Finance Committee (Meets 4th Tuesday of each month at 4:30 p.m.)

Finance Department Phone: (715) 395-7291 1316 N 14th Street Fax: (715) 395-7292 Superior, WI 54880 To: Councilor – Jack Sweeney (Chair) September 20, 2022 Councilor – Tylor Elm (Co‐Chair) Councilor – Mike Herrick Councilor – Jennifer Van Sickle (Alt) From: Deb Kamunen – Assistant Finance Director Finance Committee Mission Statement: To have broad oversight of financial policies and procedures, and to provide the City Council and management with such financial expertise, opinion, and recommendations as will be helpful for the Council to make decisions regarding the financial stability of the City of Superior. **** SPECIAL FINANCE COMMITTEE MEETING AGENDA **** Please note this is a SPECIAL MEETING of the Finance Committee; regular meetings will continue to be held monthly on the 2nd Thursday at 4:30pm of each month. A Special Finance Committee meeting is scheduled for Thursday, September 22, 2022 at 4:30 p.m. in Room 217 of the Government Center. The public may also access this meeting online with Google Meet by pressing CTRL + click to follow the link or copying and pasting the address into a web browser: Join with Google Meet meet.google.com/ewe-oquw-vqj Join by phone (US) +1 484-841- 8161 PIN: 498 231 381# The following items will be discussed at the Special Finance Committee meeting: 1. Review of the proposal submitted by Baker Tilly US, LLP for 2023 auditing services. 2. Request for Approval of the 2023 HealthPartners Group Insurance renewals. 3. Request from Assistant Finance Director Deb Kamunen for approval of the 2023 Self Insured Health Fund Budget, 2023 Health and Dental Insurance Rates and funding of HSA/HRA deductibles for 2023. If you are unable to attend this meeting, please contact Deb Kamunen at 715‐395‐7293. Cc: Mayor Jim Paine KDAL Radio Taylor Pedersen City Council Members WDSM Radio Peter Luke City Clerk’s Office WEBC Radio Kyle Hawley Bulletin Board Duluth News Tribune Department Heads Superior Telegram Notice is hereby given that a quorum of the City Council may be present. No action will be taken other than the items listed on this agenda. *********************************************************************************************************************************** Pursuant to the Americans with Disabilities Act of 1990, if you are in need of an accommodation to participate in the public meeting process, please contact the City Clerk’s Office at (715) 395-7200 prior to the scheduled meeting. The City will attempt to accommodate any request depending on the amount of notice received. TDD (715) 395-7521. *********************************************************************************************************************************** In compliance with Wisconsin Open Meetings Law, this agenda was: Posted: Government Center, Court House, Public Library Faxed to: Daily Telegram, Public Library, September 20, 2022 Media notified and mailing list: September 20, 2022 Superior Telegram to sign and fax verification of receipt to fax number (715‐395‐7292) __________________________________________________________ Name Date  Finance Department Deb Kamunen, Assistant Finance Director Phone: (715) 395‐7293 1316 North 14th Street, #235 Fax: (715) 395‐7292 Superior, WI 54880 E‐mail: kamunend@ci.superior.wi.us Website: www.ci.superior.wi.us September 19, 2022 Finance Committee Meeting Date: September 22, 2022 TO: Mayor Jim Paine and Members of the Finance Committee FROM: Deb Kamunen, Assistant Finance Director RE: 2023 Health and Dental Plan Renewal Recommendation Introduction/Background The Health Insurance Committee (HIC) is recommending 2023 renewal of our self‐insured health plan and dental plan with HealthPartners. The HIC is recommending to renew the current health plan (Attachment B) with HealthPartners. The renewal was presented with two options ‐ $2,800 deductible for single and $5,600 deductible for family coverage which is the current 2022 deductible amounts for single/family coverage and $3,000 deductible for single and $6,000 deductible for family coverage which is the new IRS