Ms. Sybille Noble, Chairman, called the meeting to order.
Ms. Noble asked for a motion to approve the minutes from the meeting held on August 12, 2005.
Motion was made to approve the minutes of August 12, 2005 by Barbara Palmer. Seconded by Elly Riss
Jim Martin gave an overview of issues with insurances. The Finance Department and Benefit Section are working diligently in staying on top of benefit issues and trying to address them in a timely fashion to contain cost and hopefully not have to make a great reduction in benefits.
Mr. Jim Martin explained that GASB is an issue that we will be confronted with within the next 18 months which deals with reporting post retirement benefit liabilities. These are big numbers that could affect our bond rating. Currently, our consultants are doing a preliminary GASB evaluation to see what our liabilities are for our retiree benefits as of today. This liability will have to be reported beginning July 1, 2007.
Update on Disability Insurance by Jim Martin
Almost four years ago, disability was taken out of the pension plan and put with an insurance company, UNUM. The move saved money and the plan was managed better. After two years, UNUM's renewal rate was extremely high. We immediately went out for bid and employed Standard Insurance with about a 30% increase. We are approaching the end of the Standard's contract as of 12/31/05, and the renewal rate with Standard is about 45%. Short Term Disability (paid entirely by employees) is doing fine, but the Long Term Disability (paid by the County) is doing very badly. The 45% rate will increase the County's cost about $600,000 per year. The concern is whether to take the one-year renewal or go out for bid immediately. The driving cost is that 50% of the disability comes from the Sheriff’s Office and the Correction Center and the fact that Shelby County coordinates sick leave with long term disability.
Update on Life Insurance by Jim Martin
We renewed with our current life insurance carrier, CIGNA, which increased the County's portion of the premium about 16%. County pays 70% and the employee pays 30% of the premium. Our experience is continuing to deteriorate which is driven by our retiree life benefits. When someone retires, they are eligible for one-time their salary at retirement. This type of benefit is very unusual and very generous which is why insurance companies generally only offer life insurance to people who are getting up in age at a very high rate. One reason why we haven't faced this situation sooner is because the Board of Education was a part of our life insurance plan until a couple of years ago. The Board of Education had a younger employee population and fewer retirees and their participation in our life insurance plan subsidized our plan. We will be looking at our life insurance as we go forward possibly within the next 12 months.
Update on Medicare Part D by Jim Martin
There is a new governmental program from Medicare to cover some drug cost for Medicare recipients where before they literally had none. This program is due to kick-off January 1, 2006. One option we were given was to drop our drug plan and allow people to go into Medicare Part D plan which will be a reduction in benefits. The second option is that the Government is offering a subsidy. If we continue our drug plan and it is certified as good as the Medicare Part D plan, then we could get approximately 28% of all the money we spend for drugs on retirees. The third option is a wrap around program where Medicare becomes primary and our plan is secondary. The County has chosen the subsidy for the first year of this plan. Information will be sent out to all retirees within the next couple of weeks explaining their options. The retirees have already received information from Medicare and will get more information from all the new PDP, Medicare drug plans. Retirees will have to decide if they want to go into a PDP to help cover more of the cost of their drugs.
We would probably anticipate going into a full wrap program next year. Most employers will be doing that next year.
Jim Martin introduced Ms. Elizabeth Kash, Account Representative with Express Scripts, who spoke about major issues we have with drugs and drug costs.
Jim Martin introduced Mr. Craig Stephens, Regional Vice President of Sales for CuraScript. CuraScript is a new entity to Express Scripts who bought them two years ago, which makes them one of the leading specialty providers in the country. Mr. Stephens made a presentation on specialty drugs and how it could save the County money. No action was taken at this time.
Motion was made to adjourn by Donna Pavette. Second by Minnie McCray
Respectfully submitted,
