Sp2 ipbc city council report 6.9.14

Intergovernmental Personal Benefits Cooperative Report

Status - December 31, 2013

Martin Lyons Asst. City Managerwww.cityofevanston.orgIPBC Report 06/09/14

1

City – IPBC Historical Recap

• Joined Intergovernmental Personal Benefits Cooperative (IPBC) - December 1, 2009.

• IPBC Established in 1979.

• Currently over 60 local government agencies in IPBC and over 10,000 covered employees.

• Minimal Changes in Benefit Plans at time of membership.

IPBC 11/30/2013 2

City Insurance Background

– City Provides both PPO and HMO Plans and added High Deductible Health Plan in 2012 in Fire Union.

– PPO plans are self-funded– Complete flexibility in plan design in PPO– HMO plans are provided on Cost Plus basis– City does not pay premiums to Blue Cross– Life Insurance provided at discounted rates

due to large membership.

IPBC Report 06/09/2014 3

Insurance Terminology

• Self-Insurance – Providing medical coverage through the payment of actual claims instead of through the payment of a premium to an insurance carrier.

• Loss Ratio- The amount of claims and expenses incurred compared to the amount of revenues or premium set aside to pay those claims.

• Capitation fee – The monthly fee charged on a per member basis by each doctor in the HMO plan regardless of whether a member visited the doctor.


IPBC Funding Structure

Operates using Four Funds• Administrative Fund – Administrative costs

including legal, auditing, and accounting• Benefits Fund – All claim costs associated with the

PPO benefit plans including claims, stop loss insurance and Blue Cross and Gallagher Benefit claims administration costs.

• HMO Account – All costs associated with the HMO plans including capitation, claims, and Blue Cross and Gallagher Benefit administration costs

• Terminal Reserve – Funds designated as specific reserves of the member community and not utilized for the above activities.


IPBC Operations

• City sends monthly “funding premium” to IPBC deposited into each account except terminal reserves.

• Claims and bills are processed on a weekly basis by Cooperative accounting firm after review by Blue Cross and Blue Shield. Accounting firm also pays insurance premiums for fully insured programs.

• Large claims and excess insurance costs are shared among pool members described in more detail later.


IPBC Partnership Structure

• Member organizations meet quarterly to process business.

• Gallagher Benefit Services is IPBC consultant and provides detailed monthly reports on revenues, expenses, balances and programs.

• Lauterbach and Amen is the accounting firm that processes bills and actually collects funding premiums.

• The Sikich Group is the accounting firm that independently audits the IPBC each year.

• Ancel, Glink, and Co. provide legal counsel.IPBC Report 06/09/2014 7

Carriers/Insurance

• Blue Cross and Blue Shield of Illinois provide PPO and HMO health plan administration (not insurance)

• Guardian and Met Life provide voluntary dental insurance – employee cost.

• Reliance Standard provides life insurance.• Medco/Express Scripts provides Drug/Rx card

program.• City could alternatively choose United Health

Care or Cigna as the PPO and/or HMO network and administrator.


History of Revenues and Expenses

• IPBC continues to grow and now processes in excess of $150 million in insurance related costs.


CITY OF EVANSTONIPBC HISTORY - Cooperative Year is 7/1 to 6/30 2013-14 Y.T.D

2010-11 2011-12 2012-13 12/31/2013*

Funding Premiums 12,569,492 12,955,609 12,842,493 6,744,769

Interest Income 8,008 4,909 3,558 n/a

Percent Change 3.1% -0.9% 5.0%

Actual Experience - Claims and Administration 11,551,638 12,215,384 11,729,289 5,993,877

Percent Change 5.7% -4.0% 2.2%

SURPLUS/(DEFICIT) 1,025,862 745,134 1,116,762 750,892

*Not all costs have been allocated between members at mid-year, so the 12/31/2013 amount is an estimate

History of Balances


PLAN YEAR 2010-11Account Summary

AccountAccount Balance as

of 6/30/10Transfers/Withdrawals

Plan Year To Date Gain/ (Loss) Plan

Year To DateAccount Balance as

of 6/30/11Admin Fund $5,153 $0 $8,240 $13,393Benefit Fund $403,657 $0 $662,222 $1,065,879HMO Account $135,904 ($135,904) $372,508 $372,508Terminal Reserve ($310,908) $118,796 $0 ($192,112)Total $233,806 ($17,108) $1,042,970 $1,259,668






of 6/30/12Admin Fund $13,393 $0 $10,769 $24,162Benefit Fund $1,065,879 $0 $410,707 $1,476,586HMO Account $372,508 ($372,508) $181,650 $181,650Terminal Reserve ($192,112) $372,508 $142,008 $322,404Total $1,259,668 $0 $745,134 $2,004,802






of 6/30/13Admin Fund $24,162 $0 $6,502 $30,664Benefit Fund $1,476,586 ($300,000) $1,099,319 $2,275,905HMO Account $181,650 ($181,650) $194,969 $194,969Terminal Reserve $322,404 $181,650 $115,972 $620,026Total $2,004,802 ($300,000) $1,416,762 $3,121,564

History of Performance

– Performance in the PPO is mainly a reflection of Evanston claims (except large, shared claims).

– Total IPBC performance is measured in the HMO because it is a totally pooled system.


Category FY 2010-11 FY 2011-12 FY 12-13 FY 2013-14 YTD

PPO Loss Ratio 94.4% 94.2% 86.6% 84.0%PPO Funding Variance $427,861 $492,391 $1,171,923 $734,585

HMO Loss Ratio 99.0% 101.8% 116.4% 141.4%HMO Funding Variance $32,952 ($68,326) ($606,402) ($762,856)Reallocated Surplus/ Deficit $331,398 $183,152 $226,390 $72,596Net Benefit to City $331,398 $251,478 $832,792 $835,452

CITY OF EVANSTON EXPERIENCE SUMMARY

History of Balances

• All City funds at the IPBC have positive balances.

• Transfer of Funds other than through regular premium payments is done according to IPBC By-Laws and procedures.


PLAN YEAR 2013-14Account Summary-ESTIMATED AS OF 12/ 31/ 2013





of 12/31/13Admin Fund $30,664 $0 $924 $31,588Benefit Fund $2,275,905 ($150,000) $716,463 $2,842,368HMO Account $194,969 ($194,969) $68,724 $68,724Terminal Reserve $620,026 $194,969 $114,781 $929,776Total $3,121,564 ($150,000) $1,468,875 $3,872,456

The Future

• The City is projected to receive a PPO rate decrease and HMO rate increase for the IPBC plan year of July 1, 2014 (both under 5%) .

• Medical inflation is still well over 5%.• Wellness activities are paying off.• HMO claims will be monitored.• Recommend moving $1.0 million from IPBC

back to City Insurance Fund.• Recommend a premium holiday for December

2014.


QUESTIONS?


Government & Nonprofit

Sp2 ipbc city council report 6.9.14