minimum needed in order to offer a high‐deductible health savings account (HSA). If the current deductible amounts of $2,800 single/$5,600 family would be recommended, then the City could not offer a HSA. In order to continue to offer the HSA, the HIC had no other choice but to recommend to renew at the $3,000 single/$6,000 family deductible option. Additionally, the HIC recommended to keep the HSA funded by the City at 50% with the other remaining 50% to be paid by the employee. The HIC is recommending renewal of a Dental plan (Attachment B) with HealthPartners. The recommendation is to maintain the current plan design which includes an annual maximum of $1,500 in coverage. Budget Source/Fiscal Impact Health Insurance fees are paid out of Fund 817, Self‐Insured Health Fund. The renewal rates set for Health Insurance is at the 10% premium increase which is slightly below the expected claims increase which has a shortfall of $206,836 which will be absorbed by the Self‐Insured Health Fund. This recommended Health plan has an expected cost of $6.710 Million with a maximum cost of $8.222 Million. The recommended Dental plan has an estimated expense of $213,399. Recommendation I am requesting that the Finance Committee recommend the selected HealthPartners renewals to the City Council for approval.  MEMORANDUM Finance Committee Meeting Date: September 21, 2022 Date: September 16, 2022 To: Mayor Jim Paine & Members of the Finance Committee From: Lee Sandok Baker & Bob Zimmerman, Co-Chairs, Health Insurance Committee RE: 2023 Health and Dental Plan Renewal Recommendation Introduction/Background The Health Insurance Committee (HIC) reviewed renewal cost spreadsheets provided by Assistant Finance Director Kamunen. The HIC explored options to raise rates to cover maximum exposure at 35.5%, to cover expected exposure at 13%, to set rates slightly below expected claims at 10%, and with rates set well below expected claims at 6.6%. Recent renewal rates have been set slightly below expected claims with the Health Insurance Fund absorbing any excess. Kamunen said that the Health Insurance Fund remains relatively healthy, and that the Finance Department has budgeted for a 10% rate increase for 2023. MMA and HealthPartners said that similar employers are seeing similar increases. The dental insurance rates are not increasing at all. Recommendation The HIC recommends the 10% premium increase, and maintaining the city’s H.S.A. contribution at 50% of the IRS required HDHP deductible.  HealthPartners Self-Funded Cost Illustration (Page 1 of 2) Company Name: City Of Superior Wi - 20045 Proposed Effective Date: 1/1/2023 Contract Basis: Paid $150,000 Specific Deductible per Member (Unlimited Lifetime Maximum) Aggregate Attachment Point 125% of Expected Claims Monthly Projected Administrative Fee Contracts Members Current Renewal Cost Increase Single 98 98 $5.85 $3.24 $317 Single + 1 61 122 $11.95 $6.62 $404 Family 111 434 $18.04 $9.99 $1,109 Total 270 654 $12.24 $6.78 $1,830 -44.64% Specific Stop-Loss Single $80.93 $88.21 $8,645 Single + 1 $169.33 $184.57 $11,259 Family $257.98 $281.20 $31,213 Total $173.69 $189.32 $51,117 9.00% Aggregate Stop-Loss Single $3.60 $3.60 $353 Single + 1 $7.53 $7.53 $459 Family $11.46 $11.46 $1,272 Total $7.72 $7.72 $2,084 0.00% Broker Service Fee $0.00 $0.00 $0 #DIV/0! Claims Fiduciary Fee $0.31 $0.31 $84 0.00% Cancer Management $0.00 $0.70 $189 #DIV/0! Healthy Pregnancy - No Incentive $0.00 $0.32 $86 #DIV/0! Low Back - Employee Only $0.00 $0.43 $116 #DIV/0! Total Fixed Costs Single $90.69 $96.81 $9,488 Single + 1 $189.12 $200.48 $12,229 Family $287.79 $304.41 $33,789 Total $193.96 $205.58 $55,506 5.99% Fixed Costs will be billed monthly based upon actual enrollment. Claim Cost: Current Monthly Renewal Monthly Monthly Contracts Expected Attachment Expected Attachment Attachment WI175 HSA - $2800-100% E - Creditable Claims Rates Factors Claims Rates Factors Factors 16.00% Single 98 $750.55 $938.19 $870.64 $1,088.30 $106,653.16 Single + 1 61 $1,567.01 $1,958.76 $1,817.73 $2,272.16 $138,602.03 Family 111 $2,390.97 $2,988.71 $2,773.53 $3,466.91 $384,826.62 Total 