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

Home Browse Search

. M E M 0 RAN DUM ,e June 19, 1985 TO: Mayor and City Councilors FROM: Micheal D. Gleason SUBJECT : Self-fundinq 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 transrering that risk to an insurance company ror a fee (premium). The City's current self-insurance programs--workers' compensation and general liability--are a mix of both insurance ana self-insurance. We set asioe funds to pay predictable losses and we buy "umbrellall coverage to prote:t us against unanticipated catastrophic losses. The ,.. nealth 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 lowey' 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 data will allow us to order special reports that wi 11 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 Degin to better assist employees with their healtn 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 annua~ growth rate of health care costs has slowed significantly, which minimizes the risk of unpredictable and unbudgeted cost fluctuations. The aecision to self- funa was Dased on the City1s desire to achieve the most flexible, cost.-effective. and service-oriented plan possible. We want to make ~ ce~t.ain ~hat t.he Coae Clearly allows self-funding or emoloyee benerits within the Risk Management. ~und. If you naVE any questions. p'ease cail Lana L..inast.fom. Compensation Manager, at 687-5064.