HomeMy WebLinkAboutCAO-10-002 - Group Benefits Provider ReviewREPORT
REPORT TO:
Councillor B. Vrbanovic, Chair and Members of the
Finance and Corporate Services Committee
DATE OF MEETING:
February 8, 2010
SUBMITTED BY:
Ita Magid
PREPARED BY:
Ita Magid
WARD(S) INVOLVED:
DATE OF REPORT: February 2, 2010
REPORT NO.: CAO-10-002
SUBJECT:
GROUP BENEFITS PROVIDER REVIEW - EXTENSION OF
GROUP INSURANCE PROGRAM CONTRACTS
RECOMMENDATION:
That existing contracts for the various group insurance programs available to staff be
extended for a period of one (1) year pending a detailed market analysis and review of
service levels and financial arrangements.
BACKGROUND:
The Human Resources Audit of 2008 recommended that Human Resources revisit Council’s
direction to tender the group benefits every five years and approval be obtained from Council if
another approach is to be followed.
Since 2008, the following actions have been undertaken:
Account review meetings with current providers, Manulife & Mosaic Counselling, to
discuss utilization, costs and service levels.
Benefits survey conducted in follow up to 2007 staff Culture Survey feedback; comparing
City of Kitchener benefits with those of other municipalities.
Survey of our comparator municipalities regarding selection, management and tendering
of group benefits.
The various group insurance programs available to staff include Life Insurance, Long Term
Disability, Extended Health, Dental, and Accidental Death & Dismemberment. In addition, an
Employee Assistance Program (EAP) is in place. Benefits are available to all full time
employees, as well as qualified part-time and temporary employees, both in union and non-
union groups. The City of Kitchener’s overall cost for benefits in 2009 totalled over $5 million.
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Group Insurance Programs:
The current group benefit provider is Manulife with respect to Extended Health Care, Dental,
Life and Long Term Disability benefits coverage.
Over the course of three (3) years, our group benefits provider changed three (3) times as a
result of successive buyouts. The City’s group benefits provider from 2002 to 2003 was Liberty
Health; Maritime Life from 2003 to 2005 and in January 2005, Maritime Life was acquired by
Manulife, who has provided consistent support and flexibility.
Manulife is one of the largest group insurers in Canada, as a result of multiple mergers and
acquisitions. Their group benefits operation is located in the KW area providing group benefits
to approximately 7800 plan members and their eligible dependents within the greater tri-city
area. Some of their public sector clients are The City of Cambridge, The City of Guelph, The
City of Brantford, The City of Stratford, The City of Hamilton and The City of Toronto to name a
few. More than 95% of their plan sponsors with an annual premium of over $10,000 have been
with them for more than 10 years.
The following are examples of how Manulife has tailored solutionsto our unique needs:
Development of communication strategies and customized material to encourage plan
members to register on their intranet site and signup for health risk assessments.
Facilitation of “lunch & learn” sessions on Orthotics; bringing the expertise of a local
practitioner to help explain “best practices” and how to be an informed consumer.
Participants at the City of Kitchener’s annual Wellness Fair offering tools and insight to
plan members for their benefit plans.
Sharing of information from Manulife’s claims profiling and fraud investigation unit;
through our combined efforts, monies have been recovered and returned to the plan.
24/7 availability to key Manulife personnel during union negotiations, coupled with plan
options and pricing alternative comparisons/analysis which has led to savings for the
City – consulting fees avoided.
Provision of customized benefit bulletins to assist in explaining Out-of–Country
coverage, physiotherapy services and orthotic claim submissions.
Support has been provided in face to face meetings with both plan members and union
representatives to provide benefit information and clarification first hand.
As part of Manulife’s commitment and desire to maintain as well as grow their relationship with
the City of Kitchener, they offered the following financial guarantees in 2009 as a result of the
account review process:
Basic Life Insurance – 5% reduction to the prior rate with an accompanying three (3)
year guarantee – approximate annual savings of $18,625 ($55,875 over three (3) years).
Optional Life Insurance – no change to the current rate with an accompanying three (3)
year guarantee
Long Term Disability – no change to the current rate with a 12 month guarantee
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Administrative Services Only (ASO) Expenses – Reduction of the administrative fee from
6.95% to 6.5% with a three (3) year expense guarantee – approximate annual savings of
$25,000 ($75,000 over three (3) years).
Employee Assistance Provider (EAP):
Our current Employee Assistance Provider (EAP), Mosaic Counselling and Family Services has
been providing service to the City of Kitchener since April 2002. Formerly called Catholic Family
Counselling Centre, they changed their name to better serve the community by taking into
consideration this Region’s growing cultural mosaic. Located in the heart of The City of
Kitchener, Mosaic Counselling and Family Services is a not-for-profit full service professional
counselling agency. For more than 57 years, Mosaic has provided individual counselling, group
programs, credit counselling and community outreach as well as being the home of the Family
Violence Project of Waterloo Region. Mosaic also has offices in Cambridge, and provides
programs at various locations throughout the Region of Waterloo.