270 $1,609.40 $2,011.76 $1,866.91 $2,333.64 $630,081.81 $3000x2 Ded; 100% Coins; 100% Open Form Rx; $3000x2 OOP Emb HSA - Creditable Single 0 $0.00 $0.00 $858.24 $1,072.80 $0.00 Single + 1 0 $0.00 $0.00 $1,791.85 $2,239.82 $0.00 Family 0 $0.00 $0.00 $2,734.04 $3,417.55 $0.00 Total 0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! $0.00 * Rates assume group will be contributing $1400-S/$2800-F toward the employee's HSA. * Refer to healthpartners.com/creditable-coverage for creditable coverage determination method and details. Annual Expected Claims Rate Costs: $6,048,786 Total Annual Expected Costs: $6,714,854 Total Annual Maximum Costs: $8,227,050 Minimum Annual Attachment Point (90% of Annual Attachment Point) will be determined based on first months enrollment. * Excess Risk Insurance Coverage is provided by HealthPartners Insurance Company. * Third Party Administrative Services provided by HealthPartners Administrators, Inc. * Quote will expire on: 1/1/2023 * Claims Shared Savings Fee: 3% of claims savings generated by HPAI through: Negotiated provider discounts or other fee arrangements; code review; prior authorization and application of timely filing limitations. Fee does not apply to dental claims, pharmacy claims or non-covered member expenses. * The Claims Shared Savings Fee is estimated to be $96,000 annually. * Rebates are used to lower your administrative fee using the book of business estimated rebate value of $25.22 PMPM. * Quote is contingent upon the Underwriting Requirements and Provisions. Print Date: 8/17/2022 City of Superior (2023)SI_WWI  HealthPartners Self-Funded Cost Illustration (Page 2 of 2) Company Name: City Of Superior Wi - 20045 Proposed Effective Date: 1/1/2023 Contract Basis: Paid $150,000 Specific Deductible per Member (Unlimited Lifetime Maximum) Aggregate Attachment Point 125% of Expected Claims Claim Cost: Renewal Monthly Expected Attachment $3000x2 Ded; 100% Coins; 100% Open Form Rx; $3000x2 OOP Emb HSA - Creditable Claims Rates Factors Single $860.22 $1,075.27 Single + 1 Includes Omada Hypertension and Diabetes Prevention Programs $1,795.97 $2,244.97 Family $2,740.33 $3,425.41 * Rates assume group will be contributing $1400-S/$2800-F toward the employee's HSA. Print Date: 8/17/2022 City of Superior (2023)SI_WWI  Self-Insured Coverage Requirements For City Of Superior Wi Renewal Date: January 1, 2023 HealthPartners is proud to offer you and your employees high quality health care at a competitive cost. Our dedication to quality, cost management, and service lays the foundation for better health and financial value. Below you'll find an outline of the assumptions we used to provide you with the best price for your plan. These coverage requirements ensure an equitable and adequate risk pool, and must be met and maintained in order for your offer to be valid. If you have questions, please contact your HealthPartners sales representative. As you read below, please keep in mind that "employee" means all employees eligible for health plan coverage whether or not he/she has elected health plan coverage offered by the employer. "Participant" means an employee who has elected health plan coverage offered by the employer. n Please refer to the benefit summary for a description of the benefit package corresponding to this offer. Because any changes or revisions may result in an adjustment to the rates and rating factors, please let us know of these changes as soon as possible. n Brokerage firms may receive additional compensation based on volume and net growth. This compensation is commonly known in the industry as a bonus or override. HealthPartners also recognizes additional time, resource allocation, and effort when our collaborative sales approach is utilized. n Increases or decreases in the number of eligible employees by more than 10% may affect plan rates. The effective date of any rate change would be the date of the increase or decrease in employees. n We are pleased to offer you the following contract arrangement: Incurred on or after the inception date and paid within the policy period (Paid). n At your request, HealthPartners