HomeMy WebLinkAbout20. 15-486NOVEMBER 10, 2015 15-486 RESOLUTION
(CARRIED___7-0_____LOST________LAID OVER________WITHDRAWN________)
PURPOSE: DESIGNATION OF HEALTH INSURANCE FUND RESERVE
INITIATED BY: ADMINISTRATIVE SERVICES
WHEREAS, the City of Oshkosh has provided health insurance benefits to its
employees through a partially self-funded model which include a designated Health
Insurance Fund, with the express purpose of the fund to cover costs associated with
providing health insurance to its employees; and
WHEREAS, the Oshkosh Common Council has approved a new health insurance
program for its employees effective January 1, 2016, that will change the city’s insurance
health insurance program to a fully funded program; and
WHEREAS, the need for a reserve in the health insurance fund to cover costs
associated with a self-funded program will cease to exist after the payment of incurred
claims, commonly known as the “run out” claims; and
WHEREAS, it is projected that after the “run out” claims have been paid by the
health insurance fund, a projected reserve of $200,000-$1 million may exist in the fund;
and
WHEREAS, it is necessary and prudent to designate the use of these remaining
funds for the payment of other health benefit expenses that may be needed after “run out”
claims have been paid.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
Oshkosh that the proper City officials are hereby authorized to take appropriate steps to
designate remaining funds in the Health Insurance Fund for the purpose of paying out
remaining incurred claims, with any residual amount remaining after the payment of such
claims to be designated for future health insurance costs, including the transition costs
associated with a possible return to a self-funded program, costs associated with making
plan design changes associated with complying with Affordable Care Act requirements, or
other relevant costs associated with employee health insurance.
CITY HALL
215 Church Avenue
P.O. Box 1130
Oshkosh, Wisconsin
54903-1130
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TO:
FROM
DATE:
RE:
City of Oshkosh
Honorable Mayor and Members of the Common Council
John Fitzpatrick, Assistant City Manager/Director of Administrative Services
November 5, 2015
Designation of Health Insurance Fund Reserve
BACKGROUND
Through direction received from Council in our most recent health insurance
workshop held on September 8, 2015, city staff and Associated Financial Group
(AFG) have been finalizing the agreements necessary to establish Wisconsin
Counties Association (WCA)/Group Health Trust (GHT), Delta Dental of Wisconsin
and Delta Vision of Wisconsin as vendors for the City beginning in 2016.
Pending approval from the Council of these agreements, the Council has also
directed the application of any residual health insurance fund balance remain
designated to the Health Insurance Fund.
ANALYSIS
In the future the City will continue to evaluate and analyze the cost benefit of self-
funding verses fully insuring. Should this analysis show financial benefit to return
to a self funded model it will be necessary for the City to have an adequate
reserve. In addition, it will be necessary for the city to continue to evaluate plan
design as significant change will be required to eliminate any costs associated
with the Cadillac Tax. Reducing this pending liability will require plan design
changes which could be addressed with funding from the Health Insurance Fund.
FISCAL IMPACT
Run out claims from the city's self funded plan will be processed for up to a 12
month period after the plan ends beyond 12/31/15. Conservatively, this balance
is estimated to be a minimum of $200,000 and could range as high as
$1,000,000. The final balance could be reduced greatly by unknown
circumstances which the City cannot predict or estimate. However, all fixed
costs for run out and estimates for medical and drug costs have been included in
the 2016 Health insurance budget.
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RECOMMENDATION
Based on the analysis conducted, as well as the discussion and direction that
occurred in the Council Workshop held on September 8, 2015, staff recommends
that any residual health insurance funds r�maining after the conversion to
WCA/GHT remain in the health insurance fund balance, and be designated for
use toward costs associated with transition through plan design changes,
including potential start up costs associated with the city reverting to a self
funded model.
Respectfully Submitted,
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John M. Fitzpatrick
Assistant City Manager /
Director of Administrative Services
cc:
Pam Resch, HR Manager
Approved:
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Mark A. Rohloff
City Manager
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