Search

Board of Aldermen 3-31-2020 Page 21

Alderman Clemons

However, the City is going to give a health savings account to anyone with the HMO of $1,500.00 and
$3,000.00?

Kim Kleiner, Admin. Services Director

With the HSA yes. With the HSA we give the contribution, the Health Savings Account.
Alderman Clemons

Ok so this is where | am confused; so if you have the HMO you aren’t paying that, we are not giving you a
health savings account is that correct?

Larry Budreau, Human Resources Director

Thank you may | jump in? Alderman Clemons the deductible for the HMO is not a first dollar deductible as it
is for the High Deductible Health Plan. You could go in fact according to one of the statistics that Ms. Kleiner
had earlier this evening, 95% of the people on the HMO were not hospitalized in 2019. But if those same
people did not have an outpatient procedure either, then none of them paid a penny towards the deductible; it
is only applied for inpatient admission and outpatient surgical procedures.

With an HMO, an HMO is a plan designed for which the IRS does not approve a Health Savings Account.
You can only have a Health Savings Account if you have a high deductible health plan. I'll stop there so you
can clarify if you like. Thank you.

Alderman Clemons

Thank you. So basically what you are saying is that with — if you have the high deductible plan you will get a
health savings account and the City will put either $2,000.00 or $4,000.00 into it for your out-of-pocket
expenses that you can use? But if you have an HMO you are responsible for the full deductible if you incur
one?

Larry Budreau, Human Resources Director

That was merely correct Alderman Clemons, the only difference is that the City is going to contribute
$1,500.00 and $3,000.00 towards the deductibles of $2,000.00 and $4,000.00 respectively. And in the HMO,
you are correct, there is no contribution to help allay those expenses.

Alderman Clemons

So essentially the, so this is what | was trying to get to. So essentially what we are really looking at here is if
you have the HMO effectively if you are an individual, the cost to you is going to go up by what $250?

Larry Budreau, Human Resources Director

If you have the HMO today and you stay with it, the cost is going to go down and Ms. Kleiner may have been
a better person to answer. The cost is going to go down about 15% so that the cost for both the high
deductible health plan and the HMO are about the same in terms of their premium contribution, their 20%
share of the premium. The current HMO is much more expensive than the high deductible plan.

Alderman Clemons

OK so | guess what | am asking is this, right now what | am asking is this, if | go into the hospital and | am on

Board of Aldermen 3-31-2020 Page 22

the HMO in let’s say August of this coming year, and | have to pay the whole amount of money for my
deductible, let’s say it is $3,000.00. How much of that is the City going to pay?

Kim Kleiner, Admin. Services Director

So Alderman Clemons if you are on that HMO currently, and you ...

Kim Kleiner, Admin. Services Director

In August? If you are hospitalized in August then you are going to run into that $3,000.00 deductible.
Alderman Clemons
And how much is the City going to pay?

Kim Kleiner, Admin. Services Director

That is your deductible. So if you are a family if you are on a family plan that’s your deductible, up to that
amount the employee would occur. What we are saying is because the cost of the plan has been reduced, if
you saved that cost, you could apply it toward that deductible and that would bring that exposure to $2,000.00
and he put the slide back up for us so we could see it. Because you are saving $936.00 annually because of
the plan change.

Alderman Clemons
| understand now. Ok | understand that now, thank you. My last question is | think this is pretty straight
forward, just that the copays are increasing on the HMO from $6 to $10 if you were going to get a prescription

at the pharmacy? | think | have that correct.

Larry Budreau, Human Resources Director

I’m sorry Alderman Clemons’ voice was choppy. | think it had something to do with going to the pharmacy
but could he repeat the question?

Alderman Clemons

| think this is the most straight forward part of it is that the copays on the HMO are basically doubling from
where they are now?

Larry Budreau, Human Resources Director

Yes that is true for the pharmacy.
Alderman Clemons

Ok | just want to make a couple of comments | guess if | can. Thank you. The reality is that right now for me
we are in a tough, this is a tough place we are in right now. We want to try to balance what we can do for our
employees with the understanding that we have a limited amount of resources to do it with. You know the
economy right now has never been worse and that happened overnight. When the economy was doing fine
the Mayor came to us with budgets that had an over per cent increase in the tax rate. So my thought is that
that’s going to have to change if this economy doesn’t turn around with this Coronavirus. So you know this is
a pretty good proposal to try and help us mitigate some of those costs. | understand that it is difficult to try to
budget and things like that and you are doing something completely different that you’ve never done before.
But the reality is that you know we can’t keep going down the road we are going. We have to be able to do

Board of Aldermen 3-31-2020 Page 23

something to change our healthcare cost until either the State or more likely the Federal Government does
something to bring down the cost. So we have to do what we can do locally to do that. And | think this is a
pretty good proposal. It gives people a clear choice and you know it is unfortunate that we can’t keep things
the way they were, but it is just not sustainable unfortunately. And | would rather have all of these people
working as opposed to laying them off because we have to pay for the healthcare for some of them and lay
off the rest in order to do it. So for those reasons, | am going to support this proposal. Thank you.