will provide our standard reports to external stop loss vendors in the event an individual or the group exceeds the attachment point. n We calculate specific stop loss benefits on a per covered member basis. This means covered expenses for a member accumulate to the specific stop loss deductible. n When you purchase excess risk coverage through HealthPartners Insurance Company, a Unlimited per individual lifetime benefit limit applies. n HealthPartners' minimum participation standard is at least 50% of all eligible employees must participate in the employer sponsored plan(s) regardless of waivers. If this minimum participation level is not met HealthPartners may add a risk adjustment to the rates. n The employer must contribute a minimum of 50% of the lowest-cost premium for all employees in each eligible class. n Employees who waive coverage may receive up to 50% of the pre-tax single premium in cash or cash-equivalent in lieu of medical coverage. Employees who exercise this option must have other group medical coverage. n Excess Risk coverage (stop loss insurance) is provided by HealthPartners Insurance Company, a licensed wholly owned insurance company of HealthPartners. n If you purchase aggregate stop loss coverage, specific stop loss is required. n If changes are made to your specific stop loss level, it may affect stop loss rates, expected claims rates and aggregate attachment factors, so please let us know of any changes as soon as possible. n Our offer assumes that HealthPartners is sole carrier and that everyone enrolled in the employer-sponsored plan is enrolled in the HealthPartners plan(s). n Rebates have been used by HealthPartners Administrators, Inc. to lower your administrative fee. In the event state or federal laws or regulations reduce or eliminate the availability of rebates or if process changes result in rebates being provided at point of sale, HealthPartners may adjust the administrative fee to offset the reduction in rebates retained by HealthPartners. n We are pleased to include the HealthPartners® RxRevealed Guarantee as part of this proposal. Details of this guarantee are provided separately. n If you do not contribute to the cost of early retiree coverage, up to 20% of your enrollment can include early retirees. n Claims Shared Savings Fee: 3% of claims savings generated by HPAI through: Negotiated provider discounts or other fee arrangements; code review; prior authorization and application of timely filing limitations. Fee does not apply to dental claims, pharmacy claims or non-covered member expenses. n Assumptions Specific to Empower HSA Plan: See the cost illustration for assumptions regarding group contribution towards the annual deductible on the HSA plan(s). HealthPartners will notify employees covered on HealthPartners plans of the special enrollment detailed in the Federal Register 2590.701-6. It is the responsibility of the employer to notify those employees who are not enrolled in the HealthPartners coverage of their special enrollment rights. Did you know that if 5% of employees used an employee assistance program (EAP), an employer could potentially save an estimated 3.45% of payroll in reduced absenteeism and improved productivity? Contact your HealthPartners sales executive for more information. Thank you for the opportunity to provide you with rates for the upcoming year. We look forward to being your partner for better health in the next year and for years to come.  Self-Funded Renewal Calculation Group Name: City Of Superior Wi [20045] Current Product: Open Access Choice SI Current Packages: DW910 Claims Period: Jun 2021 through May 2022 Renewal Period: Jan 2023 through Dec 2023 Date Prepared: 7/7/2022 Financial Summary In Network Out-of-Network Net Paid Claims $178,442 $116,794 $61,649 General Administration $15,530 Total Expenses $193,972 Renewal Calculation Projected Expenses Net Paid Claims $178,442 Benefit Adjustment Factor 1.046 Total $186,585 Adjusted Trend (Annual Trend: 3.44%) 5.50% Expected Annual Claims $196,845 General Administration $16,554 Subtotal $16,554 Total Claims and Administration $213,399 