time in Goodland. Alan stated, it is going to be a quick turnaround, with first day of employment December 1, 2020. I look forward to moving community in a positive manner and to a long relationship.
- Health Insurance – PIC – Rhonda Fernandez, PIC stated, our goal is to help City explore all opportunities with employee benefits. We want to help with solutions, strategize and ensure you stay in compliance. Your employee’s are the heart and soul of your business and want to find middle ground with budget, keeping finances in order. We work with the Leadership Team, Administrative Team, Human Resources (HR) and employees. We keep administration on top of legislative initiatives to stay in compliance with ACA. For HR we maintain up to date employee packages and issue compliance memos. We have access to an HR hotline which your City has used for HR questions. We work with employees on open enrollment to discuss benefits then ongoing on a consistent basis with claims and your plan. The Leadership Team works through your benefit design to determine how to work through plans and stay within budget. During renewal we work to negotiate plans then provide renewal options for Commission. We complete annual reports calculating the actual cost of your plan. We evaluate claims and determine which ones will be carried forward and marketing to ensure every carrier sees your history. Claims are claims no matter who you are looking at. I do not want to bring in a plan that will not work with your claim history. You are located on Colorado border so it is extremely important for employees to be able to utilize doctors they are familiar with. When shopping we look at where employees are going to the doctor and the claims. We do not look at carriers that change rates frequently. I started PIC in 1999 and prior to that I worked with BCBS, so I have seen a lot of things happen with insurance. It is about relationships, not just your plan. We need to ensure employees get claims covered and know how insurance affects them. Plans have advanced and we work with administration and HR to stay in compliance on all issues. We submit Benefit Buzz briefings and Live Well-Work Well videos to the team monthly. Lately the briefings have included information on COVID and ways employees can stay healthy. There is a lot of information including a poster that is good to be posted in facilities to determine whether experiencing flu, cold or COVID symptoms. Our HR hotline has been used many times by your City with employee issues. They will provide information on how to handle situation within twenty-four hours. They have a number of attorneys available which has proven to be a good resource for supervisors. We have a lot of HR tool kits to ensure you have correct information. When I started servicing City years ago, we worked with Hinkle Law Firm to get your personnel manual in compliance. Employees are the reason I made the change from BCBS. I have no problem with customer service but the reason I started PIC is I enjoy working with employees. I meet with all new hires to ensure they understand your benefit package, then I work with them when eligible on decisions for Medicare so they do not get penalized. We do not sell any products, we simply make recommendations. We make sure employees receive annual notices required by ACA. Many employees are not familiar with FMLA so we discuss it so employees understand the law. In detail I go through employee benefit summary which includes your insurance package along with other products voluntarily offered to the employees. I enjoy working with your team. We work with you to keep City in compliance. ACA Compliance Overview for 2021 provides a lot of information like your grandfather plan and how you lose it, along with penalties when you do not meet self-funding requirements. We attend Hinkle compliance seminars to ensure we have up to date information and provide their legal compliance updates. This year information on COVID was distributed early to administration. We do many things day to day that Commission is not aware of or does not see. This group knows from experience we are here for the employees and they can call us if they need help with questions or issues. Goodland is a small town and it is not always easy to talk to people you know about personal information. Your group renews March 1, then in April we meet with administration for debrief and ensure have information need to plan for future. In June we review first quarter and previous year claims. We start looking forward to information happening in marketplace to see what information we need to address. We then review the second quarter and if we have to do health statements we get those started and review claims. Then we work on third quarter report and renewal where we negotiate plans and weed out carriers that cannot meet your claim needs and network. When meet with Leadership Team we present plans in marketplace that work with your group. We are in contact with people in your group several times a month. We have enjoyed working with the City and a pleasure working with the Commission, employees and administration. I