President Wilshire
Thank you, Alderman Clemons. Next, we have Alderman Cleaver.
Alderman Cleaver

Thank you very much, a couple of questions. First of all, who are the providers besides Anthem and has
there been any shopping?

Larry Budreau, Human Resources Director

We moved to just one provider purposefully because last year we had two before, Harvard Pilgrim and
Anthem. We are self-funded; the City of Manchester and the City of Nashua are the only two self-funded
municipalities in the State because of our size. There are economies of scale that come from having just one
administrator instead of two. That may not answer all your questions just part of it.

Alderman Cleaver

The follow up is when is the last time we approached another provider for processing?

Larry Budreau, Human Resources Director

Oh I'll continue | forgot that. We did RFP’s just last, not for Fiscal 21 but for Fiscal 20. WBS the consultant
that Director Kleiner has mentioned a number of times this evening has done that for us. We usually do it
about every 3 years and Anthem was the best choice.

Mayor Donchess

Could | add to that answer? Keep in mind that we are self-insured so the City is paying the claims just out of
tax money. So we are not paying an insurance company to insure people, we are paying them only to
administer the claim. Either Ms. Kleiner or Mr. Budreau can correct me if I’m wrong on this figure, but out of
the approximately $50 million dollars we are projected to spend on healthcare, only like $1.2 is for
administration. So you know it’s 2% of the entire cost. So whether it goes up or down a little bit with the
administrator, obviously we want to save every dollar, but even if it goes up or down a bit on the
administrator, that being Anthem or someone else, it doesn’t really affect, because it is only 2% of the budget,
it doesn’t really affect the overall picture. In addition, we say an 11% increase but that was after we reduced
the number of administrators from 2 to 1 and thereby saved $400,000.00. So we think having a single
administrator is not the same as just having an insurance company that covers everybody. Again we are self-
insured so we are paying only for the administration of the claims. We are not paying Anthem for the claims
themselves; we are to provide the insurance.

Alderman Cleaver
Thank you very much. The next question is somebody or a family has medical issues early on, they could be

out $4,000.00 until they get $1,500.00 reimbursed on July 1 and then the following $1,500.00 October 1*. Do
| understand that correctly?

City of Nashua, NH

Exhibit Design of Interpretive Panels

603.493.4917 © paula@baileydonovan.com ¢ betsy@baileydonovan.com ® baileydonovan.com BaileyDonovan

Board of Aldermen 3-31-2020 Page 24

Larry Budreau, Human Resources Director

Our plan year runs from July to the following June so immediately upon signing up effective July 1* you get
the first $1,500.00 the next day and then the second $1,500.00 would come on October 1* unless you
needed it before that in which case we would provide it when you needed it. Does that answer the question?
Alderman Cleaver

Yeah that answers the question, thank you very much. Next is just a comment and not a question but it
seems to me that this issue and this presentation is a ringing endorsement for Medicare for all.

President Wilshire

Are you all set Alderman Cleaver?
Alderman Cleaver

Yes, thank you very much.
President Wilshire

You're welcome. | think | had somebody before you Alderwoman Kelly. Linda, did you have your hand in the
queue.

Alderwoman Lu

| do have some questions OK?
President Wilshire

OK.

Alderwoman Lu

This is Elizabeth.

President Wilshire

OK Linda you go first please.

Alderman Harriott-Gathright

Is it an either or in terms of the different insurances, if you don’t go with the HMO then you have to go with the
HSA is that correct?

Larry Budreau, Human Resources Director

We have offered a third alternative and will continue to; it is a point of service plan. It is considerably more
expensive than either of the two and the whole City has only about 120 people enrolled on it, most of whom
are retirees living away.

Alderman Harriott-Gathright

Another question, the HSA there was somewhere | read that it carries over for or you can carry it over to the

Board of Aldermen 3-31-2020 Page 25

next year. Is that the end of it or does it continue to carry over year after year.

Larry Budreau, Human Resources Director

Sorry Director Kleiner, it is not the end of it. It carries over year after year and when you retire or resign it
becomes your money the instant you first get that $3,000.00 and it continues year after year when you retire
or you resign, you take that with you.

