Intergovernmental Personal Benefits Cooperative Report

1. Intergovernmental Personal
Benefits Cooperative Report
Status - December 31, 2013
Martin Lyons Asst. City Manager
www.cityofevanston.orgIPBC Report 02/17/14
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2. City – IPBC Historical Recap
• Joined Intergovernmental Personal
Benefits Cooperative (IPBC) - December
1, 2009.
• IPBC Established in 1979.
• Currently over 60 local government
agencies in IPBC and over 10,000
covered employees.
• Minimal Changes in Benefit Plans at time
of membership.
IPBC 11/30/2013 2

3. City Insurance Background
– City Provides both PPO and HMO Plans and
added High Deductible Health Plan in 2012 in
Fire Union.
– PPO plans are self-funded
– HMO plans are provided on Cost Plus basis.
– City does not pay premiums to Blue Cross
– Life Insurance provided at discounted rates
due to large membership.
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4. Insurance Terminology
• Self-Insurance – Providing medical coverage through
the payment of actual claims instead of through the
payment of a premium to an insurance carrier.
• Loss Ratio- The amount of claims and expenses
incurred compared to the amount of revenues or
premium set aside to pay those claims.
• Capitation fee – The monthly fee charged on a per
member basis by each doctor in the HMO plan
regardless of whether a member visited the doctor.
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5. IPBC Funding Structure
Operates using Four Funds
• Administrative Fund – Administrative costs
including legal, auditing, and accounting
• Benefits Fund – All claim costs associated with the
PPO benefit plans including claims, stop loss
insurance and Blue Cross and Gallagher Benefit
claims administration costs.
• HMO Account – All costs associated with the HMO
plans including capitation, claims, and Blue Cross
and Gallagher Benefit administration costs
• Terminal Reserve – Funds designated as specific
reserves of the member community and not
utilized for the above activities.
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6. IPBC Operations
• City sends monthly “funding premium” to
IPBC deposited into each account except
terminal reserves.
• Claims and bills are processed on a weekly
basis by Cooperative accounting firm after
review by Blue Cross and Blue Shield.
Accounting firm also pays insurance
premiums for fully insured programs.
• Large claims and excess insurance costs are
shared among pool members described in
more detail later.
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7. IPBC Partnership Structure
• Member organizations meet quarterly to
process business.
• Gallagher Benefit Services is IPBC consultant
and provides detailed monthly reports on
revenues, expenses, balances and programs.
• Lauterbach and Amen is the accounting firm
that processes bills and actually collects
funding premiums.
• The Sikich Group is the accounting firm that
independently audits the IPBC each year.
• Ancel, Glink, and Co. provide legal counsel.
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8. Carriers/Insurance
• Blue Cross and Blue Shield of Illinois provide
PPO and HMO health plan administration (not
insurance)
• Guardian and Met Life provide voluntary
dental insurance – employee cost.
• Reliance Standard provides life insurance.
• Medco/Express Scripts provides Drug/Rx card
program.
• City could alternatively choose United Health
Care or Cigna as the PPO and/or HMO
network and administrator.
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9. History of Revenues and Expenses
• IPBC continues to grow and now processes in
excess of $150 million in insurance related
costs.
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CITY OF EVANSTON
IPBC HISTORY - Cooperative Year is 7/1 to 6/30 2013-14 Y.T.D
2010-11 2011-12 2012-13 12/31/2013*
Funding Premiums 12,569,492 12,955,609 12,842,493 6,744,769
Interest Income 8,008 4,909 3,558 n/a
Percent Change 3.1% -0.9% 5.0%
Actual Experience - Claims
and Administration 11,551,638 12,215,384 11,729,289 5,993,877
Percent Change 5.7% -4.0% 2.2%
SURPLUS/(DEFICIT) 1,025,862 745,134 1,116,762 750,892
*Not all costs have been allocated between members at mid-year, so the 12/31/2013 amount is an estimate

10. History of Balances
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PLAN YEAR 2010-11
Account Summary
Account
Account Balance as
of 6/30/10
Transfers/Withdrawals
Plan Year To Date
Gain/(Loss) Plan
Year To Date
Account Balance as
of 6/30/11
Admin Fund $5,153 $0 $8,240 $13,393
Benefit Fund $403,657 $0 $662,222 $1,065,879
HMO Account $135,904 ($135,904) $372,508 $372,508
Terminal Reserve ($310,908) $118,796 $0 ($192,112)
Total $233,806 ($17,108) $1,042,970 $1,259,668
PLAN YEAR 2011-12
Account Summary
Account
Account Balance as
of 6/30/11
Transfers/Withdrawals
Plan Year To Date
Gain/(Loss) Plan
Year To Date
Account Balance as
of 6/30/12
Admin Fund $13,393 $0 $10,769 $24,162
Benefit Fund $1,065,879 $0 $410,707 $1,476,586
HMO Account $372,508 ($372,508) $181,650 $181,650
Terminal Reserve ($192,112) $372,508 $142,008 $322,404
Total $1,259,668 $0 $745,134 $2,004,802
PLAN YEAR 2012-13
Account Summary
Account
Account Balance as
of 6/30/12
Transfers/Withdrawals
Plan Year To Date
Gain/(Loss) Plan
Year To Date
Account Balance as
of 6/30/13
Admin Fund $24,162 $0 $6,502 $30,664
Benefit Fund $1,476,586 ($300,000) $1,099,319 $2,275,905
HMO Account $181,650 ($181,650) $194,969 $194,969
Terminal Reserve $322,404 $181,650 $115,972 $620,026
Total $2,004,802 ($300,000) $1,416,762 $3,121,564

11. History of Performance
– Performance in the PPO is mainly a reflection
of Evanston claims (except large, shared
claims).
– Total IPBC performance is measured in the
HMO because it a totally pooled system.
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Category FY 2010-11 FY 2011-12 FY 12-13 FY 2013-14 YTD
PPO Loss Ratio 94.4% 94.2% 86.6% 84.0%
PPO Funding Variance $427,861 $492,391 $1,171,923 $734,585
HMO Loss Ratio 99.0% 101.8% 116.4% 141.4%
HMO Funding Variance $32,952 ($68,326) ($606,402) ($762,856)
Reallocated Surplus/Deficit $331,398 $183,152 $226,390 $72,596
Net Benefit to City $331,398 $251,478 $832,792 $835,452
CITY OF EVANSTON EXPERIENCE SUMMARY

12. History of Balances
• All City funds at the IPBC have positive
balances.
• Transfer of Funds other than through regular
premium payments is done according to IPBC
By-Laws and procedures.
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PLAN YEAR 2013-14
Account Summary-ESTIMATED AS OF 12/31/2013
Account
Account Balance as
of 6/30/13
Transfers/Withdrawals
Plan Year To Date
Gain/(Loss) Plan
Year To Date
Account Balance as
of 12/31/13
Admin Fund $30,664 $0 $924 $31,588
Benefit Fund $2,275,905 ($150,000) $716,463 $2,842,368
HMO Account $194,969 ($194,969) $68,724 $68,724
Terminal Reserve $620,026 $194,969 $114,781 $929,776
Total $3,121,564 ($150,000) $1,468,875 $3,872,456

13. The Future
• The City is projected to receive a PPO rate
decrease and HMO rate increase for the IPBC
plan year of July 1, 2014 (both under 5%) .
• Medical inflation is still well over 5%.
• Wellness activities are paying off.
• HMO claims will be monitored.
• Recommend moving $1.0 million from IPBC
back to City Insurance Fund.
• Further Updates will be provided in the Fall of
2014 for 2015 Benefit Planning.
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14. QUESTIONS?
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