Minutes - 06/03/2008 - Board of TrusteesMINUTES OF THE JUNE 3, 2008 SPECIAL MEETING OF THE
PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF
OAK BROOK APPROVED AS WRITTEN ON NOVEMBER 119
2008.
1. CALL TO ORDER
The Special Meeting of the Village Board of Trustees was called to order by President
Craig in the Samuel E. Dean Board Room of the Butler Government Center at 6:02 p.m.
The Pledge of Allegiance was given.
2. ROLL CALL
Village Clerk Charlotte Pruss called the roll with the following persons
PRESENT: President John W. Craig, Trustees James Carson, Jeffrey J. Kennedy,
Kathryn F. Manofsky, Moin Saiyed, Robert G Sanford and Gerald Wolin.
ABSENT: None.
IN ATTENDANCE: David Niemeyer, Village Manager and Blaine Wing, Assistant
Village Manager.
3. ADJOURN TO CLOSED MEETING
Motion by Trustee Kennedy, seconded by Trustee Sanford, to adjourn to Closed Meeting
to discuss collective negotiating matters between the public body and its employees or
their representatives, or deliberations concerning salary schedules for one or more classes
of employees (2c2) and to consider the appointment, employment, compensation,
discipline, performance, or dismissal of specific employees of the public body or legal
counsel for the public body, including hearing testimony on a complaint lodged against an
employee of the public body or against legal counsel for the public body to determine its
validity (2c 1). ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
President Craig left the meeting at 6:07 p.m.
4. RECONVENE
The meeting was reconvened at 6:47 p.m. Motion by Trustee Wolin, seconded by Trustee
Saiyed, to appoint Trustee Robert Sanford as temporary Chairman. VOICE VOTE:
Motion carried.
VILLAGE OF OAK BROOK Minutes Page 1 of 6 SPECIAL MEETING
June 3, 2008
5. DISCUSSION AND APPROVAL OF HEALTH INSURANCE PLAN FOR 2008/2009
In the plan years 2002 through 2005, the Village experienced very high Stop -Loss
renewals with the Village's self - funded insurance plan due to a few very large claims in
each of the plan years as well as a higher volume of overall claims. In addition, the
change in the insurance market with a swing toward the institution of lasers (which is an
increased individual specific funding level, set at renewal, on an eligible plan participant
based on a diagnosis /treatment that is classified as a high risk for the carrier) on high risk
individuals left the Village extremely vulnerable to massive increases on a year to year
basis. Specifically, in 2006, the Village renewal under the old plan of Group
Administrators as the Third Party Administrator (TPA) and Cairnstone as the Stop Loss
provider, would have been between a 26% to 33% increase in premiums (the range is
based on the level at which the Village would fund the large claim lasers). Therefore, in
2006, the Village directed our Health Benefits Consultants, Mesirow Financial to expand
the overall marketing of the plan including TPA Services with Stop Loss in order to
receive proposals from the larger carrier networks. The result was a recommendation
from staff and approval by the Village Board to move to Blue Cross Blue Shield (BCBS)
of Illinois as TPA and Stop Loss providers that resulted in a 6% premium increase (in
2005 the Village experienced a 23% increase on the Health Premiums). The major
difference in renewal cost was solely attributed to the discounts projected with the BCBS
plan along with the expansion of, and the push to use, in- network providers. Additionally,
the risk of funding significantly higher deductibles on high risk individuals was removed
as Blue Cross Blue Shield does not impose "lasers."
Past Renewal Highlights
• In the 2004 plan year, one individual was lasered and five (5) individuals over
specific, whereas in past years, the Village averaged at most one (1) individual over
specific.
• In 2005, even with claims lower than in the past two years, the renewal included 5
lasered individuals resulting in a renewal of 23% increase in premium costs, which
is 8% over the market trend of an average 15% increase to health insurance
providers.
• In 2006, the review for the renewal included the review of moving to a health pool
and various options of fully insured and self insured programs. The precluding
factors continued to be the claims experience the Village has had and the inability
to decrease benefits due to the collective bargaining agreements.
• The 2006 recommendation included a switch to a combined TPA and Stop Loss
arrangement with Blue Cross Blue Shield of Illinois as the Third Party
Administrator and as the Stop Loss Provider for the Plan that resulted in a 6%
increase in premiums, and a move away from budgeting for lasers.
