6.2 ERMUSR 09-13-2005 Elk River Municipal Utilities
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le 2006 Health Plan Renewal
Prepared by David Martin Agency, Inc.
September 2005
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I 2006 Health Plan Rates
The Aware Gold with $15 Copay Plan from Blue Cross Blue Shield of Minnesota will
increase by 20.6% on January 1, 2006. This is annual increase of$63,330 or $5,277.50
I per month. Total 2006 annual premium will be $370,710. The average single rate will
be $311/month; the average family rate will be $1,173/month. The 20.6% increase
includes an actual rate increase of 15.4% plus an additional 5.2% due to your group's
I individual claim experience. Health insurance trend rates in the general marketplace are
running between 11% - 13%. The Service Cooperative pool is indicating a lower trend
rate of 9% - 10%.
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Health Plan Insurance Pool
I The plan carrier is Blue Cross Blue Shield of Minnesota which provides plan benefits and
claims/administrative services. Renewals are distributed through Resource Training &
Solutions, the Service Cooperative and David Martin Agency, Inc. Plan rates for Elk
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River are based on the MN Care small group insurance pool of 2-50 employees under the
Resource Training & Solutions umbrella. This pool is comprised of 19 employer groups
ill having about 13% of total pool employees. (Large group employers number eight and
have about 87% of total pool employees.) Resource Training and BCBS calculated 2006
renewal rates based on:
I 1.) claim experience of the small group pool
2.) claim experience of Elk River
3.) demographics of Elk River
IRate History of Total Pool
I Resource Training & Solutions: Insurance Pool Rate History
Year Minimum Maximum Average
2006 Projections
MN Care 5-7% 35-39%
Large Group 0-2% 30-32%
2005
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MN Care 3.0% 24.0%
Large Group 2.8% 11.6%
2004 3.0% 24.5% 10%
2003 5.0% 20.0% 9.4%
2002 4.0% 25.0% *
*Information unavailable at time of printing.
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Plan History of Elk River
ULoss Ratio PMPM
Year Premiums Claim Rate Change
10 Claims Amount
Average
2006 n/a n/a +20.6%
I2005* Paid to June 05
Jan—Apr 05 98% $241.92 +15.91%
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2004
2003 117% $217.55
$204.35 +16.9%
105% +13.4%
2002 90% $140.34 +4%
I *In-active High Cases: Jan-Dec 03 $65,012
Jan-Dec 04 $38,804
Jan 05 $19,299
IAverage Plan Rate History of Elk River
I Year Single Rate Family Rate
2006 $311.00 $1,173.50
2005 $258.00 $ 973.00
I 2004 $222.50 $ 839.50
2003 $205.32 $ 775.12
2002 $184.39 $ 696.10
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0 How Rates are Determined
The rates given by the Service Cooperative are considered self-insured, as Elk River is
solely responsible for all claims up to $50,000 per employee per year. (This is the
I specific stop-loss amount for 2005. For 2006, stop-loss may increase to $75,000 per
employee per year.)
I Specific percentages of past year's claim experiences are used to calculate a full year of
experience for a self-insured rate. For the 2006 renewal, 36% of 2003 claims, 56% of
2004 claims and 8% of 2005 claims (Jan—Apr) were used.
IDemographic History of Elk River
The average age of your group is currently 41.13 years. Average age, number of
Iemployees and dependents can impact overall rates. All plan members total 85.
Employee Count
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Year Total Sgl/Fam
2006 30 5/25
2005 30 7/23
I 2004 27 5/22
2003 26 3/23
2002 25 4/21
lip
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I2006 Health Plan Amendments
Out of Pocket Maximum: The in-network out of pocket maximum will be reduced from
110 $2,500 to $1,500 per calendar year.
Emergency Room Copay: The emergency room copay will increase from $60 to $75.
Pharmacy Network: The current National Drug Network is being replaced with the
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Select Drug Network.
Prescription Drug Benefit: The prescription drug benefit will change to a 3-tier benefit--
$5 Copay for generics, $30 Copay for formulary brand names, and $45 Copay for non-
' formulary brand names with mandatory generic.
Health Plan Cost Control Options
IThe following options for cost reduction/control are available:
1.) Change plan products within the Cooperative
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• BCBS CMM $15 Copay Plan (see attached benefit summary)
Avg Rates: $293.00/Single, $1,105.00/Family
• BCBS CMM $25 Copay Plan (see attached benefit summary)
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Avg Rates: $287.50/Single, $1,084.50/Family
• BCBS $300 Deductible CMM Plan (see attached benefit summary)
Avg. Rates: $276.00/Single, $1,041.00/Family
I • Other options also available—will discuss at renewal meeting
2.) Conduct a market search for plan bids outside the Cooperative
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• Review plans and rates from other carriers
• This will require employees to complete applications and/or waivers
III 3.) Review internal contribution strategy
• Regional benchmarking compared to current
Example: Minnesota union employers pay 82.5% of the average single
premium. For non-exempt clerical and technical employees, Minnesota
employers pay 77.3% of the average single premium.
Source: Employers Association, 2005/2006 Policies and Benefits Survey
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• National benchmarking compared to current
Most of the above options were seriously considered and reviewed during the 2005
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renewal process last year. However, no decisions were made at that time.
Thank you for this opportunity to present your 2006 health plan renewal! Please contact
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me with any questions you may have regarding the attached materials.
Sincerely,
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IJodi Berge CEBS
Enc.
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