Human Resources Action Item

DATE:	Tuesday, June 11, 2013
TO:	School Board Members
FROM:	MaryEllen Elia, Superintendent
SUBJECT / RECOMMENDATIONS
Approve Health Insurance Renewal for 2014.
EXECUTIVE SUMMARY
Staff directed the School District’s health insurance broker/consultant, Aon Hewitt Consulting, Inc. (Aon) to negotiate rates and plan designs with Humana and report back to the Employee Benefits Health Insurance Committee (Attachment A).  Humana’s initial renewal offering of an increase of 11.33 percent for 2014 was reduced to 2.25 percent (approximately $3.5 million), subsequent to multiple negotiations between Humana and Aon.  However, district staff insisted, that based on HCPS’s medical trend out-performing national medical trend for several years, the proposal should not require any increase.  Aon was able to provide extensive data analysis to support staff’s demand; but Humana was not willing to put the additional $3.5 million at risk. So staff offered a compromise that Humana accepted:  provide the renewal at a "zero percent" increase and the district would set aside $3.5 million in an account dedicated to be paid to Humana only if HCPS’s claims exceeded its premiums for 2014 and only up to the $3.5 million. Additional excess claims, if any, would be Humana’s at-risk obligation. The Committee recommends the School Board continue its relationship with Humana and accept the proposed 2014 health insurance renewal, which includes:  Employee premium rates remain the same for 2014 as they were in 2011, 2012, and 2013. Continuation of current plans, programs, terms and conditions – no benefit “take-aways.” Opt-outs and retirees (retirees pay 100 percent of their premium cost). MHNet carve-out for mental health and substance abuse (MH/SA) coverage (excludes HDHP). MHNet Employee Assistance Program (EAP). Humana Vitality Wellness Program. Fees required for Federal Health Care Reform (approximately $5.3 million). Opportunity for a lower renewal cost if the Board renews the 2014 Voluntary Benefits Program with Aon.  (The Humana premiums include a fee payable to Aon for providing administrative services for the medical plans.  Aon has agreed to reduce this fee, due to the economies of scale they would experience if Aon is renewed as the 2014 Voluntary Benefits Broker/Administrator.)
STRATEGIC OBJECTIVES
• Demonstrate best financial practices
FINANCIAL IMPACT (Budgeted:  Yes)
Based on projected enrollment of 24,806 employees, the estimated School Board's cost for the Health Insurance Program for Plan Year 2014 (01/01/2014-12/31/2014) is $128,011,377.  However, if the recommendation to renew the 2014 Voluntary Benefits Program with Aon is approved, the estimated School Board's cost for the Health Insurance Program for Plan Year 2014 is $127,322,499 (Attachment B).  In addition, a “set-aside” of $3.5 million is required to be paid to Humana only if the District’s Humana medical claims exceed the premiums paid for 2014.
EVALUATION
Health insurance is renewed annually.
SUBMITTED BY:

Deborah M. Henry		Daniel J. Valdez
General Manager - Employee Benefits & Insurance (813) 272-4665		Deputy Superintendent (813) 272-4166
		A 4.06
Hillsborough County Public Schools (Florida) * Mtg.#20130611_565 (Board Meeting) * Section A Item# 4.06