Daemen College Health Insurance

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1 Background: Daemen College Extremely difficult budget year: Downturn in enrollment? Every FTE lost =$25, FTE = $254,550 Minimum wage increases $8.75; $9.00; $9.70 in 2016 end of year = $40,000 Increase of $21,000 in workmen s compensation 2% wage increase would be $423,000 Health insurance increase > $200,000 Increases in matrix for student merit awards - $830,000 increase 20 new position requests = $853,000 Total budget request increases = $2.3 million Capital budget items of $3.2 million requested

2 Fast Facts: HWBCEI (Consortium) member through 5/31/ Membership = 7 colleges; Gow school; charter school - Niagara U, Trocaire, Hilbert, Medaille, St. Bona, D Youville - First Niagara Bank serves as consultant to Consortium Daemen s present Plan: - 2nd largest college cost after payroll, approx. $4 million subscribers 121 single; 195 family - Current Monthly Rates: Single $511; Family $1,330

3 Chronology of Events: Daemen College Early 2015, Consortium begins exploring self-funding health insurance (minimum 6 quarters ago). Data shows 83% of large plans self-insure Progress and significant savings reported at Consortium meetings shared with the Daemen Board of Trustees Business Committee over that time Recently the Consortium determined it wasn t eligible to self-fund Consortium turns its attention to a minimal version thereof, diminishing significantly the premium impact; reports at January 2016 meeting

4 Chronology of Events, continued: Consortium receives 2016/2017 renewal rates from Blue Cross, February 7, 2016, an increase of 5.1%. Consortium requests two votes from membership at March 29, 2016 meeting staying/leaving Consortium and self-fund or continue fully insure health insurance program Daemen begins exploring self-funding on its own in February, 2016, securing quotes for similar plans to that in existence, with Independent Health and Univera

5 Chronology of Events, continued: The fully insured and self-funded plan options were presented to the Business Affairs Committee of the Board at its meeting in mid-march, Self-funded plan with savings of $400,000 over existing Blue Cross plan presented as best cost option. - Lead to a decision to continue to explore self-funding over next week and opt out of the Consortium given the cost savings available to Daemen College. Final decision to self fund needed by April 1 After further discussion of concerns of faculty members of the Committee, a decision to explore the matter further to be followed by a special meeting of the Business Affairs Committee prior to April 1.

6 Chronology of Events, continued: Faculty petition President with concerns and request a meeting with VP of Business Affairs and HR Director to discuss options, leading to today s meeting Concerns: - portability of coverages when traveling - lack of RFP for insurance agent; all insurance eggs in one basket if certain agent selected - analysis of quotes/costs/benefits/plan designs/cash flows - privacy of health care claims data; Daemen versus Consortium claims

7 Fully Insured and Self-funded plans A fully insured plan requires the purchaser to pay premiums designed to cover contracted claims, administrative costs and insurer profits. Claims risk is borne by the insurer and results in an experience rating used to influence the following year calculation of premium charge to the insured. Good experience rating (fewer than anticipated claims) results in a lower premium than would a bad experience rating Self insured coverage costs are based on claims, and administrative costs. Risk of claims is with the insured, not the insurer. The insured contracts with the insurer to provide health coverage, and generally purchases stoploss insurance to limit exposure on one particular claim as a means of controlling claim cost

8 Handout of comparison data: - Current consortium plan (fully insured) - BCBS fully insured plans (3) with different options - Independent Health and Univera fully insured plans - Self-funded Independent Health plan

9 Affect of potential 5% increase in employee contribution: Single pay period 2015/2016 Employee Deductibles Family pay period Single - yearly Family yearly $10.40 $16.64 $ $ $34.32 $60.32 $ $1, $57.20 $ $1, $2, $64.48 $ $1, $2, $68.64 $ $1, $3, /2017 Employee Deductibles Increase Single Family Single Family $10.93 $17.49 $ $ $36.07 $63.40 $ $1, $60.12 $ $1, $2, $67.77 $ $1, $2, $72.14 $ $1, $3,279.12

10 Next Steps: Determine the plan to accept strongly leaning to accepting the BCBS plan similar to that in existence now and contracting with the same agent Set up a health insurance task force committee to study health insurance options over the next 8 months culminating in a recommendation to Daemen management such that the plan can be put in place by the year. Such a study will include fully insured and self-funded payment methodologies, analysis of agents to represent the college and assist in claims management, plan design, access, portability, etc.