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CITY OF LAREDO HUMAN RESOURCES DEPARTMENT

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					       CITY OF LAREDO
HUMAN RESOURCES DEPARTMENT
   HEALTH & BENEFITS FUND




                 By: Daniel E. Migura Jr.
              Health and Benefits Fund
                      FY 08-09



Projected Deficit = $ 2,965,976
If no action is taken our projected deficit
  for FY09-10 will be $5.8M
 ~As per Budget Health & Benefits Fund Summary




                                                 2
Deficit Factors




                  3
                                Health & Benefits Fund
            1992-1996
            $174.17
                            History and Recommendations
                        96-97     97-98        98-99         99-00        00-01          01-02        02-03       03-04
City Monthly
                    $151.06      $151.06      $121.00       $121.00      $133.09        $159.74      $191.70     $201.28
Contribution/EE
Fund Balance       $7,936,556   $7,686,311   $6,251,362   $5,241,610    $1,639,348     $1,300,354   $1,017,534   $100,107
Council Approved
                    13.27%↓     No change     19.9%↓       No change      10%↓           20%↑         20%↑         5%↑
Increases
HR Staff                                                                                                           35%
Recommendation*                                                                                                  Increase

                        04-05      05-06        06-07        07-08         08-09
City Monthly
                    $211.35      $232.50    $244.14         $249.14       $261.60
Contribution/EE
Fund Balance       ($24,528)    $364,331   $199,477        ($950,322)   ($2,965,976)
Council Approved
                     5%↑          10%↑       5%↑          $5.00↑ (2%)      5%↑
Increases
HR Staff
                 35% Increase 35% Increase    0%          10% Increase 5% Increase
Recommendation*



*Had the rate increased by 35% the 1st time requested and 5% increments there after we would be at
$330.27.                                                                                                                  4
                                                    Employer     Employee
                                                                                Total
                        CURRENT BI-WEEKLY          Contribution Contribution
                   Regular Employee Only             $120.74       $0.00       $120.74
                   Regular Employee Family           $234.13      $122.57      $356.70
                   Police / Fire Employee Only       $120.74       $0.00       $120.74
                   Police / Fire Employee Family     $238.72      $117.98      $356.70


Proposed Medical
                                                    Employer     Employee
                                                                                Total
                     10% INCREASE BI-WEEKLY        Contribution Contribution
                   Regular Employee Only             $132.81       $0.00       $132.81
  Contributions    Regular Employee Family
                   Police / Fire Employee Only
                                                     $257.54
                                                     $132.81
                                                                  $134.83
                                                                   $0.00
                                                                               $392.37
                                                                               $132.81
                   Police / Fire Employee Family     $262.59      $129.78      $392.37
                                                    Employer     Employee
                                                                                Total
                     15% INCREASE BI-WEEKLY        Contribution Contribution
                   Regular Employee Only             $138.85       $0.00       $138.85
                   Regular Employee Family           $269.25      $140.96      $410.21
                   Police / Fire Employee Only       $138.85       $0.00       $138.85
                   Police / Fire Employee Family     $274.53      $135.68      $410.21
                                                    Employer     Employee
                                                                                Total
                     20% INCREASE BI - WEEKLY      Contribution Contribution
                   Regular Employee Only             $144.89       $0.00       $144.89
                   Regular Employee Family           $280.96      $147.08      $428.04
                   Police / Fire Employee Only       $144.89       $0.00       $144.89
                   Police / Fire Employee Family     $286.46      $141.58      $428.04
                                                    Employer     Employee
                     45% INCREASE BI-WEEKLY        Contribution Contribution    Total
                   Regular Employee Only             $175.07       $0.00       $175.07
                   Regular Employee Family           $339.49      $177.73      $517.22
                   Police / Fire Employee Only       $175.07       $0.00       $175.07
                   Police / Fire Employee Family     $346.14      $171.07      $517.22   5
           Proposed Medical Contribution
              for Dependent Coverage

