Oct242007

Minutes
LAFAYETTE TOWNSHIP BOARD OF TRUSTEES
Workshop Meeting
Wednesday, October 24, 2007

Meeting called to order: 3:30 p.m.

Members Present: Trustee Lee Kehoe, Trustee Lynda Bowers, Trustee Donna Young, Fiscal Officer
Shirley Bailey

Township Medical Insurance Presentation: Frank Harmon, with Ohio Insurance Services Agency, Inc.,
presented the Employee Benefit Renewal. The proposal outlines rates and services from United Health
Care, Aetna, and Medical Mutual. Mr. Harmon stated that his company has been helping set up Health
Reimbursement Arrangements. Just as one would have a deductible on your auto insurance, this Health
Reimbursement Arrangement would provide a premium savings. Out of the premium savings, a little bit
is set aside. That amount is available for funding under the Health Reimbursement Account (HRA). It
would be handled by his office. He suggested Medical Mutual as having the best rates and plan for
Lafayette Township. The Office Visit co-pay would increase from $20 to $25. Mr. Harmon suggested
funding the $50 co-pay to see a Specialty Care Physician down to the $25 level from the HRA. He also
suggested funding the deductible ($1,000/$3,000) at a 70/30% so out of pocket would be lower
($300/$900). The prescription card is one of the most used features. He recommended keeping that at
the current level of $8 generic / $15 brand name co-pay. Medical Mutual is the only one that is still able
to provide those prescription card rates. United Health Care is $10/$30/$50, Aetna is $10/$25/$45. Mr.
Harmon explained that our monthly base premium would be $3,950.00, a savings of about $15,000 from
our current renewal costs. The HRA administration will cost about $738 per year. The exposure level
would be $4,900 if every one covered were to hit their maximum amount of coverage. In comparing our
current renewal rates with Anthem against Medical Mutual, the township will be saving $15,750.84,
adding in the administrative costs for the HRA of $738.00, the maximum exposure of $4,900, the worst
case scenario of savings is $10,112.84. The best case scenario would be a savings of $15,012.84.

Mr. Harmon explained the benefits page of the Medical Mutual package. They have a good network of
physicians available. Ms. Young agreed. Ms. Bowers asked Mr. Harmon why she had been receiving
phone calls at home from Medical Mutual saying that she was in their plan. After discussion, it was
determined that perhaps they were trying to contact her sister-in-law. Mr. Kehoe questioned what the
Ohio Public Entities Consortium (OPEC) was. Mr. Harmon explained that it was a consortium of public
entities that they, on behalf of Lafayette Township, were able to utilize to negotiate benefit and cost
advantages. The township is currently a part of OPEC with Anthem. Medical Mutual has agreed to allow
some concession for the consortium as well. The biggest concession is the prescription card. Ms.
Bowers asked the pool size of OTARMA compared to OPEC. Mr. Harmon stated that they were probably
about the same size. Not everyone in OTARMA is in the health plan. He stated that they would not be
able to offer the prescription coverage. Mr. Harmon also stated that the township currently is only
required to fill out the short form with Medical Mutual. If additional employees are submitted to Medical
Mutual with a health form, the rates could possible change. Because the township is part of the
consortium, they are able to use the short application. A prescreen quote may cause the township to
lose the offered rate. Mr. Harmon stated that is pretty much the same with all insurance companies.

Mr. Kehoe asked to have the funding explained. Mr. Harmon replied that a HRA provides the flexibility to
do a number of things. The township could have the employees fund some of the account, but they
usually see with the public sector that the employers fund the account. Mr. Kehoe asked for clarification,
stating that money would be paid pretax into a fund, and that money can then be tapped to pay a
deductible or co-pay. Mr. Harmon replied that under the HRA the township would have a plan
document. An HRA is a plan document under section 105 of the IRS code that allows employers to set
monies aside for a unfunded liability and health plan. These monies are tax-exempt. The township
would only allow the monies to be used to fund a portion of the deductible at the 70%/30% level and
fund the $50 co-pay down to $25. It would not be allowed to be used as a Flexible Spending Account
(FSA) towards dental or vision. At the end of the year, the amount unused from the HRA will stay with
the township. Ms. Bowers asked if in his experience, many of the employers are doing this. Mr. Harmon
replied that they do have a number doing that. They are seeing a 50-60% utilization of the maximum
exposure. Most claims happen with the office visit co-pays, emergency room, urgent care, and
prescriptions. While major medical claims can be incurred, most often they are not. Ms. Young asked
Mr. Harmon if the townships are not having the employees pay anything out of their payroll. Mr. Harmon
replied that townships are still the last bastion of having no monies come out of pocket for benefits.
Townships salaries are not as high and maintain a family type feeling. He is not sure that it would be
worth the hassle to collect a small amount vs. the administrative tasks. Ms. Young stated that a $4,000
savings per person would net about $20,000 for the township.

