MONROE - After comparing its present employee health insurance plan with one offered by WPS, the City of Monroe Insurance Committee voted Tuesday to retain its present self-funded policy, but to add tail coverage.
Tail coverage will reduce the risk to the city for claims made after the policy is terminated, if the city decides to change insurance providers at a later date. But it also will give the city a better opportunity to change policies.
Without tail coverage, the city would be solely responsible for paying expenses incurred during the policy term, but whose claims are made after a policy is terminated.
A new policy may not pick up those late claims, or may not pick up enough of them.
The city currently is responsible for up to $50,000 per claim, plus another $50,000 total for all claims that exceed the first level.
Once the second tier of $50,000 is used up, the insurance company comes into play for claims over the initial $50,000.
The city also pays about $30,000 in administrative fees and $187,000 in stop loss premium for the plan.
In total, the city's annual maximum liability is about $1.9 million.
The city was looking at changing insurance providers in an effort to reduce the financial risk to the city and for lower premiums.
The WPS plan would have provided less risk, for the same benefits for employees, at a fixed premium of $1.6 million.
But the run-in claims were estimated at only $111,000, which is too low, Mayor Ron Marsh said. The average monthly claims for 2008 have been $122,000.
Without knowing exactly what the cost of outstanding claims may amount to, the committee decided the risk was too great to change policies this year.
The tail coverage will cost the city an extra $7,000 to $8,000, which the committee believes can be scraped together from interest-bearing accounts and from savings on premiums after employees agreed to pick up a 2.5 percent share of the premium costs during recent union negotiations with the city.
Committee members also expect to educate employees about the value of preventative medicine and the use of wellness centers over the next year.
The city has self-funded its insurance plan for about 10 years.
Tail coverage will reduce the risk to the city for claims made after the policy is terminated, if the city decides to change insurance providers at a later date. But it also will give the city a better opportunity to change policies.
Without tail coverage, the city would be solely responsible for paying expenses incurred during the policy term, but whose claims are made after a policy is terminated.
A new policy may not pick up those late claims, or may not pick up enough of them.
The city currently is responsible for up to $50,000 per claim, plus another $50,000 total for all claims that exceed the first level.
Once the second tier of $50,000 is used up, the insurance company comes into play for claims over the initial $50,000.
The city also pays about $30,000 in administrative fees and $187,000 in stop loss premium for the plan.
In total, the city's annual maximum liability is about $1.9 million.
The city was looking at changing insurance providers in an effort to reduce the financial risk to the city and for lower premiums.
The WPS plan would have provided less risk, for the same benefits for employees, at a fixed premium of $1.6 million.
But the run-in claims were estimated at only $111,000, which is too low, Mayor Ron Marsh said. The average monthly claims for 2008 have been $122,000.
Without knowing exactly what the cost of outstanding claims may amount to, the committee decided the risk was too great to change policies this year.
The tail coverage will cost the city an extra $7,000 to $8,000, which the committee believes can be scraped together from interest-bearing accounts and from savings on premiums after employees agreed to pick up a 2.5 percent share of the premium costs during recent union negotiations with the city.
Committee members also expect to educate employees about the value of preventative medicine and the use of wellness centers over the next year.
The city has self-funded its insurance plan for about 10 years.