Yavapai Unified Employee Benefit Trust Regular Meeting September 1, 2015 Prescott Unified School District Conference Room A A regular meeting of the Yavapai Unified Employee Benefit Board of Trustees was held at the Prescott Unified School District Office in Conference Room A on Tuesday, September 1, 2015, at 3:00 p.m. in Prescott, Arizona. 1. Call to Order Kelly Cordes called the meeting to order at 3:01 p.m. 2. General Business a. Roll Call Trustees Present: Kelly Cordes PUSD Gary Hicks HUSD Scott Smith HUSD John Mackin PUSD Trustees Absent: Tom Staley PUSD Cynthia Windham HUSD CFO Also Present: Aaron Polkoski The Segal Company Rick Cajthaml - Meritain Kelly Mattox, PUSD Benefits Coordinator Jayne Krumbholz, PUSD Liaison Rebecca Smith, HUSD Benefits Coordinator Dan Street, HUSD Superintendent Jim Bogner, HUSD Asst. Superintendent Melissa Jackson, Cypress Associates Rebecca Chang, Cypress Associate Andi Mayer, Recording Secretary A quorum was established. b. Approval of Agenda Motion #1: Gary Hicks moved to approve the agenda as presented. Scott Smith seconded the motion and the motion carried unanimously 4-0. 1
c. Approval of Minutes from July 9, 2015 3. Public Comments Motion #2: Gary Hicks moved to approve the minutes from July 9, 2015, as presented. John Mackin seconded the motion and the motion carried unanimously 4-0. There were no public comments at this time. 4. Appeals and Possible Action Regarding Such Appeals There were no appeals at this time. 5. Discussion and Possible Action Items a. Financials Aaron Polkoski reported that in June, paid claims plus expenses were higher than contributions resulting in a slight loss of $53,022. Year to date through June, the plan has a surplus of contributions less paid claims and expenses of $131,975. The average medical and Rx paid claim cost for the 2014-2015 Plan Year was $431.30 per employee per month for active employees and $343.01 for retires. The cost for active employees the prior plan year (2013-2014) was $385.83 and $744.59 for retirees. There were a few large claims, but none of them were catastrophic claims. The Trust raised the specific deductible level to $165,000 during 2014-2015 and saved money on the fixed and will see a substantial savings of about $300,000. Nothing has changed as far as enrollment regarding active vs. retiree. Most are active with the retirees reducing over the last several years. Regarding Contributions vs. Expenses, contributions are just under $7 million with the bulk of costs being medical claims at about $4.5 million with no large claim refunds. Prescriptions are the second biggest cost at $927,882. You had a phenomenal year almost flat over the previous year. We are seeing increases industry-wide due to specialty prescriptions. Many other plans are seeing 15-20% increases in their plans and you are flat. Total monthly claims are about $5.5 million. You have a surplus of $131,975 and so gained a little in reserve from last year due to strong plan management and correct plan design. Jayne Krumbholz asked if any of the large claims were on-going. Aaron responded, some will continue such as cancers. Rick Cajthaml responded, the first two months there were 12 people with claims of over $25,000 it s on-going. Some are just one time things and usually in the month of June we see a big increase. No one met the threshold for reimbursements. Our normal process is to pay those in June, but it didn t help this year. 2
Aaron asked Rick if he had a glimpse of the new plan year. Rick responded, claims are consistent for July and August. July was $427,000. We are running low for overall claims. Aaron noted that there is no rolling 12-month since we re at the end of the year. We will be re-vamping the look of the report going into this next year. Regarding actives vs. retirees, this is the first year retirees were lower per cost per month. It s a pretty small group with 72 people. Regarding trends, you ve had a phenomenal history. The medical trend is 3.8% compared to national of 9.9% without any major overhauls. Most of your peers had to do major plan changes. Prescriptions are 1.4% vs. 8.3% nationally. Blended on a weighted basis is 3.3% vs. 9.6% nationally. Net Assets vs. Liabilities you have total assets of $6 million. Liability to IBNR is $610,000 for $5.4 million in net assets. Your stop loss is set at $60,000. We generally talk about this in the fall if you want to make a change. $5.4 million in net assets is the highest it s ever been and puts you in a good position. Statement of net assets has the current year at $6 million and the prior year at $5.8 million. 5.4 vs. 5.2 net increase of about $228,000. Claims vs. previous years have been relatively flat over the previous year. The Pecori fees associated with the ACA will get lower each year. Gary Hicks asked, what protection do we have at the different banks? Aaron responded, they will guarantee up to $250,000. Kelly Cordes noted that we pay a fee to make sure all those funds are FDIC insured that is the law in the State of Arizona. He noted that at a future meeting we re going to have to reconsider the bulk of the money at CHASE, as it is earning no interest right now. Aaron suggested inviting their representatives to a future meeting. Jayne suggested letting CHASE know that we re going to go to some other banks and see what they might do for us. b. Investments Kelly Cordes reported that since we re receiving no interest on that money we might go to Compass or County with those funds they do pay a little bit of interest. We re supposed to meet with CHASE again and I don t know why we have the bulk of money at one bank and then $228,000 at the other banks. 3
