Town Clerk Kandace Contreras reported that part of the budget preparation included health care costs for the Town employees. A very competitive quote system is utilized, as health care costs continue to skyrocket and availability continues to dwindle. After comparing several bids, the Town chose the Rural Arizona Group Health Trust (RAGHT). She introduced Amanda Weaver, who was there to share information about RAGHT.
Ms. Weaver informed the Council that RAGHT was formed in 2002. It began with 3 towns and now includes 17 cities and towns, 2 charter schools and a fire district.
The average rate increase over those 16 years has been 2.9%. It runs so successfully because they work together so well, meeting quarterly, and also once a year to discuss benefits and rates.
Self funding reduces operating expenses and spreads the risk factor. It reduces fluctuations from the insurance cycle, saving money in good years and helping in bad years. It increases employer benefit flexibility. And it increases employer control by utilizing contracted vendors (the unbundled approach), claims data and claims appeals. There are no premium taxes or State Benefit Mandates. RAGHT utilizes the Blue Cross/Blue Shield (BCBS) network in Arizona and Aetna in the rest of the country, and they use a separate vendor for prescriptions.
They were formed per ARS 11-952 and 11-952.01, and file with the Department of Insurance (DOI), are audited every year and are subject to DOI examination every 5 years. They have an actuary and a legal department. The 5 year DOI examination was recently completed and they had a good examination. Every entity has a Trustee and an Alternate Trustee, and each entity has 1 vote, so all are equal. As of June 30, 2017 they had $8.5 million in cash and $7.3 million in surplus.
They were formed per ARS 11-952 and 11-952.01, and file with the Department of Insurance (DOI), are audited every year and are subject to DOI examination every 5 years. They have an actuary and a legal department. The 5 year DOI examination was recently completed and they had a good examination. Every entity has a Trustee and an Alternate Trustee, and each entity has 1 vote, so all are equal. As of June 30, 2017 they had $8.5 million in cash and $7.3 million in surplus.
All benefits must be offered. Medical/Prescription drugs include a co-pay plan, a high deductible & Health Savings Account plan with required employer contributions, or the employee can be self insured. Dental and Vision are self insured. Group life and accidental dismemberment are available. Voluntary life insurance is conventionally insured through Securian. Enrollment is online and is effective as of July 1st. Wellness programs and preventative screenings are covered 100% for employees and their dependents.
Mayor Peterson asked if there was any degradation of benefits for the employees compared to the current plan. Mrs. Contreras replied that it's better. The current deductible per person is $750 and per family $1500. Under RAGHT, the deductible per person is $350 and per family $1050. The co-pays are comparable to the current plan. The Mayor asked if there were limitations on doctors that could be used. Ms. Weaver explained that within Arizona, the doctors had to be contracted with BCBS and outside of Arizona, with Aetna. Councilman Mike Krahe said it sounded like they will be paying less for a better plan.
Gary Neiss said the current insurance plan would implement a 20% cost increase for the coming year. RAGHT is approximately $30,000 less than the market. Councilman Mike Farrar asked how the costs are kept so much lower. Ms. Weaver explained that if a condition requires the use of a more expensive facility, like Mayo, they negotiate. For major claims or chronic illnesses, they work with American Health Group, which has a case management team to help educate the patients to use their benefits wisely, to remain in-network and to help with the next steps, keeping the costs down.
Vice Mayor John Crane asked for and got confirmation that the plan was comprehensive, offering all the services mentioned previously. Mayor Peterson noted that most of the municipalities covered were more rural than Carefree and asked if that kept down the cost, versus using metropolitan doctors. Ms. Weaver explained that they are contracted with BCBS and Aetna. There is a per employee per month fee that is part of the premium, so they can lease the networks and get the discounts. The RAGHT actuary looks at each applying entity to decide if they are a good fit with the Trust. If they are, the Trustees vote about offering membership.
Mrs. Contreras said that Carefree had to apply and provide information to the actuary. Unlike regular insurance companies that accept anyone who pays the premium, joining RAHGT requires going through a membership process. Carefree was unanimously approved. RAGHT is selective, but an approved entity can't be dropped. Mayor Peterson noted that it's a 3 year commitment. Ms. Weaver added that going forward, there are choices of a 3, 4 or 5 year commitment.
