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HomeMy WebLinkAboutMinutes - Health Care Benefits Trust Board - 2/18/2025MINUTES HEALTH CARE BENEFITS TRUST REGULAR SESSION February 18, 2025 KACHINA CONFERENCE ROOM 11000 N. LA CAÑADA DRIVE REGULAR SESSION AT OR AFTER 10:00 AM CALL TO ORDER The meeting was called to order at 10:03 a.m. ROLL CALL Present: Frank Trembulak, Chair Dave Gephart, Vice Chair Harry Greene, Member Jennifer Marek, Member Absent: Mark Parston, Member Staff Present:Jennifer Inboden, Board Secretary Andrew Votava, Human Resources Director Tobin Sidles, Legal Services Director Eric Rustand, CBIZ Business Unit President Sonya Martinez, CBIZ Account Executive CALL TO AUDIENCE - There were no speaker requests. REGULAR SESSION AGENDA 1.REVIEW AND APPROVAL OF THE DECEMBER 3, 2024 REGULAR SESSION MEETING MINUTES Motion by Chair Frank Trembulak, seconded by Member Jennifer Marek to approve the December 3, 2024 regular session minutes. Vote: 4 - 0 Carried 2.PRESENTATION AND DISCUSSION OF THE MEDICAL AND PHARMACY EXPERIENCE REPORT THROUGH DECEMBER 2024 Sonya Martinez, CBIZ Account Executive, presented the Medical and Pharmacy report for the first half of the 2024-2025 plan year. She started with the Year over Year Financials and pointed out to the Trustees that this year is not normal compared to the past five plan years. The Total Medical/Pharmacy Claims Paid are trending lower than the prior plan year at $1.17 million compared to $1.49 million a year ago. The Net Medical/Pharmacy Paid Claims Per Employee Per Month (PEPM) are at $562.70 compared to $737.63 a year ago. 02/18/2025 Minutes, Health Care Benefits Trust 1 Vice Chair Gephart asked if the Town has ever seen the Net Medical/Pharmacy Paid Claims PEPM at this low of a level halfway through the plan year. Ms. Martinez answered, "No." She reminded the Trustees that the Plans run July - June, but the deductible and out-of-pocket maximum accumulators reset on January 1 each year. Eric Rustand, CBIZ Business Unit President, added that the Town has not seen claims this low in a decade. He stated that compared to other businesses in the area, the Town's claims are lower PEPM. Ms. Martinez explored why the claims are lower than usual. She checked to see if members are not utilizing the plan as much as in prior years. She found that members are utilizing the plan, but a high number of claims are for preventive care which are not high cost claims. Andy Votava, Human Resources Director, reminded the Trustees that the Town started a new wellness plan with incentives this year. Although there is not enough data yet, perhaps this is a contributing factor to the high number of preventive care claims. Ms. Martinez continued by reviewing the paid claims and administration information for all plans combined. Ms. Martinez reminded the Trustees that even though the Town has two plans, underwriters will look at the Town in aggregate when determining pricing. The average enrollment midway through the plan year is 313. The amount paid for medical claims through December was $829,000. The amount paid for Rx claims was $342,000 and there have been $115,000 in Rx rebates. Ms. Martinez explained that the Rx rebates occur because the Town has low utilization of specialty medications. Trustee Parston arrived at 10:12 a.m. The total paid claims are $1.05 million YTD; with the admin fees of $431,000 and HSA contributions of $154,000, the total claims and admin fees for the first half of the plan year are $1.64 million. The loss ratio for expected claims is tracking at 67% and at 49% against maximum liability. Ms. Martinez reminded the Trustees that these percentages only include claims, not admin fees or HSA contributions. The claims and admin fees PEPM is at $874 through the 2nd quarter. The plan is running at 74% against budget. This 74% figure includes claims and admin fees, but not HSA contributions. Ms. Martinez continued to review the report and focused on the High Deductible Health Plan (HDHP). This plan is tracking at 60.5% of expected liability or 48% of maximum liability. The claims and admin fees PEPM is $761 through December. For reference, the prior plan year ended at $727 PEPM. The membership of the HDHP has been increasing every year for the past few years. The HDHP plan is running at 68% against budget. The PPO plan is tracking at 89% of expected liability or 71% of maximum liability with claims and admin fees PEPM at $1,165 through December. For reference, the prior plan year ended at $1,216 PEPM. The PPO plan is running at 89% of budget. Mr. Rustand added that he believes the Town has saturated enrollment in the HDHP plan. New hires may join the HDHP, but the enrollment percentage of 65% in the HDHP plan will remain fairly constant. Next Ms. Martinez reviewed the year-over-year comparison and reminded the Trustees that the numbers on this page are very conservative. The 