Alderman Harriott-Gathright

OK and my one last question. So for the unaffiliated, that’s their choice to choose one of those three options,
correct?

Larry Budreau, Human Resources Director

Correct.

Alderman Harriott-Gathright

Ok thank you.
President Wilshire
You’re welcome.

Alderwoman Kelly

Yeah, | have a few questions, actually the first one was actually something that you just said Director
Budreau. So you said you would take that money with you when you retire. Does is still stay in an HSA so
you can only access it for healthcare?

Larry Budreau, Human Resources Director

It does stay in an HSA; however HSA’s like other tax deferred savings accounts, you can take the money and
spend it on anything but you do pay the taxes at that point.

Alderwoman Kelly

OK thank you. So my second question is around projections so | know our projects on terms of how much
our health care was going to go up were done you know earlier this year. I’m not sure anyone will be able to
answer this but | am assuming given the state of the world and the crisis we are in that those numbers will
adjust?

Larry Budreau, Human Resources Director

President, may Director Kleiner take that question?
President Wilshire

Yes.

Kim Kleiner, Admin. Services Director

So the numbers that we see, Alderwoman Kelly, are always an estimate and they do fluctuate and we see

Board of Aldermen 3-31-2020 Page 26

that throughout the year. We did speak with WBS today. | think we have some concerns but you can look it
this way; So you saw a big push in elective procedures being canceled because of the crisis, so those costs
weren't realized. What costs we will see now towards the end of the year as a result of the crisis are really an
unknown. So we could actually have a drop in claims for people that have had these elective surgeries now
postponed, or we could see a surge towards the end when we receive them in May and June. We would be
happy to keep the Board informed on that but we do see it fluctuation. And then with Anthem’s change in
reporting this year, that has made things a little different as to when we are comfortable making the projection
and we actually delayed it and didn’t inform the Mayor of the production until later than normal.

Alderwoman Kelly

Thank you. | had one more follow up if that’s ok Madam President. Thank you. So my | think this makes
sense, | know we came to you guys and asked you to look at plan design as a way to potentially mitigate the
cost to the City. My question is, so much of the savings that we are talking about is predicated on people
actually making that shift. So what is the plan that we will put in place, | know you talked about ambassadors,
to help people make that shift? Because we are going to have to build a budget based on a number that we
are not sure we will hit unless those people decide to make the change.

Kim Kleiner, Admin. Services Director

So let’s look at the employee group we are talking about; there are 113 subscribers. 51 of those are already
on the HSA; 59 on the HMO and then 3 on the POS Plan that Director Budreau talked about. We are going to
have a lot of education for those 59 current HMO subscribers to try to switch them over to the HSA for the
next plan year. We can, with this small group of 113, you know, we can really reach out and have those
conversations. With the larger group, the total population as a whole, each Division is having those
conversations. So DPW is talking with their people; Police are actively talking with their people and the
Teacher’s Union is talking with teachers. That's how we realistically think that we are going to drive the
largest shift.

Our budget projection in the Fiscal 21 Budget is the entire increase that we recommended to Mayor
Donchess. So any potential savings that we see as a result of plan change, will be to our benefit.

Alderwoman Kelly

Great thank you very much.

President Wilshire

All set Alderwoman Kelly? Alderwoman Lu. Alderwoman Lu are you there?
Alderwoman Lu

Hello, can you hear me now?

President Wilshire

We can, thank you.

Alderwoman Lu

Thank you, Madam President. Just a few quick questions, the EOB is that Estimate of Benefit?

Board of Aldermen 3-31-2020 Page 27

President Wilshire
That is an Explanation of Benefits.
Alderwoman Lu

OK. Great. So that’s something that you receive to explain how much you owe and how the City picked up,
correct?

President Wilshire
Correct.
Alderwoman Lu

Thank you. On the invitation that was sent to the members of the Unaffiliated Group, it was sent out on
March 9". What date were they invited to come and learn about this proposal?

Kim Kleiner, Admin. Services Director

They received an e-mail from the Mayor directly on the 9" for a meeting on the 12".
Alderwoman Lu
| see, so they had a 3-day notice, but only a few came, right?

Kim Kleiner, Admin. Services Director

No, we had a fantastic attendance, | would say roughly 60 to 70 attended the meeting with the Mayor.
Alderwoman Lu

Oh OK it must’ve been the Director’s Meeting that | am remembering that only a few came to. So 60 or 70 of
the 135 we able to come and discuss it and learn about it? Is that right?

Kim Kleiner, Admin. Services Director

That is correct. Yes it was held in the City Auditorium.
Alderwoman Lu

OK and just the Fire Department it has been mentioned that they have a large enrollment in the High
Deductible. But it is not the same plan is it? | mean we are not talking about the same plan. There are a
Union and they probably have some kind of a slightly, you know, every plan is specific is that correct? So
when we say a lot of them have signed up, we don’t mean a lot of them have signed up for this particular
plan? Correct?