Aaron noted that during the down turn in the economy the trustees put some in each for FDIC protection. Kelly Cordes noted that at the next meeting he will make sure Tom Staley is here and we also need to talk about signers on accounts. I feel we need more signers than the superintendents and CFOs. The only authorized signer on the accounts is Cynthia. Jayne stated that she thought we had two superintendents and two CFOs approved. Kelly Cordes asked, who signs the checks? Kevin Dickerson responded, myself and Denise Stevens. I think there needs to be a HUSD signer. We might need a third signer, so please put this on the next agenda. c. Changes Due to Federal Guidelines Rick noted that there have been no changes. d. Authorized Check Signers on YUEBT Accounts Kelly Cordes noted that we covered this agenda item above. We will make sure we address at the next meeting once Tome and I get more information from CHASE. When we have that meeting, I would like to encourage the superintendents to be there. e. Vendor Renewals Aaron noted that this is a carry-over from the last meeting and should be taken off the agenda. f. Deductible Change Transition Rick stated that this might be a reason why claims were up a little in June. We re still receiving claims from May and June but haven t seen any huge increase. Other plans doubled in June. I don t think the six month transition impacted your plan. We did discover something we will discuss in Item k. Some of the rules for those six months carried over to the new plan year, so there is a little speed bump. It was requested that this item be taken off the agenda for future meetings. g. Life Insurance Enrollment Aaron reported that Sun Life has offered the one time open enrollment opportunity, which will be a good deal for the employees. They have been coordinating with both of your liaisons. Kelly Mattox stated that it will be right after fall break the week of October 19-30 to make plans. Each will have their own personalized packet. 4
h. Trust Strategy Aaron suggested putting this on the agenda over the next couple of meetings. We ll leave it open since we don t have all trustees in attendance. It s a matter of where do you want to go next, structure and longer term goals. i. Prescription Prior Authorization Requirements Aaron noted that there are some new documents regarding prescription prior authorization requirements. There is some new cholesterol inhibitors coming on the market that are very effective and very expensive but will only work for certain people. We are suggesting that they use these forms to make sure the right people are using them. Catamaran is suggesting some prior authorization to be put into place. This would prevent somebody from prescribing if they aren t going to be effective. Jayne asked, how expensive are they? Aaron responded, a couple thousand per month. Kelly Cordes asked, this is already in place? Aaron noted, you signed it already and it s not a plan change. j. ID Re-Cards Rick reported that new ID cards will go out this week. The new cards will say Optum since Catamaran was acquired by them. Kelly Mattox asked, do you foresee any changes with them? Rick responded, it depends on what they re going to do. There could be a system conversion, but that s a question for Optum. Aaron pointed out that Optum uses the same system as Catamaran, so that probably won t happen. Jayne asked, did we get everything converted? Rick responded, there are still some little glitches, but we are taking care of them. Everything should be smooth going forward. We are exchanging data now. k. High Deductible Health Plan (HDHP) Rick noted that there is a plan amendment we need to handle. In the past the deductibles were $2,500 for individuals and $5,000 for family. Since $2,500 matched IRS it was an embedded deductible. Because the family deductible was the same, the plan paid. You put the deductible at $1,300 during the short period. It s normally $2,500. If you have family coverage it will be $2,600 and then you ll get paid. This amendment adds the extra $100 in order to be IRS compliant. Only one person from HUSD was affected by this and we plan to send a letter to that person. 5
