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MINUTES HEALTH CARE BENEFITS TRUST REGULAR SESSION February 20, 2024 KACHINA CONFERENCE ROOM 11000 N. LA CAÑADA DRIVE

REGULAR SESSION AT OR AFTER 10:00 AM

CALL TO ORDER
The meeting was called to order at 10:06 a.m.

ROLL CALL

Present:	Frank Trembulak, Chair
	Dave Gephart, Vice Chair
	Jennifer Marek, Member
Absent:	Harry Greene, Member
	Mark Parston, Member
Staff Present:	Jennifer Inboden, Board Secretary
	Andrew Votava, Human Resources Director
	Tobin Sidles, Legal Services Director
	Oscar Diaz, CBIZ VP of Business Development

CALL TO AUDIENCE - There were no speaker requests.

REGULAR SESSION AGENDA

REVIEW AND APPROVAL OF THE JANUARY 16, 2024 REGULAR SESSION MEETING MINUTES


				Motion by Chair Frank Trembulak, seconded by Member Jennifer Marek to approve the January 16, 2024 regular session minutes.

				Vote: 3 - 0 Carried

	2.			PRESENTATION AND DISCUSSION OF THE MEDICAL AND PHARMACY EXPERIENCE REPORT THROUGH DECEMBER 2023 Oscar Diaz, CBIZ VP of Business Development, presented the most recent Medical and Pharmacy report. He started by reviewing the paid claims and administration information for all plans combined. He pointed out that the loss ratio for November was 104%, but it was down to 90% for December, tracking at 90.8% for the expected claims liability halfway through the plan year. The claims and admin fees per employee per month (PEPM) costs are tracking at $1008. The budget is tracking at $1.87 million or 92.6%. He reminded the trustees that the goal is always to come in under 100% of expected liability and the budget. Mr. Diaz pointed out that it was good that the Plan saw a deescalation in claims this month. Mr. Diaz continued to review the report and reminded the trustees that it is normal for the High Deductible Health Plan to trend lower than the PPO. The HDHP is at 82% for the expected claims liability halfway through the plan year and 86% of the budget. The PPO is at 110% for the expected claims liability halfway through the plan year and 108% of the budget. Mr. Diaz reviewed the year-over-year comparison which includes a completion factor. At this point, CBIZ is expecting the plan to come in at $3.98 million compared to $3.6 million last year. This is a 7.8% increase PEPM which is below the national average of 8.5-9%. The forecast shows that the plan is on track to finish the year at 98.2% of the budget. Mr. Diaz finished by going over the high claimant report. He reported that there is one claim that appears to be done and there is a new high claimant that looks to be a one-time claim. The Town has some historical claimants that Mr. Diaz thinks will show up soon. He explained that 7.6% for the large claim percentage of all claims is exceptional and much lower than the typical 25-30%. In summary, Mr. Diaz said the plan is running pretty well with the 7.8% estimated increase PEPM. He said there is a chance this number will go down to around 5% since the two existing large claims are done. The trend that he is seeing with his other clients is a higher volume of claims on top of persistent high claims.

	3.			PRESENTATION AND DISCUSSION OF THE MIDYEAR FUND BALANCE THROUGH DECEMBER 2023 Vice Chair Gephart reviewed the fund balance halfway through the plan year. The cash balance is healthy at $1.96 million and investments are strong at $1.3 million with a definite improvement in interest receivable as the earnings environment and interest rates have ticked up. There is not much to comment on the liabilities part of the balance sheet since the trust doesn’t adjust claims payable for IBNR until year end. In reviewing the income statement, Vice Chair Gephart focused on where the fund is now compared to December 2022. He explained that the reason we are seeing quite a bit less for the employee premiums and more for the employer premiums is because the Plan design changed for the HDHP this Plan year, and the employer contributes a higher portion than in the past. This drove more employees to select the HDHP than the PPO. He pointed out that stop loss is quite a bit less at $13,000 compared to $408,000 a year ago. This is because there were a couple of very high claimants last year that we haven’t yet seen this year. Thus, the total revenues of $2.1 million this year compared to $2.4 million last year is primarily due to the stop loss reduction. For expenditures, there is an increase in expenditures of about $80,000 for outside professional services which is due to an increase in administrative costs from UHC. Claims are $300,000 less than a year ago, which is again attributable to the stop loss reduction. Year to date, income over expenses is $58,000 with an ending fund balance of $2.95 million compared to $2.86 million a year ago. Vice Chair Gephart reviewed the Budget vs. Actual spreadsheet and pointed out that the revenues from employee and employer paid premiums are 50.89% which is right where the fund should be halfway through the year. The fund did budget for some stop loss recovery which has not been collected yet, hence the 5% collection. That gets offset in expenditures which can be seen with the 47% of budget for claim settlement. Vice Chair Gephart finished by pointing out how strong of a year it is for investments with interest from investments already at 169% of budget. This strong performance will continue for the second half of the Plan year, which will provide a nice cushion to the overall fund balance. Chair Trembulak asked more about the big bump in expenditures for outside professional services year-over-year. Vice Chair Gephart explained that most of this can mostly be attributed to higher administrative fees from UHC, but a higher fee from CBIZ and the onsite health clinic as well as inflation certainly contribute as well.

	4.			PRESENTATION, DISCUSSION AND POSSIBLE ACTION ON RESERVE POLICY
				Mr. Votava, Human Resources Director, presented the changes made to the draft reserve policy at the Trustees’ request at the January meeting. The three changes that were made are that IBNR was spelled out to Incurred But Not Reported, the reference to the consultants’ actuarial Premium Adequacy Report, and a statement reflecting the Town’s competitive recruiting posture in terms of updating the reserve policy. Chair Trembulak commented that these changes do satisfy the requests for changes made by the Trustees.


				Motion by Chair Frank Trembulak, seconded by Vice Chair Dave Gephart to approve the Reserve Policy.

				Vote: 3 - 0 Carried

	5.			PRESENTATION, DISCUSSION AND POSSIBLE ACTION TO AFFIRM THE IMPLEMENTATION OF THE TRUST
				Chair Trembulak reminded the trustees that he had requested that staff compile some affirmations for the Trustees to agree to in reference to the implementation of the Trust as outlined in the Trust Document. Mr. Votava went through the Trust Document and captured the items that required clarification. Chair Trembulak commented that Baker Tilly, listed as auditor, is actually appointed by the Town. Chair Trembulak and Vice Chair Gephart complimented Mr. Votava on his work and agreed that this met their request for clarification.


				Motion by Chair Frank Trembulak, seconded by Member Jennifer Marek to approve the affirmations listed in the resolution regarding the implementation of the Trust.

				Vote: 3 - 0 Carried

ADJOURNMENT


				Motion by Chair Frank Trembulak, seconded by Vice Chair Dave Gephart to adjourn the meeting at 10:32 a.m.

Vote: 3 - 0 Carried

I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Health Care Benefits Trust held on the 20th day of February. I further certify that the meeting was duly called and held and that a quorum was present.

Dated this __22nd__ day of _February_, 2024.

______________________________
Jen Inboden
Human Resource Analyst