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HomeMy WebLinkAboutLGS-027-23Clarftwn Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: October 16, 2023 Report Number: LGS-027-23 Submitted By: Rob Maciver, Deputy CAO/Solicitor Reviewed By: Mary -Anne Dempster, CAO Resolution#: GG-169-23 File Number: By-law Number: Report Subject: Health Benefit Program 2023 Renewal to November 1, 2024 Recommendations: 1. That Report LGS-027-23 and any related communication items, be received; 2. That the Health Benefit Program be renewed with Sun Life to November 1, 2024, at an overall increase of 5.7%; and 3. That the Clarington Public Library, Museums & Archives be advised of the renewal program, and that they continue to be invoiced for their portion of the benefit program as applicable; and 4. That the Deputy CAO/Solicitor, in consultation with the Chief Administrative Officer, be authorized to approve administrative agreements as required for the current and future benefit renewals, subject to satisfactory service and acceptable terms with the benefit provider(s). Municipality of Clarington Report LGS-027-23 Report Overview Page 2 The annual renewal of the Health Benefit Program is presented for approval at an overall rate increase of 5.7% for the period of November 1, 2023, to November 1, 2024. In addition, this Report seeks approval to authorize the Deputy CAO/Solicitor, in consultation with the Chief Administrative Officer, to approve the administrative agreements for the current and future benefit renewals with the benefit provider(s), subject to satisfactory service and acceptable terms. 1. Background Existing Program for Health Benefits 1.1 The Extended Health (EHC) and Dental Benefits program with Sun Life remains under an Administrative Services Only (ASO) funding formula. The non-ASO benefits which include Life Insurance, Long Term Disability (LTD) and Accidental Death & Dismemberment (AD&D) continue under the traditional funding formula. Mosey and Mosey — Benefit Consultant 1.2 Mosey and Mosey is a leading benefit consultant in the municipal sector. In 2009 they partnered with Local Authority Services (LAS), a multi -employer consortium to allow individual municipalities to achieve reduced benefit costs through the increased purchasing power of the overall group. There are currently over 34 municipalities participating in this program. 1.3 Since 2019, the Municipality of Clarington has partnered with Mosey and Mosey in the Local Authority Services (LAS). 2. The 2024 Program Renewal 2024 Rates and Overall Impact 2.1 Mosey and Mosey has undertaken negotiations with Sun Life to reduce the proposed benefit program rate increase from 15.0% to 5.7%. The 2022 — 2023 annual renewal was 7.9%. 2.2 The overall rate increase is impacted by increases to AD&D and claims experience with Extended Health and Dental benefits. There is no change to Life Insurance and Long - Term Disability (LTD) premiums. Municipality of Clarington Report LGS-027-23 3. Financial Considerations Page 3 3.1 The Municipality has established the ASO Benefits Reserve Fund which can be used to fund fluctuations in actual benefits and stabilize the tax impacts of health benefit costs. 3.2 At January 1, 2023 the opening balance in the ASO Benefits Reserve Fund is approximately $1.5 million. This balance consists of returned premiums resulting from surpluses in our claims history and would be used to fund any deficits to the plan. 4. Future Benefit Annual Renewals 4.1 In 2008 and 2012 Council provided authorization to the former Director of Corporate Services to authorize annual benefit renewals provided the renewals were subject to satisfactory service and the terms of the renewal were acceptable; meaning the change in rates were in line with claims experience and general market conditions. 4.2 Since 2019 the annual renewals have been brought to Council for approval to demonstrate the benefit of Mosey and Mosey's involvement, through the LAS program. 4.3 The last time the Municipality went to market was in 2016 resulting in a carrier change to SunLife from Great West Life. Insurance costs to the Municipality are based on the group's claims experience. When going to market insurance companies may discount the first year to incent a change of carrier. In future years, based on claims experience costs may rise at a higher -than -average number to reflect the true claims experience. Therefore, in the long run the Municipality sees higher volatility in rates but no significant savings in the long run as costs are based on claims. Therefore, frequent change in providers is not recommended. 4.4 The partnership with Mosey and Mosey provides oversight of the benefit plan, offsetting the need to have the benefit plan tested in the market. They regularly review the plan to ensure that fees are in line with the market and as part of the LAS program our experience is rated over the entire LAS group versus solely the Municipality, mitigating the overall risk. 4.5 The Municipality is obligated to provide benefits to employees under the provisions of existing employment contracts and collective agreements, as approved by Council. The Municipality is required to provide the same type and level of benefits currently in place and those negotiated in future rounds of bargaining. 4.6 Providing authorization to the Deputy CAO/Solicitor, in consultation with the Chief Administrative Officer, to approve the annual renewals that are negotiated on our behalf by Mosey and Mosey improves efficiency ensuring timely authorization of the Municipality of Clarington Report LGS-027-23 Page 4 administrative agreements for the benefit program renewals and reduces administrative reporting to Council. 5. Concurrence 5.1 This report has been reviewed and contributed to, by the Deputy CAO/Treasurer who concurs with the recommendations. 6. Conclusion 6.1 It is respectfully recommended that the renewal of the Health Benefit Program be renewed with an overall 5.7% increase and that the Deputy CAO/Solicitor, in consultation with the Chief Administrative Officer, be authorized to approve administrative agreements with the benefit provider(s) for future renewals. Staff Contact: Lisa Wheller, Human Resources Manager, 905-623-3379 ext 2205 or Iwheller(c)_clarington.net Kerri McMullen, Compensation & Benefits Supervisor, 905-623-3379 ext 2206 or kmcmullen(a_clarington.net Attachments: Attachment 1 — Mosey and Mosey Monthly Renewal Rates and Cost Summary Interested Parties: The following interested parties will be notified of Council's decision: The Clarington Public Library, Museums & Archives Attachment 1 to Report LGS-027-23 Mosey and Mosey Monthly Renewal Rates and Cost Summary THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON All Divisions Combined Basic Life Insurance Lives & Volumes 103,670,500 $ Cost Monthly Premium 27,475.63 Renewal Costs Monthly Premium % Adi• $ NegotiatedBenefit Renewal Costs Monthly Premium 27,475.63 % Adi' 0.0% $ 27,475.63 0.0% Supplemental Life Insurance 16,237,000 1,867.26 1,867.26 0.0% 1,867.26 0.0% Dependent Life 370 2,801.25 2,801.25 0.0% 2,801.25 0.0% AD&D 88,892,500 1,688.96 1,955.64 15.8% 1,866.74 10.5% Long Term Disability 1,925,565 84,126.71 96,744.82 15.0% 84,126.71 0.0% Extended Health Care Single 74 11,143.10 12,926.08 12,145.95 Couple 128 40,943.97 47,495.21 44,629.20 Family 249 99,364.24 115,262.55 16.0% 108,307.83 9.0% Dental Single 74 5,342.11 6,357.15 5,742.59 Couple 128 18,606.13 22,141.55 20,001.66 Family 249 56,732.60 67,512.20 19.0% 60,987.69 7.5% TOTAL MONTHLY PREMIUM $ 350,091.96 $ 402,539.34 $ 369,952.51 TOTAL MONTHLY COST INCLUDING PST $ 378,099.32 $ 434,742.49 $ 399,548.71 TOTAL ANNUAL COST - ALL BENEFITS $ 4,537,191.84 $ 5,216,909.88 $ 4,794,584.52 Variance To Current Cost $ 679,718.04 15.0% $ 257,392.68 5.7% Mosey And Mosey Benefit Plan Consultants Page 1 of 7