Jayne suggested just paying the $100. Rick noted that you need to worry about being IRS compliant. Kelly Mattox suggested just let those affected know. Rick stated that you probably should let all members know since it s an amendment to the plan. Different options were discussed regarding paying $100 to their HSA, having HUSD do the $100 and Rick would then make an adjustment on the invoice. Motion #3: Scott Smith moved to accept the amendment as presented and deposit $100 into that employee s Health Savings Account. Gary Hicks seconded the motion and the motion passed unanimously 4-0. Kelly Mattox asked for clarification is the trust paying or is HUSD? Rick responded, I will do a $100 adjustment on their billing. l. Presentation: Employee Benefits Cypress Associates Kelly Cordes noted that he had met with Rebecca Chang and Melissa Jackson, who have talked with Joe Howard, Tom Staley and myself. They are here to give us a presentation that doesn t involve trust funds, so would be a school board matter. I think we should look at what they re going to present, as it will save the district and employees money. Melissa Jackson and Rebecca Chang from Cypress Associates did a presentation for trustees regarding a Healthy Schools Initiative. Melissa Jackson noted that this program was not meant to replace any program. It s for claims utilization and was customized for this group. This program would install a hybrid Section 125 Cafeteria plan into place. It would provide 600 participants with Whole Life/Term Policy and is guaranteed up to $250,000 with no medical questions for eligible staff members. Kevin asked, what do you mean when you say eligible employee? Melissa responded, there are certain criteria. Anyone over age 70 doesn t qualify. People who have an HSA, if they are funding it themselves, or if you make less than $20,000, you don t qualify. The 600 number being used is for both school districts and we were being conservative with that number. She noted that this program would provide 1,000 employees and all family members access to telemedicine program 27/7 with a medical doctor and no copayment. It would provide 1,000 employee s short term disability and critical illness at no cost. There would be no cost to the employee or the district. Rebecca Chang pointed out that this service reduces staff members from having to go to urgent care or the ER, saving both the district and employee money. 6
Aaron asked, when people use telemedicine, do you find when the doctor can t see them they refer them to the ER? Rebecca responded, most certainly they would be referred. You can download this app on your smart phone device and have care 24/7. It s a privatized company and United Health Care is invested in this company. You do have a STD with no cost for an employer paying those claims, reducing the cost for the employee and claims liability. Over a five year period you could be looking at over a million dollars in savings. It s done through a ledger change in payroll and HR. She then showed a sample of a current plan and a defined benefit plan. Aaron asked, do you make commissions and overrides on the whole life? Melissa responded, yes. We get paid the 1%. We are a boutique PTA, and another fee through the tax savings. We get paid on the tax savings so we take nothing from the trust, employer or employees. Aaron noted that the portion of the $168 that is a commission should be disclosed. Rebecca noted that there is no pre-existing or long waiting periods. The STD is income replacement when you are sick or have an accident. No pre-existing or long waiting periods. The critical illness policy will pay the employee $5,000 for a heart attack, stroke, and dread disease. With telemedicine you can speak or video interface with a doctor. Anyone in a family all dependents will receive care with no co-payment to the member. Melissa distributed a case study article for a school system I Wisconsin and showed a telemedicine commercial. She stated that we can save employees from HSA deductibles and can re-direct claims and overall costs. Within this component we have a wellness component and all that data can be sent over to medical records. Any child under the age of two must be in front of doctor, so they would not receive care. We do video conferencing and the doctor can send the prescription directly to the pharmacy for you. Aaron asked, who pays for the telemedicine? Melissa responded, it s out of the tax savings. They showed a slide for savings report and a five year analysis. They also shared a timeline noting that they would like a commitment on the timeline today if possible. Kevin asked, what data is in the census? Rebecca responded, W-4 information, dependents, age, name, date of birth. Social Security numbers aren t needed at the very beginning, but would be by the end of the enrollment. Kevin noted that the YUEBT approved that Sun Life would come through on an offer for a term policy and when the employees receive the information on Sun Life and then on your information, I feel like they are competing. Melissa responded, the positive enrollment stands along and runs independently of everything they have. We would construct language for both. 7
Aaron asked, what would happen to the current district Section 125 plans? Melissa responded, they would stay in place and keep those deductions separate. Aaron noted, you re not asking this trust for anything, but you re asking the governing boards to take $700 out of eligible employee s checks for VEBA. Kelly Cordes made a recommendation to close the presentation since a governing board meeting was scheduled to start in 15 minutes. 6. Discussion/Information Items a. Set Next Meeting Date - Nov 4 th 3:00 p.m. at HUSD b. Items for Next Meeting s Agenda: 7. Adjournment Add Health Assessments Keep Check Signers Remove Vendor Renewals Remove Deductible Change Transition Motion #4: John Mackin moved to adjourn the meeting. Gary Hicks seconded the motion and the motion carried unanimously 4-0. The meeting adjourned at 5:20 p.m. Respectfully submitted, Andi Mayer Recording Secretary 8