2023-2024 plan year finished at $3.4 million; the estimated annualized cost for the 2024-2025 plan year is $3.7 million with an expected increase of 9.8% or $335,000 from the prior year. These estimates are based on the trajectory of how the plans are being utilized. Ms. Martinez finished by going over the large claims over $50k report. There continues to be just one large claimant of $62,000 which is 5.4% of total medical and Rx claims. Mr. Rustand added that 5.4% is about 30% below the norm of what is typical to see for large claimants. Vice Chair Gephart asked Mr. Votava what the strategy is for passing savings to the Town and employees. Mr. Votava answered that the trust will be at the top of the 9-month reserve. As a reminder, the Town has two years to use down the reserves. There will be discussion about premium strategy. He noted that if the Town spends more, it will be in the wellness area to continue the goal of having healthier members by lowering A1C, cholesterol and blood pressure. Trustee Greene asked if anti-diabetes or weight-loss drugs are covered. Ms. Martinez answered that they are covered if they are prescribed to control diabetes, but not for weight-loss purposes. Mr. Rustand mentioned that two things that are working both for and against the Town's plans is the fact that the stop loss market is hardening. Stop loss renewal rates are higher than they used to be with increases of 15-18% rather than 9-10%. Much of this is due to the natural disasters around the country 02/18/2025 Minutes, Health Care Benefits Trust 2 since stop loss coverages are property and casualty policies. Another factor that will impact renewal rates is pharmacy costs. There may be new legislation regarding lowest net cost at the point of sale for members which would cause a movement away from pharmacy rebates. Finally, there was a ruling at the district level to give states the power to regulate self-funded plans. Vice Chair Gephart asked at what point does the hardening of the stop loss market become unfeasible to the point that a plan considers taking on the risk themselves. Mr. Rustand answered that employers of the Town's size are almost always going to carry Individual Stop Loss (ISL) and Aggregate Stop Loss (ASL) coverage. As an employer grows to around 2,000 member lives, they may drop ASL but they will always keep ISL. 3.PRESENTATION AND DISCUSSION OF THE FUND BALANCE REPORT THROUGH DECEMBER 2024 Vice Chair Gephart reviewed the fund balance report through the end of the second quarter. He compared the second quarter of the 2024-2025 plan year to the end of the prior plan year. The cash balance in December 2024 increased $742,000 over where it was in June 2024. Total assets increased from $3.9 million to $4.25 million. The fund balance increased from $3.4 million to $3.9 million demonstrating that the financial position of the fund continues to strengthen. Vice Chair Gephart continued to review the income statement and compared the state of the fund at the end of December 2024 to where it was a year prior at the end of December 2023. Revenues are $171,000 greater than a year ago which can be attributed to the premiums. Employer-paid premiums increased $130,000 and Employee-paid premiums increased $14,000. Also notable is the increase in investment income from $42,000 a year ago to $72,000 at the end of 2024. Chair Trembulak asked if there are restrictions on investments. Vice Chair Gephart answered that there are restrictions. Investments are very conservative in treasuries with nothing less than an "A" rating. Claims activity is down from $1.58 million a year ago to $1.22 million at the end of 2024. At this time, the Town is starting to receive data on the wellness program so adjustments have been made to the balance sheet to adequately reflect the investment in wellness. This explains the increase in expenditures for the wellness program from $6,700 a year ago to $35,600 at the end of 2024. Trustee Parston asked if there is a way to determine if the investment in wellness is paying off. Ms. Martinez explained that this question will be easier to answer in November 2025 once the Town has a full year of data on the new wellness program. Vice Chair Gephart finished by pointing out that the fund balance has increased from $3.4 million at the end of the 2023-2024 plan year to $3.9 million at the end of December 2024. ADJOURNMENT Motion by Member Harry Greene, seconded by Vice Chair Dave Gephart to adjourn the meeting at 10:43 a.m. Vote: 5 - 0 Carried I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Health Care Benefits Trust Board held on the _18th_ day of _February, 2025_. I further certify that the meeting was duly called and held and that a quorum was present. Dated this _20th__ day of _February_, 2025. ______________________________ Jen Inboden 02/18/2025 Minutes, Health Care Benefits Trust 3 Senior Human Resources Analyst