• In 2007, Mesirow was very helpful in seeking, reviewing and recommending a
fully- insured HMO option, in addition to our currently self - funded plan, for
consideration.
VILLAGE OF OAK BROOK Minutes Page 2 of 6 SPECIAL MEETING
June 3, 2008
Current Health Benefit Program:
The Village operates a self - insured health insurance program for all claims on a per
individual basis for the first $75,000 ( "individual specific attachment point ") of claims in a
given plan year (July 1 to June 30). This program has been in place in this format since
1993, but with different specific attachment points and TPAs. The Village secures Stop Loss
Coverage for claims that exceed $75,000 per individual or over 125% of the annual
aggregate specific attachment point of expected claims. The Village health benefit program
has approximately 228 employees, which includes approximately 30 retirees
(retirees /COBRA employees on the traditional insurance plan who pay 100% of the
equivalent premium for their coverage) in the program, plus eligible dependents. The Oak
Brook Park District also piggybacks on our plan paying the full premium cost for all eligible
individuals. The program itself is a three -tier premium system consisting of single, single +1
and family coverage for health, dental and vision coverage with network discounts through
Blue Cross Blue Shield. In addition, the Village provides group term life insurance coverage
at $100,000 for all employees, with an option for only $50,000; and per the existing union
contract, $50,000 for union fire personnel.
Vision Insurance
Vision Service Plan (VSP) is the current vision insurance provider for the Village.
Employee coverage is paid for by the Village, with dependent coverage being optional
and fully paid for by the employee. The current rates are guaranteed through June 30,
2010. Thus, staff recommends that the Village renew with VSP for an additional year at
the unchanged monthly rates for each employee and for dependent coverage.
Life Insurance
The Village provides $100,000 of group term life insurance and AD &D coverage to all
full -time employees, aside from the Firefighters under the Collective Bargaining
agreement which sets the life insurance at $50,000 (contract expired in December 2007).
Staff has added an option within our plan, which will be effective on 7/l/08, and will
allow employees to lower the group life term to $50,000, so employees can avoid
additional taxes on this benefit. The Village's current Life and AD &D contract with Fort
Dearborn expires on 7/1/09.
Dental Insurance
Guardian is the current dental insurance provider for the Village. Employee coverage is
paid for by both the Village and employee. The current rates are guaranteed through June
30, 2009
Renewal for 2008/2009 Health Plan Year:
Health Benefit Consultant, Mesirow Financial, was again instrumental in monitoring the
2007/2008 plan year claims and discounts, and in securing new proposals from various
carriers for the 2008/2009 plan year. With their assistance, staff is recommending several
changes in 2008/2009, as well as looking at additional changes in 2009/2010.
VILLAGE OF OAK BROOK Minutes Page 3 of 6 SPECIAL MEETING
June 3, 2008
Staff's recommendation for the 2008/2009 Health Plan is to increase the employee cost
sharing percent ( %) for the Blue Cross Blue Shield PPO plan from 7.5% to 10 %. This
change will cost a family approximately $24 extra per month and less for other
coverages. The proposed changes also include increasing the deductible by $50 (from
$150 to $200). These changes, although costing employees more, would allow the
Village to continue to offer an excellent PPO plan option. An addition to the plan
proposed this year is an HMO alternative that may be a good fit for some employees as it
has some options that are not in the PPO plan. The proposal offers employees the choice
of a high quality HMO at the current 7.5% cost sharing, which, if selected by an
employee, would reduce the amount an employee would pay. The Village is not
mandating the proposed HMO option to non -union employees as part of these proposed
changes; the HMO would simply be an alternative to the PPO plan. If accepted by the
Village Board, the new PPO and HMO plans would become effective on 7/1/08, with the
deductible change effective on 1/1/09.
There are several plan design differences between PPO and HMO plans, including, but
not limited, to limits on physician choice, office co -pays, etc. If the Board does approve
offering an HMO option, the details will be provided at the already scheduled employee
informational sessions, so employees can make an informed choice. Besides the cost
breakdown, employees will be most interested in the program differences.
