06/24/1985 Meeting (2) - Laserfiche WebLink

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.~~ , M E M 0 RAN DUM y~ June 19, 1985 TO: Mayor and City Councilors FROM: Micheal D. Gleason SUBJECT: Self-funding Health Benefits Over the past few years, the City, like many other employers,has been working toward the objective of self-insuring some employee benefits. With the assistance of the City Attorney, we have examined the Eugene Code 2.585 to ascertain whether or not it allows the City to self-insure the health benefit program. We believe that it does; however, it should it clearer. Furthermore, it is possible in the future to self~fund other employee benefits. Accordingly, we would like to amend the Code to broaden the definition of the Risk Management Fund. Why self-insurance Self-funding means retaining the risk (expense) of loss instead of transfering that risk to an insurance company for a fee (premium). The City's current self-insurance programs--workers' compensation and general liability--are a mix of both insurance and self-insurance. We set aside runds to pay predictable losses and we buy lIumbrellall coverage to prote:t us against unanticipated catastrophic losses. The ,. health benefits program will be structured in the same manner. There are several reasons why we decided to self-fund our health benefits program: - The cost of administering a self-funded program is lower than the fee charged for the same service by an insurance carrier. - Being self-insured means the City owns the data about how the plan is being used. Access to da~a will allow us to order special reports that will give us a better understanding of where our health benefits dollars are being spent. With such information, we can tailor our program to fit our employees. We can also begin to better assist employees with their health maintainance through preventive and health education programs. - We want employee to understand the benefits plans and become smart health care consumers. Self-insurance gives the City the ability to customize benefit booklets, the explanation of benefit forms, and other forms of benefit communications. Summary The time is right to self-fund employee benefits. The annual growth rate of health care costs has slowed significantly, which minimizes the risk of unpredictable and un budgeted cost fluctuations. The decision to self- fund was based on the City's desire to achieve the most flexible, cost-effective, and service-oriented plan Dossible. We want to make .. certain that the Code clearly allows self-funding of employee benefits within the Risk Management Fund. If you have any Questions, please call Lana Linds~rom, Compensation Manager, at 687-5064.