                            Bi-Weekly Deductions


                      REGULAR                        POLICE / FIRE
Increase     Contribution        Difference   Contribution       Difference
                    Current: $122.57                 Current: $117.98
 10%        $134.83             $12.26        $129.78           $11.80
 15%        $140.96             $18.39        $135.68           $17.70
 20%        $147.08             $24.51        $141.58           $23.60
 45%        $177.73             $55.16        $171.07           $53.09




                                                                              6
                           Rate Comparison
                     BI-WEEKLY                                                   MONTHLY
                     City of Laredo                                             City of Laredo
                   Employer     Employee                                      Employer     Employee
                  Contribution Contribution     Total                        Contribution Contribution     Total
Employee Only          $120.74          $0.00    $120.74   Employee Only          $261.60          $0.00    $261.60
Employee Family        $234.13        $122.57    $356.70   Employee Family        $507.26        $265.57    $772.83

                         UISD                                                        UISD
                   Employer     Employee                                      Employer     Employee
                  Contribution Contribution     Total                        Contribution Contribution     Total
Employee Only          $134.04         $16.50    $150.54   Employee Only          $290.42         $35.75    $326.17
Employee Family        $134.04        $284.86    $418.90   Employee Family        $290.42        $617.20    $907.62

                         LISD                                                        LISD
                   Employer     Employee                                      Employer     Employee
                  Contribution Contribution     Total                        Contribution Contribution     Total
Employee Only          $108.46         $47.31    $155.77   Employee Only          $235.00        $102.51    $337.51
Employee Family        $108.46        $336.46    $444.92   Employee Family        $235.00        $728.99    $963.99

                    WEBB COUNTY                                                 WEBB COUNTY
                   Employer     Employee                                      Employer     Employee
                  Contribution Contribution     Total                        Contribution Contribution     Total
Employee Only          $185.00         $25.00    $210.00   Employee Only          $400.83         $54.17    $455.00
Employee Family        $185.00        $125.00    $310.00   Employee Family        $400.83        $270.83    $671.66


                                                                                                                      7
          Medical Claims Budget Summary
                Budgeted vs. Actual
               Fiscal Year    Budgeted        Actual       Variance
                 FY 03-04     $9,027,338    $9,690,796    ($663,458)
                 FY 04-05    $10,966,017   $11,315,197    ($349,180)
                *FY 05-06     $8,849,908    $8,305,059     $544,849
                 FY 06-07     $7,500,000    $8,845,954   ($1,345,954)
                 FY 07-08     $8,925,000   $10,562,834   ($1,637,834)
               **FY 08-09     $9,921,638    $8,526,495   $1,395,143



**Estimated Medical Claims for FY 08-09 = $11,500,000.
 *STARTED WITH BCBSTX




                                                                        8
                   Prescription Utilization Summary
                    October 2008 – June 2009 (9 Months)

                                                                                              Paid
          DRUG TYPE               RX FILLED % of RX                PAID
   Generic                           18,086 63.10%               $350,318                          GENERIC
                                                                                                     18%
                                                                                                             MULTI-
                                                                                                             SOURCE
                                                                                                              BRAND
   Multi-Source Brand                     744     2.60%            $99,740                                      5%

                                                                                          SINGLE
   Single- Source Brand                9,813 34.30% $1,516,280                            SOURCE
                                                                                           BRAND
                                                                                            77%
   Summary                           28,643 100.00% $1,966,338
                                                  FY 08-09
                                           Budgeted $2,200,000
                                           Estimated $3,300,000
Generic drugs are chemically and therapeutically equivalent to the corresponding brand-name drug, but are available at a
lower price.

Multi-source brand-name drugs are available from more than one manufacturer and have at least one generic equivalent
alternative available.

