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Employee Benefit Trust Minutes - 09/25/2007 CITY OF WICHITA FALLS EMPLOYEE BENEFITS TRUST BOARD MEETING September 25, 2007 Present: Bill Sullivan, Chair Darron Leiker, City Manager Jim Dockery, Finance Director David Winney, Human Resources Director Gail Gannon, Employee Benefits Coordinator Cassie Stennett, Broker for Trust Curt Trimble, Medicare Supplement broker The meeting was called to order at 1:05 p.m. Agenda Items: Approval of Minutes Jim Dockery made a motion to accept the minutes of the June 18, 2007 meeting. Darron Leiker seconded the motion. Motion carried. Financial Statement Jim Dockery presented the financial statement showing total revenue for the year at approximately$8,000,000., expenditures of approximately$7,120,000. leaving a balance of around$880,000. He stated that this would bring the total surplus in the Employee Benefit Trust account to nearly two million dollars. Report and discussion with ICMA on Governmental Trust Jim Dockery again discussed the need to develop a trust for the annual 2 Y2 million required contributions for paying expected retiree expenses. Two million would be used for paying claims and the remaining '4 million would be invested in aggressive investments to build a reserve. He stated that the ICMA Trust already in existence would be good for the City as it can be easily accessed now. Jim also stated that another possibility would be to set up deferred contribution accounts for future employees with ICMA. This would allow the City to provide no further benefits in retirement. A call was placed to Chris Solimine, with ICMA. HE specialized in the GASB requirements and handles the trust accounts for other cities. Mr. Solimine explained that a Trust can be set up with the City choosing the investment mix from the slate of ICMA investment opportunities. He stated that a middle of the road investment portfolio should see a 7-7 /2 %rate of return and would be a relatively safe mix of investments. Another option suggested by Mr. Solimine was to set up Retiree Health Savings programs for future employees. The money in these accounts can only be used after retirement and only for retiree health expenses. In further discussion regarding the Trust,Mr. Solimine explained that the first step for the Irrevocable Trust is for ICMA to provide the necessary documents to get the program started. Darron Leiker inquired as to how the ICMA Trust compare to other programs of its kind. Mr. Solimine stated that it is typically less expensive in terms of fees charged because they are a"not for profit"organization. He stated that there is flexibility room in their program if the City did find a lesser expensive program. It was agreed that ICMA would send the necessary documents for the Boards review. It was also decided that Mr. Solimine would come to Wichita Falls at a later date to meet with the Board after they have reviewed the program documents. Report and discussion of bids for Retiree Health Supplement coverage Continuing their efforts to reduce the City's liability for retiree health care, the Board had asked broker Cassie Stennett to research the possibilities of transferring the Medicare eligible retirees to an independent company,making it completely separate from the Trust. Ms. Stennett, and Curt Trimble, a broker specializing in Medicare Supplement insurance plans,were present to report on their findings. Their report showed Medicare covered retiree claims costs to the Trust for 2006 to be around$300 per month, per participant. The cost for 2007 was the same. These figures were for medical and prescription expenses combined and based on an average of 245 participants. In researching different Medicare supplement plans,they could find no plan that would cost the Trust less and give comparable coverage. After some discussion,the Board concluded that there would be no savings to the Trust by switching the current Medicare eligible retirees to a separate plan. Report and discussion on Flex accounts after retirement After the recent misunderstanding of a retiree on being able to use his flex spending account after retirement, the Board discussed the importance of disclosing the termination of the account upon leaving the city's employment. It was decided that those opting to participate in the program for the 2008 year would sign a form which stated that the account could not be used for expenses that were incurred after leaving the city's employment. .f� • Discussion on possible changes to Blue Cross coverage f The Board had received a letter from an insured employee asking that they change the way Blue Cross was paying for IV Sedation during dental surgery. The employee felt it necessary to have Blue Cross cover the procedure across the board for any dental surgery. The board concluded that it should be left up to Blue Cross to decide on how certain procedures were paid. Darron Leiker stated that Blue Cross had been hired to administer the claims paying process and that the Board should probably not intervene. The rest of the board members were in agreemen . It was decided that a letter would be sent to the employee, stating that there would/no change. Discussion on medicare supplement lifetime maximum Gail Garmon reported that the medicare supplement lifetime maximum benefit of $50,000. was set back in 1986 and had never been addressed since that time. She further stated she knew of two retirees who had recently met the $50,000. maximum. and that it would be impossible for them to apply for other coverage, leaving them without. Darron Leiker made a motion to raise the Medicare Supplement lifetime maximum benefit to $100,000. Jim Dockery seconded the motion. Motion carried. It was agreed that Ms. Garmon would notify Blue Cross of the board's decision and ask Blue Cross to act accordingly. It was further decided that the change would be retro active back to January 1, 2007 to enable Blue Cross to reprocess any claims that may have been denied due to the meeting of the previous maximum benefit. Other Business The Board had received a letter from Ken Phillis, Physicians Assistant for the On-Site Clinic, asking for a 4% increase to his hourly rate. It was agreed that the request would be tabled for future discussion. The meeting was adjourned at 4:05 p.m. Respectfully submitted, Gail Garmon Employee Benefits Coordinator