Future Health Insurance Changes
At the Village Board meeting on Tuesday, May 27th, it was noted that in 2010, (next
year's budget), that there would most likely be additional increases, including increasing
the deductible an additional $50 (to $250), increasing the co -pays for the drug card, as
well as increasing the employee share of the cost to beyond the proposed 10 %. After
having one year of experience with both PPO and HMO options, the Village will be able
to make additional changes and improvements.
Cost Analysis
The insurance cost analysis indicates total annual cost for the current year's (2007/2008)
plan cost a total of $1,978,832.04. Because of the Village's lower claims this year, the
renewal rate from BCBS is slightly lower, with the annual cost being $1,854,234.32. So,
if the Village did nothing to the plan and just renewed with BCBS, there would be a
savings this year. However, if the Village only approves the proposed PPO plan, the
Village will save $50,121.60. The Village's savings will continue to increase if the
Village Board also approves the HMO option, but because it is unknown how many
employees would select this option, the estimated additional savings to be approximately
$10,000 to $15,000 more. Overall, it is estimated that savings to the Village for
implementing the proposed PPO and HMO plans to be approximately $60,000 to $65,000.
Staff strongly recommended the Village Board approve the following:
1) Renewal with Blue Cross Blue Shield of Illinois for Third Party Administrator
Services and Stop Loss Coverage for the 2008/2009 Health Plan year; and
VILLAGE OF OAK BROOK Minutes Page 4 of 6 SPECIAL MEETING
June 3, 2008
2) Renewal with VSP Insurance for Eye Care Coverage
3) Increase the employee's cost sharing rate from 7.5% to 10% for the PPO plan
4) Approve the addition of an HMO option to the Village's health insurance plan
5) Increase the deductible from $150 to $200
Trustee Wolin commented that he recognizes that the key to success in any organization is
hiring good people and retaining them for as long as you can. He added that one of the
ways to do that is having good salaries and benefits. He believes that the plans offered to
Village employees were very good.
He felt that there was not an appropriate balance between out of pocket expenses for the
PPO and the HMO. He would like to see them come closer together in that area and other
areas as goals for the future. He also suggested an "opt out" program. He also asked if
raising the deductible would change the premium.
Mr. Brian Diedrich of Mesirow Financial responded that the plan for the HMO is a
"canned" plan which does not offer options, a different plan would have to be found. He
added that the PPO plan is more flexible. He also responded that the premium would not
change if the deductible was increased, it would just transfer that responsibility from the
Village to the employee. He said there was not a lot of flexibility to price that
competitively. Assistant Village Manager Wing added that the average deductible for
comparable plans was $500.00.
Trustee Kennedy commented that the Village was way behind the comparable
communities and industry regarding the employee's share of premiums. He felt that the
leap from where we are now and where everyone else is should be considered annually
and gradually increase the employee's share.
Motion by Trustee Manofsky, seconded by Trustee Sanford, increase the employee's cost
sharing rate from 7.5% to 10% for the PPO plan. ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
Motion by Trustee Manofsky, seconded by Trustee Wolin, to approve the addition of an
HMO option to the Village's health insurance plan. ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
Motion by Trustee Manofsky, seconded by Trustee Kennedy, to increase the deductible in
the PPO plan from $150 to $250. ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
VILLAGE OF OAK BROOK Minutes Page 5 of 6 SPECIAL MEETING
June 3, 2008
rel
Motion by Trustee Manofsky, seconded by Trustee Kennedy, to approve renewal with
VSP Insurance for Eye Care Coverage. ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
Motion by Trustee Carson, seconded by Trustee Kennedy, for renewal with Blue Cross
Blue Shield of Illinois for Third Party Administrator Services and Stop Loss Coverage for
the 2008/2009 Health Plan year. ROLL CALL VOTE:
Ayes: 6 - Trustees Carson, Kennedy, Manofsky, Saiyed, Sanford and Wolin.
Nays: 0 - None.
Absent: 0 - None. Motion carried.
ADJOURNMENT
Motion by Trustee Kennedy, seconded by Trustee Kennedy, to adjourn the Regular
Meeting of the Board of Trustees at 7:24 p.m. VOICE VOTE: Motion carried.
ATTEST:
/s/ Charlotte K. Pruss
Charlotte K. Pruss
Village Clerk
VILLAGE OF OAK BROOK Minutes Page 6 of 6 SPECIAL MEETING
June 3, 2008