am providing examples of the booklet of benefits that is distributed to employees. It is renewal time now and I have discussed your plan with BCBS. Many claims did not happen from March until end of May. BCBS refunded your May dental premium. You have had two large claims so utilization is high, and adding possible COVID claims is not helping our cause. I have some preliminary BCBS numbers I would like to share with you. The City of Goodland is currently self-funded. Fixed costs are paid to BCBS for administrative cost, processing claims and stop loss premium. We have been funding for claims up to our $30,000 stop loss at the maximum to build up reserves. Budgeting estimated maximum funding for 2020, total cost is $754,035. The 2021 fixed costs and funding at expected, is $775,838. If employee’s pay 5%, the total would be reduced by $39,024. The estimated total for the City would be $736,834 for 2021. Funding at expected you are looking at about a 3% overall increase. To renew your current plan, funding at maximum, including fixed costs is a total of $890,275, without any employee contribution. You have self-funded for five years but reserves are not where I would like them to be. BCBS provided a fully insured Grandfathered quote for an estimated annualized total of $696,157. If the employee pays 5%, $40,800, the City estimated premium would be $655,357. The fully insured quote is lower than the self-funded renewal. Based on your claims history BCBS is not expecting to pay as much in claims, as they are on the risk for 100% of claims when fully insured. Your two large claimant’s utilization will not carry forward as they are no longer part of your group when looking at fully insured. Maybe funding at expected, or somewhere in between, and staying self-funded, is something to consider? If BCBS is projecting lower claims maybe the City should as well. Looking at a non-grandfather plan similar to what employees have now, employees will pay $148,855, using a $14.00 hourly wage, the maximum employee affordability factor is 9.83% of the employee household income, and City would pay $821,326. The Non Grandfathered Plan self-funded total estimated maximum cost is $970,181. More expensive than the Grandfathered Plan. I am currently working with BCBS, once I have final numbers, I can work with other carriers and I will have more information to share with City. Tyler Jones, employee sated, I am a testimonial of Rhonda’s work with employees. I welcomed my first child in February and were in Denver at Children’s Hospital for three weeks. With some error on my part and mistakes made on insurance they claimed we were responsible for over $250,000. Alice from PIC has been working on our claim non-stop. Even though she retired a few months back, she continues to work on the claim to see it through. She has been a savior for us. Mary stated, employees do not have a lot of questions of Rhonda because they are familiar with PIC and know how to contact them. Rhonda stated, it is about the relationships. Vice-Mayor Thompson asked, after you get numbers from BCBS you may shop with other carriers? Rhonda stated, I cannot shop with others until we get claim numbers from BCBS as other carriers want the claim information. We automatically shop every year to hold BCBS accountable. This year with COVID I will ask other companies for bids as soon as I receive November claim information. We go to the other big carriers, Aetna, United Health and Cigna. Overall I will have five that we get. We want good options to look at. Some will not match it because they know in the market they cannot compete. We review plans and decide which bids to bring to Leadership Team. Vice-Mayor Thompson asked, what are the benefits of remaining with the grandfather plan and what are benefits of losing it? Rhonda stated, we have remained with grandfather plan in past because it was the best rate for your group. In talking with BCBS representative, if you change to fully insured, the pool is not doing well. Once go that way you lose grandfather status. Benefits to losing grandfather status is that wellness cost remain at 100%. ACA allows the same in your plan but it costs more money. In the grandfather plan you know your costs whereas if non-grandfather plan, maximum out of pocket will increase to $6300 up to $12000 for family. If do not have threshold of a grandfather plan, employees could be spending a lot more money. If going to change plans, want to change when beneficial. If change to third party administrator, you can mirror BCBS plan. You want to protect City and employees. There are pluses and minus both ways. I feel if you can, you should include wellness benefit to ensure employees catch issues early with regular checkups. It is all about the money, you have flexibility but once you move, cannot get grandfather status back. Without a threshold it is difficult for employees when they are only making $14 an hour. Mayor Garcia asked, the four major players are Aetna, United, BCBS and Cigna, right? Rhonda stated, yes. Commissioner Brumbaugh asked, what is stop loss? Rhonda stated, it is $30,000 but you can change it anytime. Alan