Current Administrative Fee (PEPM or % of Claims) $5.59 Renewal Administrative Fee (PEPM or % of Claims) $5.79 Percentage Change 3.5% 0.0% broker commission  Self-Funded Renewal Calculation Group Name: City Of Superior Wi [20045] Current Product: Open Access Choice SI Current Packages: DW910 Claims Period: Jun 2021 through May 2022 Renewal Period: Jan 2023 through Dec 2023 Date Prepared: 7/7/2022 Renewal Fee Display Enrollment Average Current Contracts Contracts Employee 92 90 Employee + 1 19 44 Family 128 101 Total 238 235 Estimated Claim Rate Admin Fee Total Employee $25.22 $5.79 $31.01 Employee + 1 $55.48 $5.79 $61.27 Family $102.01 $5.79 $107.80 69.68 -7.17% Renewal of this plan and rates are contingent upon meeting HealthPartners Dental underwriting requirements. Underwriting Requirements - Large Group Contributory Plans  Employer must have a group medical plan, preferably with HealthPartners  Annual Open Enrollment required; if coverage is waived, employee must have a qualifying event to receive coverage prior to the next open enrollment period Participation Requirement: Minimum of 51 enrolled employees to equal at least 75% of all eligible employees Contribution Requirement: 50% employer contribution (or more) of the single premium Rates assume employer maintains current contribution strategy for the duration of this agreement  Finance Department Deb Kamunen, Assistant Finance Director Phone: (715) 395‐7293 1316 North 14th Street, #235 Fax: (715) 395‐7292 Superior, WI 54880 E‐mail: kamunend@ci.superior.wi.us Website: www.ci.superior.wi.us September 20, 2022 Finance Committee Meeting Date: September 22, 2022 TO: Mayor Jim Paine and Members of the Finance Committee FROM: Deb Kamunen, Assistant Finance Director RE: 2023 Health and Dental Insurance Rates, Budget and HSA/HRA funding Background The City of Superior has long provided a self‐funded health insurance plan to its employees. In 2018 the City realized an increased number of catastrophic claims that drew down the reserve levels. Since that time, the City has tried to keep costs contained by implementing new strategies. Cash Flow and Reserves The health insurance fund reserves fluctuate throughout the year. As of today, the reserves are at $785,379.29. COVID‐19 continues to have a large impact on the claims. Many appointments and procedures which were delayed during the early years are now being scheduled. The trend is expected to continue into next year and then level off according to HealthPartners. Premium Rates 2023 I am proposing a 10% increase to health and dental insurance rates to cover almost all of the expected costs. There is a small shortfall of $202,836 which will be absorbed by the Self‐Insured Health Fund, if needed. 2023 Health Insurance Operating Budget The budget presented for 2023 will provide funding for anticipated claims and administration, stop loss insurance, the wellness program, the employee assistance program, SuperiorUSA HAS, HRA and flexible spending programs. Recommendation I am requesting the Finance Committee approve the 2023 health and dental rates, the 2023 health and dental insurance budget, and approve funding of HAS/HRA deductibles for 2023. Analysis of 2023 Health Insurance Rates (this does not include/analyze dental rates which are expected to stay the same as 2022) Monthly Per Person # of Group Annual Expected Monthly Fixed Costs Annual Fixed Costs Cost Annual Per Person Cost Members Claims Cost 9,488 113,856 871 10,448 98 1,023,873 12,229 146,748 1,818 21,813 61 1,330,578 33,789 405,468 2,774 33,282 111 3,694,342 55,506 666,072 5,462 65,543 270 6,048,793 Total Fixed and Expected Cost by Annual Health Cost # of Group Annual Cost per Group % of Overall Cost Required to Fund Amount Covered by Group Members Member 1,137,729 0.169434329 7,529,194 1,275,704 98 13,017.39 1,477,326 0.22000835 1,656,485.55 61 27,155.50 4,099,810 0.610557321 4,597,004.52 111 41,414.46 6,714,865 Monthly Cost per Member Based on HP Expectation 2023 Proposed Rates Difference % Difference $ 1,084.78 $ 1,065.13 $ 19.65 1.81% $ 2,262.96 $ 2,226.58 $ 36.38 1.61% $ 3,451.20 $ 3,395.30 $ 55.90 1.62%