HomeMy WebLinkAboutFCS-11-191 - Employee Assistance Provider _EAP_ Review & Stop Loss Insurance UpdateREPORT TO:Finance and Corporate Services Committee
DATE OF MEETING:
October 17, 2011
SUBMITTED BY: Dan Chapman, Deputy CAO, Fin & Corp Services, x2347
PREPARED BY:
Ita Magid, Supervisor of Benefit Development, x2219
WARD(S) INVOLVED: N/A
DATE OF REPORT: October 6, 2011
REPORT NO.:
FCS-11-191
SUBJECT:
EAP PROVIDER REVIEW & STOP/LOSS INSURANCE
UPDATE
RECOMMENDATION:
THAT Homewood Health Solutions be awarded the role of the employee assistance provider
(EAP) for the City’s employees effective January 1, 2012 at their quoted annual estimated cost
of $53,000 plus HST.
BACKGROUND:
Employee Assistance Provider Review
In February 2010, city council directed staff to initiate a market analysis of group benefits
providers, which included a review of the employee assistance provider.
On April 6, 2011 a recommendation was brought forward to award Sun Life the role of the group
insurance provider for the City’s group benefit program. At that time, city council was advised
that work continued to be done to short-list, interview and identify a preferred vendor for the
city’s EAP program and that a recommendation would be forthcoming.
Stop Loss Insurance Update
On April 6, 2011 city council was advised that staff would work with Sun Life Financial and
Mercer (Canada) Limited to further analyze the cost-benefit of stop loss insurance and report
back with information in this area.
REPORT:
Employee Assistance Program Review
The City undertook a review of its EAP provider earlier this year. This resulted in quotations
from 6 providers. Of these, 3 were invited for shortlist interviews; along with the current provider.
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Homewood Health Solutions scored the highest in all evaluation categories including: product
offering, employee experience, trauma support and overallfit.In addition, their proposal
represents a 23% reduction in cost or approximately $16,000 annually from our current provider.
Homewood Health Solutions has guaranteed their rate for two years from January 1, 2012. The
EAP contract is renewed annually; a total review of the contract is done every five years in
conjunction with the review of the benefits provider.
Stop Loss Insurance Update
Stop loss insurance protects a program by mitigating the risk of large, unforeseen claims. In
such an arrangement, any health claims in excess of a pre-determined annual amount are
absorbed by the insurance company and are not directly charged to an employer’s program. In
exchange for this protection, the insurer includes a stop loss insurance charge as part of the
health plan expenses.
The City’s current program offers stop/loss insurance for out of country claims only.
By setting a stop loss level of $20,000 for both in and out of Canada claims, costs will be
reduced by approximately $40,000 annually and will mitigate financial risk in areas such as
prescription drugs. This level of stop loss coverage has been implemented for a one year period
and will be reviewed for ongoing financial viability at the one year anniversary.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The People Plan represents the strategy for how The City of Kitchener supports its employees
so that they can be successful in the work that they do each day.
The employee assistance program is listed as an example in the strategic area of focus - a
Culture of Safety and Wellbeing in the People Plan, which speaks to how the corporation values
personal, organizational and community health, safety and wellbeing. An employee assistance
program must meet the needs of staff and enable staff to be well and safe and to be effective
and productive in their work and personal lives. It is incumbent on us to do our due diligence
every five years and review the program and provider to ensure alignment with the culture of the
organization.
FINANCIAL IMPLICATIONS:
The cost of the EAP program as administered by the current provider is $69,000 annually.
Homewood Health Solutions’ proposal represents a 23% reduction in cost or approximately
$16,000 annually.
By setting a stop loss level of $20,000 for both in and out of Canada claims, costs will be
reduced by approximately $40,000 annually.
Funding is currently provided through the fringe benefit rate.
ACKNOWLEDGED BY:
Dan Chapman, Deputy CAO, Finance and Corporate Services
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