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5.2. ERMUSR 05-11-2010/i Elk River ~~~ To; Elk River Municipal Utilities commission John Dietz Jerry Gunaphrey Daryl Thompson from. Theresa Slominsl~i Subject. 20 i 0 Dental As reported to you at our April meeting, we received our June ~, 20 i0 insurance renewal information fram Assurant, which currently provides our Dental, Life & Accidental Death &Dismenaberment SAD&D}, and Long Te~~.aa Disability LTD} insurances, The total was an increase of ~ 5% and we budgeted fora 7°/a increase, Our insurance broker sent out requests for proposals and Jodi Berge, Account Executive with our insurance brol~er, David Martin Agency, lags provided tlae enclosed letter and supporting information to summarize the proposal information received. Also, please note that it was requested in tlae proposals to move the renewal date to January 1 instead of June ~ xn subsequent years, so that it lines up with our health insurance renewal, V~ith the proposals, Assurant has given us options to reduce the dental premium increase or eliminate it. These optians involve some tradeoffs with the deductibles, or tlae annual maximum amounts, but there are increases with the other insurances of Life & AD&D and LTD as well, Pote~atial savings achieved from. inaplementi~ag any changes to the dental are eroded with the other insurances increases, A small increase in dental premiums ultimately means a doubling of the deductibles to an additional X25 per individual total $50} or X75 per family total $150}, A zero increase in dental premiums means doubling the deductibles a~~d decreasing the anzaual zaaaximum amouxats covered ~a decrease from $1,500 to ~ i,000 per year}, Any major events would have a potential $500 impact if the a~anual maximum would be reached. This is a per plan pa~~ticipant maxinau~.n and so a family of four could potentially have a $2,000 impact. Per our plan representative, we do have participants that reach the maximum. Please refer to the spreadsheet completed by David Martin Agency to see our current plan and these potential changes in the plans compared. The other proposals offer additional savings ixa premiums, but even further reductions in tlae value received, and fu~.~ther increases in out-of pocket expenses for tlae employees. ~~ployee Bene~'it Specialists Elk River Municipal Utilities Dental, Life & AD&D, and Disability Proposal Results an Recornmenions Prepared by David Markin agency May 2a~0 Introducti®n In March 2010, David Martin Agency DMA} sent a request for proposal ~RFP}for Life, AD&D, Dependent Life, Long Term Disability and Dental insurance to nine carriers two for dental only}. ~f those carriers, seven carriers responded to the RFP. Summary of Findings ~Assurant only the incumbent carrier, Assurant, and a new carrier, MetLife, matched the current Long Term Disability benefit of 66.67°/°. ether carriers quoted 60°/° of monthly earnings. This option does represent significant savings, however it is not a viable option at this time. Elk River Municipal Utilities may want to consider this option in the future. The reason that so many carriers declined to quote 66.67°/° is because this benefit is not taxed; thus there is no incentive for employees to return to work if they receive nearly all their taxable income disabled, Through negotiation with Assurant, DMA was able to reduce the initial increased renewal rate of 15,13°/o down to a 7.16°/° increase. This reduced increase includes a change to the dental plan, increasing the deductible from $25 to $50 per person or $l5 to $~ 50 per family Amax}, Included in this negotiation was a hold for these rates until January 1, 2412 X19 months}, Thus changing the renewal from June 1, to a calendar year renewal date of January 1, to coincide with the medical and flex plan renewal dates, Summary Findings a MetLife MetLife gave two different proposals on the summary page. The first proposal guarantees rates for one year on dental and two years on Life and LTD. The second proposal moves the renewal rate date to January 1, 2012 X19 months} for dental and 2013 X31 months for Life and Disability, Requesting the additional seven months greatly reduced Elk River Municipal's savings from $4,123 to $831. However, this significant change in rates is Contidentia! Page ~. somewhat concerning and could be indicative of a higher renewal rate ance the rate guarantee has ended in 2012 and 2013. Also, please know that under the Long Term Disability LTD}Insurance contract, same disabilities that would be paid under Assurant may not be paid under MetLifie. This would be due to the difference in each carrier's definitions of `disability'. Frankly, Assurant may be more generous. MetLife's rates are contingent on three lines of business so the dental must be sold with the Life and Disability or the rates will be higher. An additional quote can be requested if desired for just Life and Disability. There is no conversion coverage for terminated employees this is not perceived as a big cancers as this benefit is usually not elected from terminated employees}, Regarding MetLife's dental plan, the network of providers is significantly smaller than Assurant's nearly halfthe size} and onlyfive ofthe top 35 Assurant providers were in MetLife's network. Claims will be paid at the 90t" percentile of UCR usual, customary and reasonable charges} when a member accesses care out of network. In addition, there is a reduced benefit level of 10°/° with the exception of preventive care, ~i.e. 80°/° for basic services instead of 90°/° and 50% far major services instead of 60°/°}, For those employees now accessing care from a network provider ion the Assurant Plan they not only have a higher benefit level, but they also get greater discounts and no balance billing for amounts over usual and customary. Since very few of MetLife's providers overlap those of Assuran~t's, more of the employees will be accessing care aut of the network or they would need to change dental providers. Conclusion and Rec~n~rr~endati~ns In conclusion, renewing with Assurant would cause the least amount of change for the employees. It would result in the increase in the dental deductible to $50l$150. I-lowever, the employees can continue with their current dental providers and receive the higher benefit level, There will be no change to the Disability or Life plans. [f Elk River decides to move their plan to MetLife, the company will save a significant amount of money. This is especially true if the renewal stays at a June 1 date. There would be fewer savings if a January 1 renewal date is chosen. This may be more disruptive for employees, as most will likely have to either change dental providers or receive a lower benefit level on services they receive when using an out Of network provider, There is also the riskthat an employee that may have qualified fora disability claim underAssurant may not under the MetLife definition of disability. v1le hope that our findings have satisfied your inquiries. Please let me know if there is any additional information needed. we value Elk River Municipal Utilities business and look forward to a long, beneficial relationship. Thank you for being a client! Canfidentiai Page 2 ~.~,, (~;~ F-• - ~' } ~ ~ F~: ~ t~ ~~ c.. ~~ ~ ~ ~' ~ ~., ~ ~ ~ ~ -' ~ ~ f~ ~ ~ 5 ( ~ I1 T "'.I { i , ~. .~ I .: ~ •: f ~ 1 i'1 ~~ o o {'~ Lf7 ~ d• {D ~~ ~ .~, a Q a~ ' ~ ~ `~ d ti ~~o~ m ~ h m i C'} o ~ ~~~~ ~ ~ ~ ~ ~ ~ c~ t~ ~ ~ (~ .~. ~ ~, ~- co ~ ~ ~ ~ ~ ~ ~ ~ ~ , O ,~~, ~ ~ ~, o {~ ~.' ~ d' ~ ~ ~ ~~ ~ ~ ,~ ~ .~ ~. 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