Vice Mayor Crane asked if the program is qualified in the eyes of the Federal government and Ms. Weaver confirmed that it is. Mr. Neiss said the Town has been looking at joining a pool in previous years, and applied but hadn't qualified because of the small size of the staff, which is the smallest in the state. Being accepted by RAGHT insulates the Town from volatile annual increases, provides predictability to the Town and the staff, and saves money. Mr. Farrar said, "My hat's off to you. Everyone". Mrs. Contreras said she contacted other Town Clerks of member entities, and they had nothing negative to say.
John Traynor said the Federal government doesn't regulate the insurance industry; that is a State function. Programs are overseen by the Arizona Insurance Department. He asked if RAGHT was approved as a carrier. Councilman Steven Hatcher explained that RAGHT is not a carrier; it is a provider. Mr. Traynor said that before moving ahead with something about which they knew very little, the Town should check with the DOI. Mr. Hatcher explained that RAGHT is not an underwriting platform; they contract with BCBS and Aetna. It is similar, for example, to leasing an aircraft. He assured Mr. Traynor that "the homework has been done". (Lyn's note: See paragraph #5) Mr. Traynor demanded to know, "By whom?" He said the insurance program was put together in parts. The insurance commission typically rules on those. Dr. Krahe made a motion to approve based on verification from the DOI. The motion passed unanimously.
https://vimeo.com/268119689
Lyn Hitchon
Prepared by Carefree Truth
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Mayor Peterson asked if there was any degradation of benefits for the employees compared to the current plan. Mrs. Contreras replied that it's better. The current deductible per person is $750 and per family $1500. Under RAGHT, the deductible per person is $350 and per family $1050. The co-pays are comparable to the current plan. The Mayor asked if there were limitations on doctors that could be used. Ms. Weaver explained that within Arizona, the doctors had to be contracted with BCBS and outside of Arizona, with Aetna. Councilman Mike Krahe said it sounded like they will be paying less for a better plan.
Gary Neiss said the current insurance plan would implement a 20% cost increase for the coming year. RAGHT is approximately $30,000 less than the market. Councilman Mike Farrar asked how the costs are kept so much lower. Ms. Weaver explained that if a condition requires the use of a more expensive facility, like Mayo, they negotiate. For major claims or chronic illnesses, they work with American Health Group, which has a case management team to help educate the patients to use their benefits wisely, to remain in-network and to help with the next steps, keeping the costs down.
Vice Mayor John Crane asked for and got confirmation that the plan was comprehensive, offering all the services mentioned previously. Mayor Peterson noted that most of the municipalities covered were more rural than Carefree and asked if that kept down the cost, versus using metropolitan doctors. Ms. Weaver explained that they are contracted with BCBS and Aetna. There is a per employee per month fee that is part of the premium, so they can lease the networks and get the discounts. The RAGHT actuary looks at each applying entity to decide if they are a good fit with the Trust. If they are, the Trustees vote about offering membership.
Mrs. Contreras said that Carefree had to apply and provide information to the actuary. Unlike regular insurance companies that accept anyone who pays the premium, joining RAHGT requires going through a membership process. Carefree was unanimously approved. RAGHT is selective, but an approved entity can't be dropped. Mayor Peterson noted that it's a 3 year commitment. Ms. Weaver added that going forward, there are choices of a 3, 4 or 5 year commitment.
Vice Mayor Crane asked if the program is qualified in the eyes of the Federal government and Ms. Weaver confirmed that it is. Mr. Neiss said the Town has been looking at joining a pool in previous years, and applied but hadn't qualified because of the small size of the staff, which is the smallest in the state. Being accepted by RAGHT insulates the Town from volatile annual increases, provides predictability to the Town and the staff, and saves money. Mr. Farrar said, "My hat's off to you. Everyone". Mrs. Contreras said she contacted other Town Clerks of member entities, and they had nothing negative to say.
John Traynor said the Federal government doesn't regulate the insurance industry; that is a State function. Programs are overseen by the Arizona Insurance Department. He asked if RAGHT was approved as a carrier. Councilman Steven Hatcher explained that RAGHT is not a carrier; it is a provider. Mr. Traynor said that before moving ahead with something about which they knew very little, the Town should check with the DOI. Mr. Hatcher explained that RAGHT is not an underwriting platform; they contract with BCBS and Aetna. It is similar, for example, to leasing an aircraft. He assured Mr. Traynor that "the homework has been done". (Lyn's note: See paragraph #5) Mr. Traynor demanded to know, "By whom?" He said the insurance program was put together in parts. The insurance commission typically rules on those. Dr. Krahe made a motion to approve based on verification from the DOI. The motion passed unanimously.
https://vimeo.com/268119689
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.