Ms. Bailey asked if switching from Anthem to Medical Mutual would cause a problem with pre-existing
conditions. Mr. Harmon replied that it is covered under the Federal HEPA legislation. If you have had
coverage for the past 12 months, with less than a 63 day gap, all pre-existing is waived. Someone who
doesn’t meet that criteria would have pre-existing conditions not covered for one year. Mr. Harmon
stated that a group of our size would typically only offer one plan for its employees.

Ms. Bowers asked if the HRA were to be utilized, could it be up to the township to treat elected officials
one way and employees another. As an example, elected officials paying full co-pay and deductibles.
Mr. Harmon stated that he didn’t feel that could be written into the policy. All covered are treated the
same way. Ms. Bowers asked if it could be addressed within the township’s own policy. Mr. Harmon
stated that it could be done, but it would be discriminatory, and not able to be upheld. Ms. Bowers
commented that if the township requires its employees to contribute to the premium, then it would also
be expected to pay the same kind of salary. She has recently surveyed and knows that Lafayette is not
on that same level. Mr. Figgers stated that he also had done a survey and agrees.

Mr. Harmon explained that when an Explanation of Benefits (EOB) is received, and anything goes
towards that deductible, the EOB is attached to a form, signed and sent into the Insurance Company.
They will then cut a check to the individual to pay the receiving party. If it is a specialty doctor with a $50
co-pay, the employee needs to provide a receipt to the Insurance Company for $25 reimbursement. Mr.
Kehoe asked why a check was being sent to the employee as opposed to the provider. Mr. Harmon
replied that the relationship is with the township and its employees, not the providers. Mr. Kehoe asked
how the township would know if the bill was paid by the employee. Mr. Harmon replied that we would not
know. The employee has the contract with the provider. How and when it is paid is up to the employee.
The Insurance Company will not be paying the reimbursement without proof of the claim. Another
reason the provider is not paid directly from the consortium, is personal information may be on the check
and it could also be misapplied. This keeps the processing cleaner. It can be set up to pay the provider
directly, but some flexibility will be lost. Mr. Kehoe stated that he has to pay the co-pay to the provider
before he leaves the doctor’s office. All agreed that is the way it is for most people. Ms. Bailey stated
that the township often receives money from patients who have been transported in the ambulance that
comes to the receiver and then they forward it to her office. Mr. Kehoe commented that there are
people who are transported by our ambulances who give false names to get out of paying.

Mr. Kehoe asked Mr. Harmon if his recommendation would be Medical Mutual. Mr. Harmon stated that
he would recommend the Medical Mutual column at that level of benefits as presented. This would
provide the drug card and some savings to the township. The HRA will also provide some savings. The
funding amounts for the HRA can be rearranged. Ms. Bowers asked how quickly they would need to get
the information to him. She would like to have a meeting with the employees. Mr. Harmon stated that he
could come up and explain to those participating how the program works. He stated that the next bill for
health insurance is due tomorrow (10/25/07). Ms. Bailey stated that she had paid that bill and we are
paid through 11/25/07. Mr. Harmon stated that the sooner the paper work is turned in the better. Ms.
Bowers commented that she would not want to take a chance on the rates changing. Mr. Harmon stated
that the rates are based on the information pulled out of the file. The applications need to be
completed. The three members need to complete the forms, the master contract needs to be signed,
and one initial month premium deposit, and then a couple to three weeks are needed to get the I.D.
cards printed and issued. Since we are looking at the 25th of November, it would be best to get
everything turned in by the first part of November. Ms. Young stated that she does not foresee Chief Jim
Sheppard being interested in the insurance program. Ms. Bowers said that she would like to have input
from the employees affected. Even though they don’t make the decision, she would like their input. Mr.
Kehoe stated that under Anthem our co-insurance is 80/20%. Under Medical Mutual it will be 100% in
network.. He asked if we went into an HRA, the main thing to be funded would be the deductible. If we
use 70/30%, the employee would only be liable for $300 on the deductible. Mr. Harmon confirmed. Mr.
Kehoe stated that would be $1200 less then the normal deductible would be. Ms. Young stated that they
would be ahead of the game and the township would still be saving money. Ms. Bowers stated that the
main difference for the employees would be the $5 increase in the office co-pay. Mr. Harmon reported
that a lot of the employers do look at higher co-pays on specialists.

