Rapid City Area School District

Transcription

1 Rapid City Area School District 2017 Marketing All Product Lines APRIL 2017

2 Presentation Outline Marketing Analysis Executive Summary Life and Disability Medical Dental Carve-out EAP Services Summary of Recommendations 2

3 Disclaimer The information contained herein is subject to the following disclosures and disclaimers: The intent of this analysis is to provide you with general information regarding the status of, and/or potential concerns related to, your current employee benefits environment. It does not necessarily fully address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your general counsel or an attorney who specializes in this practice area. This analysis is an outline of the coverages proposed by the carrier(s), based on information provided by your company. It does not include all of the terms, coverages, exclusions, limitations, and conditions of the actual contract language. See the policies and contracts for actual language. This analysis is not a contract and offers no contractual obligations on behalf of Arthur J. Gallagher & Co.. This analysis is for illustrative purposes only, and is not a guarantee of future expenses, claims costs, managed care savings, etc. There are many variables that can affect future health care costs including utilization patterns, catastrophic claims, changes in plan design, health care trend increases, etc. This analysis does not amend, extend, or alter the coverage provided by the actual insurance policies and contracts. Please see your policy or contact us for specific information or further details in this regard. Arthur J. Gallagher & Co S. Syracuse Way, Suite 700 Centennial, CO

4 Executive Summary Gallagher Benefit Services, Inc. (GBS), as the District s benefits consultant, has conducted a vendor marketing project for services and programs involving the following lines of coverages: Basic Life / Dependent Life / AD&D Short Term Disability (STD), new offering Long Term Disability (LTD), new offering Medical (Fully-Insured and Self-Funded offerings) Dental (Fully-Insured and Self-Funded offerings) Employee Assistance Program (EAP) Carve-out program 4

5 LIFE AND DISABILITY 5

6 Life, AD&D, Short Term Disability and Long Term Disability Carriers Companies submitting proposals to provide Life, AD&D, Short Term Disability and Long Term Disability benefits, included the following: MetLife (incumbent) Cigna Prudential Reliance Standard Standard Insurance Company Sun Life Unum Voya 6

7 Life, AD&D, Short Term Disability and Long Term Disability Carriers Overall rate/price ranking results encompassing Life, AD&D, STD and LTD are outlined as: Total Combined Annual Premium #1 Unum $302,717 (1) #2 Standard Insurance Company $328,018 (2) #3 Cigna $341,957 (1) #4 MetLife $356,646 (1) Rate guarantee Life/AD&D/LTD 3 years STD 2 years (1) Includes an embedded EAP (2) Does not include an embedded EAP 7

8 Line of Coverage Pricing & Disability Options Vendor Cost BASIC LIFE AND AD&D #1 Unum $28,047 SHORT TERM DISABILITY - 0 day Accident/7 day Illness Option 1 Use all Sick Leave #1 Unum (STD w/ltd) $158,339 Option 2 Use 15 days Sick Leave #1 Unum (STD w/ltd) $236,466 Option 3 Use 30 days Sick Leave #1 Unum (STD w/ltd) $193,757 SHORT TERM DISABILITY - 7 day Accident/14 day Illness Option 1 Use all Sick Leave #1 Unum (STD w/ltd) $137,505 Option 2 Use 15 days Sick Leave #1 Unum (STD w/ltd) $216,674 Option 3 Use 30 days Sick Leave #1 Unum (STD w/ltd) $171,881 LONG TERM DISABILITY 50% Benefit to $5,000 Monthly maximum #1 Unum $107,601 60% Benefit to $5,000 Monthly Maximum #1 Unum $148,336 Recommendation: Move coverages from MetLife to Unum Basic Life and AD&D STD 7 day Accident/14 day illness using 30 days of Sick Leave prior to STD plan offering. STD combined with Unum program. LTD 50% benefit to a monthly maximum of $5,000 Embedded Unum EAP administered by Ceridian/Life Works (see Appendix on Ceridian EAP and current EAP provider list). Unum and Ceridian will work to contract with any current EAP providers in current EAP that are not in the Ceridian EAP network. 8