The following are examples of Mosaic’s services:
Counselling on referral
Employee Assistance Programs that work with companygroup benefits
Custom EAP services that work within a budget – we determine the available budget
from year to year. Currently the EAP budget = $69,360 which equates to approximately
$33 per employee
A full-service EAP plan that includes counselling, Human Resource consultation and
wellness programs
Critical incident Workplace Debriefing
24/7 local phone number
Partnering with other counselling services in the community, to broaden resources for
staff
Partnering to develop strategies in regards to issues identified on the Culture Survey –
stress, workload, negative acts in the workplace.
The City of Kitchener EAP program is well used by employees. Statistics for the City of
Kitchener show a consistent proportion of cases related to Family Issues, Psychological Issues
and Work Related Issues. The quarterly utilization rate for the 2009 program year was 6% with
an average of 126 cases per quarter and 948 hours of counselling time provided. Of the cases
served in the first three quarters of 2009, some are continuing clients and 253 are new cases.
Utilization levels for approximately 30 employers in Waterloo Region range from a low of 3.5%
to a high of 12.7%. Utilization for the City of Kitchener EAP has been in the 6% range for the
past 3 years.
In 2008 Mosaic undertook a client satisfaction and feedback survey – they had a response rate
of 96%. Responses revealed that clients are very satisfied with the atmosphere and quality of
counselling services that are received. Clients said they feel welcomed, respected and safe at
the agency and are pleased with the quality of counselling services.
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Accidental Death & Dismemberment (AD&D):
The current provider of Accidental Death and Dismemberment (AD&D) benefit is ACE INA.
Mandatory AD&D coverage with ACE INA for firefighters has been in place since 1995. In 2002,
a consultant was hired to conduct a comprehensive review of our group benefits service
providers including AD&D; ACE INA continued as the provider for AD&D coverage to City staff.
Voluntary AD&D benefits have been provided to members of the flex benefits group since 2004.
The total amount of premiums paid in 2009 for AD&D coverage was $47,905.
A short survey was undertaken to determine what our comparators are doing in regards to to
selection, management and tendering of group benefits:
Regional Municipality of Waterloo
No fixed mandate on how often to review benefits; have retained the services of a
consultant to ensure that their rates are competitive.
City of Waterloo
No fixed mandate on how often to review benefits; broker generally reviews benefit
premiums every 3 years
City of Cambridge
No fixed mandate on how often to review benefits, generally done every 5-7 years or
on an as needed basis.
City of Guelph
No fixed mandate on how often to review benefits; a review has not been done in 10
years – may possibly go out to tender next year
REPORT:
The landscape of the insurance industry has changed over the last few years as a result of
buyouts and mergers, reducing choice. There are three large insurance companies suited to
managing the City of Kitchener’s book of business; Manulife, SunLife and Great West Life. The
complexities of the City’s book of business are a function of size and resulting from six
collective agreements, each with their own unique requirements.
In 2002, a consultant was hired to review our financial competitiveness and service levels,
resulting in a recommendation to undertake a tendering process. At that time we were covered
for Life and Long Term Disability benefits with SunLife and Extended Health Care and Dental
benefits with Liberty Health, now Manulife. The subsequent tender recommended that our Life
Insurance and Long Term Disability benefits be consolidated with our other benefits under the
same provider – Liberty Health, now Manulife. We changed our EAP provider to Catholic
Family Counselling
Retaining the services of a benefits consultant would provide us the expertise and objectivity to
analyze our current service levels and ensure that we have the most cost effective financial
arrangements in place. The consultant is effectively a risk management tool to reduce our future
exposure to circumstances unforeseen to us. Their in-depth knowledge in this field far exceeds
ours and that is why we favour this approach. A re-evaluation of our current Employee
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Assistance Program will ensure that staff continues to receive high quality confidential services
for the Corporation in a cost effective manner. We would take this opportunity to review terms
corporate areas requiring attention: and conditions of our current AD&D contract with respect to
the recent Presumptive Legislation to ensure our due diligence has been met.
The Culture Survey identified Benefits Satisfaction as one of the corporate areas requiring
attention; the findings of the consultants’ review will be shared with a Benefits working
committee which is being led by Troy Speck to address staff benefit satisfaction levels.
During the review process, current contracts must be maintained in order to avoid disruption of
coverage.
FINANCIAL IMPLICATIONS:
Maintenance of current group insurance service providers at current contracted rates.
ACKNOWLEDGED BY:
Tracey Hare Connell, Executive Director, People Services and
Organizational Development
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