HomeMy WebLinkAbout1979.02.21 CITY COUNCIL MINUTESMINUTES OF THE CITY COUNCIL MEETING
February 21, 1979
State of Idaho).
County of Madison(SS
City of Rexburg)
A meeting of the City Council for the City of Rexburg, Madison County, was held on Februa:
21, 1979, at the time of 7:30 O.M. at the City Hall. Present were the following:
Mayor: John C. Porter
Councilman: Barton Jensen
Jim Morris
Warren Porter
Nile Boyle
Morgan Garner
Also Present:
RE: APROVED THE MINUTES
Brent Moss, Acting City Attorney
Rose Bagley, City Clerk
Nile Boyle moved that the minutes of February 14, 1979, be approved, Jim Morris
seconded.
RE: MOVIE THEATER MOVING INTO THE SMALL MALL.
Ve Ann Clark was present requesting permission to bput a movie theater in the Small
Mall. Family type movies and some of the movies of the past would be shown. It would
be on the ground level at the far north side. Movies would be shown Wednesday through
Saturday. The name of the theater would be Cinema 16. There would be a matinee and
evening shows. It would have 117 to 130 seats. The council advised her that in order
to open the theatre she would have to arrange for parking and contact Mayor Porter.
The Council agreed that she could go ahead with the theater after she had arranged
for parking.
RE: SELF FUNDING INSURANCE PLAN
Mrs. Ann T. Kerr from Blackfoot was present to present a Self Funding Insurance Plan,
for the employees. The council will study the information given to them about the
insurance and make a decision at the next council meeting.
RE: GEORGE WILLMORE
Mayor Porter told the council that George Willmore had paid for 10 water & sewer
connects for his apartment house right after the flood and now he has decided
that he only needs 4 connects. He does owe the City a bill for sidewakk repair that
he damaged when he was demolishing the old Creamery building. The City paid for
replacing the sidewalk and he needs to in turn pay the City. Barton Jensen moved that
the City give ham a plumbing refund less the amount that he owes the City, Morgan
Garner seconded. All Aye.
RE: BILL FROM REXBURG MOTOR COMPANY
Mayor Porter gave the council a bill from Rexburg Motor Company for the difference
between the 1978 Garbage Truck that was bid and $he 1979 truck that they delivered.
Attorney, Brent Moss felt that there was a legal protalem because it had been bid.
Rexburg Motor Company had a legal obligation to meet the bid. If he could not meet
the bid, it would not make him low bidder. Mayor Porter will check the other bids
and contact the attorney.
RE: NORTH HIGHWAY WATER AND SEWER PROJECT
Earl Kemp was present to report on the North Highway water & sewer project. H&K
was having problems on getting the work done at this time of year and deverting
the water.
RE: COMPLAINTS ON NORTH 5TH WEST.
Mayor Porter stated that he had had some complaints on the road on North 5th West.
RE: BOR CLAIId
Mayor Porter stated that he had talked to Hugh Fowler, who had looked over our BOR
Claim. He told the mayor that there might be a problem on them paying the city crews,
because they thought the city should have paid them. He said that if they turn it
down to send the claim to the Federal Disaster Unit and they will pay. He advised
,; _,,
the Mayor to make a survey on the loss in tax revenues.
RE: BILLS
Barton Jensen moved that we pay the bills Morgan Seconded. All Aye.
RE: AUDIT REPORT
Merril Rudd and Joe Call presented the audit Report. They gave recommendations.
Mary Smith is to check on delinquent LID's and the council will then either take action
on them or write them off. Auditors also gave the Council a copy of recommendations,
which they will study and discuss at the next Council. Morgan Garner moved that we
accept the audit. Barton Jensen seconded. All Aye.
RE: ADJOURNMENT
Barton Jensen moved that the meeting be adjourned. Morgan Garner seconded. All Aye.
n ~,
John C. Porter
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CITY Clerk, Rose-;Bag,,Jey
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INTRODUCTION
Over the last few years many corix~~atii~n;~ have evaluated the
increasing costs associated with their :3roup medical
insurance programs and have sought ways to improve cash flow
and economize on employee benefits. This has given rise to
the self-insured concept.
Corporations have proven to themselves that by paying their
own medical claims and reinsuring for catastrophies, a
substantial cost savings can be realized.
Self-insured may be on a fully or partially self-funded
basis but in either case an insurance company assumes the
risk for cat~strophy type expense while the employer assumes
the risk for basic first dollar benefits.
THE CONCEPT OF SELF-FUNDING
In the long run and most often in the short run, an insured
group health plan will. be self-supporting. Through the con-
tinuous cycle of claims paid an premiums deposited and the
re-establishing of yearly "actuarially determined" rates, no
insurance carrier will continue a contract if it does nat
make a profit.
A profit to an insurance company is created by establishing
a formula in which income is expected to exceed expense.
Such expenses are:
A. Expected Claims (risk}
B. Administrative Overhead Expenses {10-18$}
C. Commissions (5-I0~)
D. Premium Taxes (2.2 - 5~)
E. Reserves for Claim Fluctuations {30-45~}
F. Contingencies for Inflation and Increased Plan
Utilization
The concept of partial self-funding was designed to elimi-
nate or substantially reduce the majority of these expenses
while, through a third party plan administrator, improved
claim processing can add further reduction in overhead and
administrative expense.
Companies such as City of Rexburg have found it to their
advantage to self-insure under the following Partial Funding
Method:
A. Under the Partial Funding Method, an employer
purchases a high deductible insurance
contract, {$500, $1,000, etc.)