asked, is it an individual or aggregate? Rhonda stated, there are both. Aggregate is maximum funding cost of claims. You want to fund for maximum with three months runout. We continually review claims all year. Alan asked, does BCBS provide stop loss? Rhonda stated, yes that is why I like to go to third party administrator because they are shopping it to be competitive. You do not have that opportunity with BCBS. Alan asked, does BCBS pay prescriptions? Rhonda stated, yes. If choose non-grandfather plan, we may not be able to keep prescription coverage as it exists, but may have to add prescription card. You have low prescription costs because employee has to file then it pays 50/50 after deducible. If go to drug card, prescription utilization will go up. Alan asked, are there any public entities where premium is going down? Rhonda stated, yes I just recently had a renewal that went down, but are seeing most renewals increase because of COVID and carriers padding costs. Alan asked, is there a threshold for participation of fully insured plan? Rhonda stated, yes, 70% of eligible full time employees. The City has had a couple tough years but are maintaining. Commissioner Brumbaugh mentioned changing stop loss but there is a concern with the size of your group. With a group your size you want to stay at $30,000 to $50,000. Alan asked, is self-funding set up like a trust? Rhonda stated, with BCBS it is not a trust. With tax supported entities you want to fund plan at maximum for five years with three to six month runout. Then once reserves are built up you can fund plan to expected, then fund by utilizing reserves. Mayor Garcia asked, why do you have employees do health assessments? Rhonda stated, because when we work with third party administrator, we have data on prognosis, diagnosis and plan of treatment. When I work with BCBS, they will not release numbers and whether the claims are ongoing and continuing. I request and pay for the employee assessments to know I get a true quote from other carriers. You want to give other carriers as much data as can to provide a good bid. It is a hassle, but your employees are willing to complete them to make sure we have options. It also gives us information on prescription plan. I feel by doing them I have done my due diligence. Mayor Garcia stated, with stop loss carriers are the prescription managers transparent? Rhonda stated, we have some we work with that give some rebates, but we like the ones that return 100% rebates to the group. BCBS returns 80% and retains 20% of the Rx rebates to help stabilize pool. We work with PBM’s that return 100% of the rebates. There is a new PBM in Kansas that is doing some out of the box thinking. Mayor Garcia asked, Alan we have had some interesting questions, what are your feelings? Do you need time? Alan stated, it is very complicated information. With third party administrators and prescription managers you never want to make a quick decision. I will have to determine where we stand. Vice-Mayor Thompson asked, our next meeting is December 7th is that enough time to do due diligence? Rhonda stated, I will make it happen. I have worked with the third part administrators a long time and have been picky who I work with. Alan asked, how many years has the City hit maximum? Rhonda stated, I believe we hit it one year. Alan stated, I will have to look at plan. Rhonda stated, I am willing to meet with you. Mayor Garcia stated, I am open to suggestions, we voted to have this meeting. We had another consultant that made a proposal. Alan needs to be in touch with other consultant as he was not here when presentation was given. Commissioner Howard stated, I would like to think about both plans and make decision next meeting. Vice-Mayor Thompson stated, that is the fair thing to do so we can digest information. Commissioner Brumbaugh stated, I am alright with whatever; we need to put the pieces together. Mayor Garcia stated, if Alan wants to call a special meeting to make decision, he can. This action does not affect insurance, only the consulting side. Commissioner Farris stated, we need to see what is best to stay in budget. Vice-Mayor Thompson stated, I appreciate Rhonda’s presentation; you provided lots of good information. Based on what we have heard, I believe we have a hard time justifying any reason to cancel her contract. I do not see any conflict or differences between services of two firms. If we cancel her contract we have to have a justified reason. Mayor Garcia, we need to consider the leadership of new city manager to review information. He is hired to run the City and is experienced in insurance. Rhonda stated, we are working with a hospital in another community giving discounts to keep people using local hospital. You cannot do that with BCBS but can a third party administrator. We can do some creative things.
Mayor Garcia stated, I would like to extend my gratitude to Andrew Finzen for his years of service.
ADJOURNMENT WAS HAD ON A MOTION Commissioner Brumbaugh seconded by Commissioner Howard. Motion carried by unanimous VOTE, meeting Adjourned at 6:55 p.m.
ATTEST: John Garcia, Mayor
Mary P. Volk, City Clerk