Single-source brand-name drugs are available from only one manufacturer and are patent protected. No generic
equivalent is available.
                                                                                                                           9
              Medical & Prescription Claims Summary
                 October 2008 – June 2009 (9 months)
                               Active
                                            Retirees              Cobra                Totals
                             Employees
Employee Only                  $4,604,792        $1,554,004          66,541                  6,225,337
Dependents                     $5,024,948            $290,389              973               5,316,310
Total Claims                  $9,629,740       $1,844,393           67,514             11,541,647

Head Count                   2351 (87%)     355 (13%)             4 (0%)         2710 (100%)


          Total Claims                        Dependents                           Employee Only
                                                     Cobra
                                             Retirees 0%                                    Cobra
               Cobra                           5%                                            1%
   Retirees     1%
     16%

                                                                                 Retirees
                                                                                   25%




                                                                                                      Active
                   Active                               Active                                      Employees
                 Employees                            Employees                                        74%
                    83%                                  95%




                                                                                                                10
           Catastrophic Cases Summary
              October 2008 – June 2009   (9 months)


               Medical Claims $50,000+
     Employee                   7             $ 699,769
     EE Dependent              10             $1,716,769
     Retiree                    6             $ 486,057
     Retiree Dependent          2             $ 154,386
     COBRA                      1             $   50,162
            Total               26            $3,107,143

* There has been a total of 3 deaths of the above catastrophic
  cases.
* EE= Employee

                                                                 11
   Catastrophic Cases Historical Summary

Fiscal Year          # of Claims Over $50,000 # of Claims of $100,000 Total Payments
FY 06-07                        19                       6              $2,182,977
FY 07-08                        27                       7              $2,498,538
FY 10/01/08-06/31/09            26                       8              $3,107,143




                                                                                       12
Funding & Cost Reduction Recommendations

   Increase out of pocket expense from $2,500 to $5,000

   •Approximate Savings: $131,694

   3 Month Medical Benefit Waiting Period for New Employees

   •Approximate Savings: $ 173,324

   Increase Deductible to $750 with a $250 Preventive Incentive
   (Annual Physicals, Buena Vida and Disease Management)
   •Savings: $110,000 – 216,000

   Reduce Lifetime Maximum to $1 Million.

   •Savings: $46,272 in premium

   Implement 4 Tier Rate Structure

   •Extend coverage only to spouses who are not eligible for coverage elsewhere


                                                                                  13
                                                                    14

Funding & Cost Reduction Recommendations
                Continued
Forced Generic Program

• Approximate Savings: $29,265

Increase Rx Copy across the board to: $10 Generic / $35 Preferred
Brand / $55 Non Preferred (One copay for Mail Order)
• $190,953 Additional Funding

Rx Step Therapy Program for High Utilized Drugs


Forced Mail Order for Maintenance Drugs


45% Contribution Increase – City, Employee, Retiree and Cobra


$30 Monthly Employee Only Contribution

• Additional Funding:
  • All Employees: $842,040
  • Excluding FF/PD: $ 560,520


                                                                     14
                                                                                            15


Staff Recommendations Continued
 10% Medical Rate Increase across the board


 Increase Deductible to $750 with a $250 Preventive Incentive
 (Annual Physicals, Buena Vida and Disease Management)
 • Savings: $110,000 – 216,000

 Implement 4 Tier Rate Structure

 • Extend coverage only to spouses who are not eligible for coverage elsewhere (10/01/10)

 Increase Rx Copy across the board to: $10 Generic / $35 Preferred
 Brand / $55 Non Preferred (One copay for Mail Order)
 • $190,953 Additional Funding

 Rx Step Therapy Program for High Utilized Drugs


 Forced Mail Order for Maintenance Drugs


 3 Month Medical Benefit Waiting Period for New Employees

 • Approximate Savings: $ 173,324
                                               16



               Summary

On August 10, 2009 the City Council Health &
Benefits Committee unanimously voted to
accept all Health & Benefits plan
modifications and a 10% rate increase
recommendation as presented by staff.
                17




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