9 MEDICAL Q:\2014\GBS\17\NicheName\20\DCN#.pptx 9

10 Medical Carriers/Third Party Administrators Companies submitting proposals to provide fully insured or self-insured medical services include the following: Wellmark (incumbent) quoted fully and self-insured Avera quoted fully insured only DakotaCare quoted self-insured only Sanford Health quoted fully insured only The following companies Declined to Quote: Aetna Cigna United Health Care (UHC) Medica 10

11 Funding Fully insured -4% compared to self-insured Self-Insured Predictable risk Positive fund balance three years Use of District trend versus carrier higher trend Premium holidays and member copay enhancement Proposed Carriers Avera fully insured quote only smaller network DakotaCare lower provider discount increased claim costs self-funded rates increase of +4.91% network excludes Sanford Health facilities Sanford Health fully insured quote only generated a +26.6% increase Wellmark provided both fully and self-insured quotes self-funded quote increases funding rates by +6.3% largest network 11

12 Funding (cont d.) Proposed Carriers (cont d.) Wellmark (cont d.) fixed fees increased +10.8% current stop loss at $145,000 is estimated to increase 18.7% ($41.53) priced stop loss change to $175,000 ($32.98) generating approximately $160,000 in annual savings. There is a value of five stop loss claims to break even. Market Circumstance Competitive pricing is constrained due to three major challenges Network access Provider discounts (increase claim costs) Hospital stability (Rapid City Regional Hospital) Recommendation: Retain ASO contract with Wellmark Re-evaluate market in three years 12

13 DENTAL Q:\2014\GBS\17\NicheName\20\DCN#.pptx 13

14 Dental Carriers/Third Party Administrators Companies submitting proposals to provide fully insured or self-insured dental services include the following: Delta Dental (incumbent) quoted fully and self-insured Aetna quoted fully and self-insured MetLife quoted fully insured only The following companies Declined to Quote: Ameritas Cigna Kansas City Life Modern Woodmen Fraternal United Health Care Recommendation: Aetna and MetLife are disqualified due to inadequate networks Retain contract with Delta Dental at current fixed costs Delta Dental renewal will require an approximate funding increase of 2.3% 14

15 CARVE-OUT EAP SERVICES Q:\2014\GBS\17\NicheName\20\DCN#.pptx 15

16 Carve-Out EAP Services Seven vendors responded to the Request for Proposal Annual cost of stand-alone EAP ranges from $21,000 to $49,000 Recommendation: Accept Unum s EAP services at no additional cost through their life quote Unum s EAP includes three face-to-face visits / current plan has five visits Ceridian, Unum s EAP vendor, will reach out to contract with current EAP providers 16

17 SUMMARY Q:\2014\GBS\17\NicheName\20\DCN#.pptx 17

18 Summary In summary, GBS recommends the following: Current Vendor Current Annual Costs Recommended Vendor Recommended Annual Costs Annual Cost Change MetLife Basic Life/AD&D (includes EAP) $44,477 $23,234 ($21,243) STD (1) (7 Accident/14 Illness, 30-day Sick Leave) New Offering Unum $171,881 $171,881 LTD (50%, $5,000 max) New Offering $107,601 $107,601 Wellmark Medical (ASO) Administration (self-insured) $14,560,840 Wellmark $15,479,387 $918, % Delta Dental Delta Dental Dental $1,372,492 $1,372,492 $0 TOTAL $1,198,029 (1) STD would be a new benefit offering to phase out sick bank. 18

19 Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc., a non-investment firm and wholly owned subsidiary of Arthur J. Gallagher & Co., is a licensed insurance agency that does business in California as Gallagher Benefit Services of California Insurance Services and in Massachusetts as Gallagher Benefit Insurance Services. Securities and Investment Advisory Services may be offered by GBS Retirement Services, Inc. and executed through NFP Securities, Inc., Member FINRA/SIPC. Investment advisory services and corresponding named fiduciary services may also be offered through Gallagher Fiduciary Advisors, LLC, a Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Not all individuals of Gallagher and none of Gallagher Fiduciary Advisors, LLC individuals are registered to offer securities or investment advisory services through NFP Securities, Inc. NFP Securities, Inc. is not affiliated with Arthur J. Gallagher & Co., Gallagher Benefit Services, Inc. or Gallagher Fiduciary Advisors, LLC. Neither Arthur J. Gallagher & Co., NFP Securities, Inc., or their affiliates provide accounting, legal, or tax advice.