B. Claims that do not exceed the deductible limit
are paid from the employer's reserves, claims
that do exceed the limit are paid by the
insurance carrier. (Such limits are $500,
$1,000, $1,500).
C. Life insurance coverage is totally insured by
the stop-loss insurance carrier.
ADDITIONAL REASONS TO CONSIDER SELF-FUNDING
A. Control of your own reserves.
B Retention cost may be eliminated entirely.
C. Greater claim control and flexibility. Claims
processing and administration may be adapted
specifically to your own requirements.
D. Constant monitoring of claims and the effective-
ness of benefit dollars spent.
E. Flexibility of plan and benefit design.
F. Improved employee understanding and appreciation
of their employer.
G. Realistic opportunity to see an end to constantly
changing insurance carriers and "putting your
program out to bid."
SUCCESS OF PROGRAM
The real key to success under a self-insured program lies
with the third party administrator. It is this service that
will, more than anything else, assure employee satisfaction
with the program.
It is proposed that City of Rexburg initiate its own
partially self-funded Group Medical Insurance Program.
The establishment of such a program is accomplished in the
following manner:
City of Rexburg forms an Employee Medical Benefit Fund.
Allpremiums being paid to its present carrier are deposited
into this fund. The fund then purchases an override
insurance policy. This policy has a $500 individual calendar
year all cause deductible (maximum two per family). The
policy will then pay 80~ of the next $2,500 of expenses and
the balance at 100$ to a $250.,000 all cau:~e maximum, thus
insuring the fund against catastrophies.
The cost of the override policy compared with the premium now
being paid is as follows:
Override Policy
Rate Total
Life and A. D. & D.
Rate $.44/1,000
Volume $540,000
Premium $ 237.60
Medical Insurance
16 Single $13.20 $ 211.20
12 two party 35.30 423.60
11 Family 35.30 917.80
$1,552.60
Difference = $1,403.80 per month.
Approximate annual difference = $16,846.
Present Plan
Rate Total
26.50 $ 424.00
59.80 717.60
69.80. 1,814.80
$2,956.40
This premium difference remains in the fund thus accumulating a
balance from which the company will help fund the $500 deduc-
tible and/or 20~ of the next $2,500 of expenses incurred by its
employees.
City of Rexburg may maintain the same benefit structure
afforded its employees by its present carrier, or it may
redesign its benefit structure in order that the employee
helps fund some of the deductible and co-insurance portions.
It is recommended that the plan be designed so that the
employee would pay a one-time calendar year deductible of
$100, then 20~ of the next $1,000 of expenses. Thus the
employee would pay $300 of the maximum exposure of $1,000 to
the medical fund. This arrangement reduces the liability and
should help hold down claims exposure.
3. Prepares all required government reports such as:
EBS-1, 5500, etc. If employee monies go into the
medical fund, the fund must be trusteed. The admin-
instrator will handle this procedure as well as
making initial submission to the Internal Revenue
Service.
Administrative services do add some additional cost to the
program. However, since the administrator usually charges much
less than do insurance companies, a savings is still realized
in this area.. The administrative fees charged by Smith-
McMullin & Associates are some of the most competitive in the
business and for your account will be 8$ of the monthly billed
premium with a one-time initial claims set-up fee of $700.00.
~~
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This. deductible and co-insurance provision should replace
employee monthly contributions toward the plan. If
employee contributions are collected, the medical fund has
to be trusteed.
Claims are handled by the third party administrator in the
following manner:
1. Medical ID cards are issued to employees (Exhibit A).
If employee insured his dependents, a card is also
furnished to the spouse. This card informs hospitals
and doctors to bill the administrator directly for
services performed.
2. When statements are received by the administrator,
they are adjudicated according to the schedule of
benefits communicated to City of Rexburg employees.
Claims are handled within two (2) days of receipt
and a personalized letter (Exhibit B) is sent to
the employee explaining how his benefits were
calculated and how much if_ any he owes for proce-
dures performed.
3. Each claim is entered into a computer system by
claimant, type of claim, dollar amount, etc. This
claim information is then available when statistical
or actuarial information is required.
The administrator, in addition to claims handling, performs the
following services:
1. Collects monies for the medical fund by billing
City of Rexburg monthly. This list billing
(Exhibit C) indicates who is covered and what
coverage he is entitled to. The billing can be
broken down by department, location or cost center
as well as by line of coverage. It is recommended
that the rates established under the aggregate
stop-loss policy be used as the medical fund depo-
sit. However, City of Rexburg could deposit any
amount desired, as well as running the program on a
"net" basis.
2. Reports monthly as to all transactions occurring
during the month in regards to the medical fund.
This report (Exhibit U) shows deposits made, interest
earned, premiums paid for stop-loss and life
insurance coveraye, monthly administrative fees, and
all claims paid. The report then shows how the fund
is held, either in checking, savings, or investment
accounts. The administrator tries to keep all funds
invested in conservative liquid investment and all
interest is posted to the City of Rexburg account,
The following is an estimated projection of the Medical Fund
for the period February 1, 1979 to January 31, 1980:
_ Total Deposits to the Medical Fund $35,477..00
~6
Less: Override Insurance Premiums 18,631.00
One Time Set-up Fee ~T0"il""00
Administrative Fee 2,838.00
Claims Paid $32,639.00
Claims Lag 8,955.00
$23,684.00
Ylus: Claims Reimbursed 17,502.00
Net Claims 6,182.00
Interest Earned 356.00
Total Estimated Fund 21~ of Premium Deposit $ 7,482.00
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