Trust Financial Health and Challenges - Acton Health Insurance Trust
Acton Health Insurance Trust, a self-insured entity, is facing financial challenges with falling reserves, increasing deficits, and a need for substantial cost reduction or revenue increase. The Trust's current status reveals rising claims and deficits, requiring significant intervention to stabilize its financial health. Explore the trust's financial history, deficits, and the imperative actions needed for recovery.
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Presentation Transcript
Acton Health Insurance Trust Fiscal Health 1
Health Insurance Trust The Health Insurance Trust is Self Insured It contracts with Blue Cross, Harvard Pilgrim, Tufts to administer programs like PPO s, HMO s, HSA s, Medicare supplements The Trust sets rates, collects contributions from The Town and District and pays claims. It does not do Plan Design To protect itself from very large claims the Trust purchases Reinsurance to limit liability to $175,000 per claim The Trust has an independent Treasurer, a Consultant to advise on rates and programs, and has an annual audit conducted by an independent CPA 2
Current Status Reserves (Undesignated Fund Balance)have fallen to zero Contribution Rate increases equivalent to 10% annually are not covering cost increases FY23 claims increase was 9.4% versus -5% in FY22 Loss on Reinsurance Insurance was $1 million versus a loss of $454,000 in FY22 and a profit of $491,000 in FY21 Rapid increase in the level of claims/deficits Claims for last 3 months 50% higher than the same period in two prior years Deficits for the first two month of FY24 have totaled $1.5 million $500,000 of that is reimbursable under stop loss insurance Some of this is still carryover from HP data breach New rebate savings program with BCBS will kick in in the second quarter 4
What is needed? To reestablish Reserves to a minimally acceptable level (10%)we need to increase revenue or decrease costs by $2.2 Million To restore the Trust to a break even basis based on FY23, we need to increase revenue or decrease costs by $1.7 million Without cost reduction the combined impact on rate would be almost 20% $2.9 million increase in contributions required from the Town and School District Employees would see an increase of almost 20% Individuals $ 50 per month more Families $ 118 per month more But based on the last 3 months experience that may not be enough 6
Claims for last 3 months 50% higher than the same period in two prior years 7
What we know and what we do not know We Know Our claims are increasing at alarming rates Compared to last year we will not lose as much on stop loss Insurance The rates we charge are not too low Our rates are comparable to the GIC and West Suburban Health Group for similar plans We Do Not Know If the claims increase is due to an increased number large individual claims or a significant increase in utilization by many subscribers 8
What have we done? Dec 22- FY24 Rates are increased by 8% $1.6 million June 23-Revised pricing model change on Pharmacy costs that will save $400,000 June 23-Stop Loss insurance premium for FY24 was held level with last year June 23-Administrative fees with HP have been reduced, other Trust Admin expenses have been reduced by 18% July 23-A new Consultant has been engaged to look at all options October 23-Adopted new retiree coverage model that will save $233,000 for the Trust and an equal amount for the retirees Developed a series of cost savings options 9
Options Authority $ Est. Amount Comments Trust 3,000,000 $ Raise Rates 15% Increase Reduce Cost Plan Design Cost Share Medicare Migration Trust Pharmacy Ben. Mgt. Trust Administration Town AB Town AB $ $ $ $ $ 1,400,000 900,000 500,000 1,000,000 300,000 Copays/ Deductibles etc Change to 70/30 split Medicare buy in Separate Prescriptions Third party Trust 10