Ms. Bowers motioned to accept the insurance package as presented by Frank Harmon. Ms. Young
stated she would like to hear what Mr. Kehoe had to say with regards to the co-pays. Ms. Young asked
if Mr. Kehoe thought the co-pays should be as presented and eliminate the township paying the
additional $25 for a specialist. Mr. Kehoe agreed with Ms. Young. Ms. Bowers stated that she did not
have a problem with that.

Ms. Young motioned to accept Mr. Harmon’s plan but leave the $50 co-pay as is and the $25 co-pay for
an office visit. Having the HRA funding at 70/30% with out-of-pocket funding at $300/900. A discussion
ensued with regards to the motioning of acceptance and the levels of the co-pays to be funded.

Mr. Kehoe, as president, motioned to accept the Medical Mutual PPO for approximately $3,950.00 per
month in premiums and fund the HRA at 70/30% which will change the deductible from $1,000/$3,000 to
$300/$900. The co-pays will not be funded by the HRA. Ms. Young seconded the motion.

Mr. Kehoe asked for any additional comments or suggestions. None were heard. Mr. Kehoe stated that
as Frank Harmon had mentioned, when applications are submitted, the amount of $3,950.00 may
change due to details found. That amount is a target amount. Mr. Figgers asked if by making the
motion the meeting with the employees would be done away with. Mr. Kehoe responded that a meeting
could still be had. Mr. Figgers asked Mr. Harmon with regards to the HEPA laws, if a prescription is
currently pending, would it transfer? Mr. Harmon stated that as long as there has been no gap in
coverage, pre-existing conditions would be waived. Ms. Bowers stated that the only difference would be
a new card, and the co-pay will go from $20 to $25. Specialty doctor co-pay will be $50. Mr. Figgers
stated that when Anthem says then want you to use a mail order prescription drug house, how will that
drug now be addressed by Medical Mutual. Will the same supply house be used? Mr. Harmon replied
that Medical Mutual uses MedCo. He stated that any unused portion of a mail order prescription can not
be transferred to another mail order pharmacy. Mr. Kehoe stated that he had been able to transfer a
prescription. Mr. Harmon stated that since the whole plan switched, it was handled in a different
manner. A new prescription may need to be issued by the doctor. Mr. Harmon stated that if something
major has popped up medically in the past six or so months, it could change the rate offered by Medical
Mutual. If the rate is different, Medical Mutual will make a counter offer. The township can then accept
or reject.

All voted in favor to accept the motion.

Mr. Kehoe asked the employees to fill out the insurance forms as quickly as possible to be returned to
Mr. Harmon.

Ms. Bowers reported to Ms. Heiszek that the signs she had spoken of at the last trustee meeting for the
railroad crossing on Lance Rd. had actually been put in place eight days prior to that meeting.

Ms. Young asked Mr. Harmon how long he had been servicing the township. Mr. Harmon replied that he
had been with the township since Baker Herbert was on the board.

Ms. Bailey stated that there were two resolutions that need to be addressed by the board.

RESOLUTION 26-2007 – A RESOLUTION MAKING AN APPROPRIATION OF $2,000 FROM THE
UNAPPROPRIATED BALANCE IN THE AMBULANCE AND EMERGENCY MEDICAL FUND TO THE
REFUNDS ACCOUNT. This is to address an overpayment by Medicaid and set up a refund account.
Motion was made by Lee Kehoe and seconded by Donna Young. All voting in favor.

RESOLUTION 27-2007 – A RESOLUTION ESTABLISHING A POLICY TO PERMIT NO POLITICAL
ACTIVITY ON TOWNSHIP PROPERTY DURING COMMUNITY EVENTS SCHEDULED FOR THE
GENERAL PUBLIC OF LAFAYETTE TOWNSHIP. This is to address no campaigning during community
activities such as clean-up day, holiday events, etc. Motion made by Lynda Bowers and seconded by
Donna Young. All voting in favor.

Ms. Young moved to adjourn. Seconded by Lee Kehoe.

Meeting adjourned at 4:35 p.m.