Kim Kleiner, Admin. Services Director

The High Deductible Health Plan with the Health Savings Account is the exact same plan across the City.
Alderwoman Lu

Oh OK is that true of — so going forward is that how these plans work. Are they sometimes, | was under the

Board of Aldermen 3-31-2020 Page 28

impression they are tweaked by the Union or they can be? | mean it is negotiated so they may be slightly
different from one Union to another.

Kim Kleiner, Admin. Services Director

| think the confusion is that the proposed healthcare plan design that is proposed this evening is for
unaffiliated employees that has to be negotiated into any Union agreement going forward with our 17 Unions.
So their HMO would remain the same unless the Union agreed to negotiate that change.

Alderwoman Lu

OK | was just trying to clarify, | was trying to understand what had been discussed about the Fire Department
having highly signed in, but was that comment about this high deductible plan as it is? As it currently is?

Kim Kleiner, Admin. Services Director

Yes, they have been very active with their members in educating them on the benefits of the high deductible
health plan which we think results in the change and the shift to the high deductible.

Alderwoman Lu

OK and just after retirement, | don’t know whether our City employees stay on the health plan after retirement
but do we continue to pay into the HSA’s for retired employees?

Larry Budreau, Human Resources Director

May | respond? Thank you. When employees retire from the City of Nashua, if they retire before they are 65
years old, they are eligible to continue the City’s Health Plans but the employee pays the full premium. They
are able to choose any of the health plans that the active employees have; so they could pick the current high
deductible health plan or the current HMO or the current Point of Service Plan. If they choose the high
deductible plan the answer is yes, we do contribute the $3,000.00 for the family deductible.

Alderwoman Lu

| guess my concern is couldn’t that become an increasingly, kind of like a pension, you know, almost as
though we are building pensions into our retiring, you know, we are adding to pensions almost. So thank you.
And another question is just about that Smart Shopper. So | have been on high deductible plans before and |
understand the benefit of you know healthy living incentives and incentivizing your employees to shop and to
know the benefits, rather to know the cost of healthcare so that they can be an agent in maybe change. But |
wasn’t clear on that slide of the Smart Shopper and whether, is there a commission that we pay for Smart
Shopper or is just part of the package that this WBS offers?

Larry Budreau, Human Resources Director

Smart Shopper is a for profit organization and they generally do business with a per employee. So Smart
Shopper usually is paid on a per employee per month basis. The City of Nashua was reluctant to find
ourselves paying more for the service than we reaped in savings. So we began our relationship with sharing
the cost savings 70% / 30%. So if you were to look at that slide again, sorry I'll just tell you. There was a net
savings of $25,000.00 by Smart Shopper. We actually retained 70% of that, less the 30%. So two thirds of
the way down — oop go ahead.

Alderwoman Lu

So what is Smart Shopper?

Board of Aldermen 3-31-2020 Page 29

Larry Budreau, Human Resources Director

| recall you last asked | think what Smart Shopper and it is is an organization that is constantly mining the
data from Anthem so it knows what facilities have charged how much for certain procedures. And then
through a web portal and also with telephone assistance, when someone has to get an MRI for example, and
| did this before Smart Shopper, when | switched to the Health Savings Plan the first time | was ordered to
have an MRI, | participated in where it was going to be. Now | would call Smart Shopper, they would take a
look at the doctor’s order and they would look at facilities and say, “If you go to this facility, we will give you
$250.00 incentive”.

Alderwoman Lu

Thank you. And am | muted?

President Wilshire

No we can hear you.

Alderwoman Lu

Is that built into the price of the plan; is that service part of the plan?

Larry Budreau, Human Resources Director

| will answer part of this question; Director Kleiner may want to help with the budgeting piece. So the cost of
the plan is only a projection because we are paying claims as they come and we can only guess what they
are going to be. So we have guessed at kind of the high end, they projected the increases from last year’s
and this year we introduced this so we are ostensibly saving a little money from what was projected.

Alderwoman Lu

Excuse me, I’m not sure you understood. | am just asking about the cost of Smart Shopper. Is that paid for
by the cost of the high deductible plan?

Kim Kleiner, Admin. Services Director

No the Smart Shopper, we are realizing 70% of the savings and Smart Shopper is retaining 30% of the
savings. That is not incurred in the cost of the high deductible health plan; it is its own benefit.

Alderwoman Lu
OK alright, | think | understand. OK. And just last of all, Oh CBA strategy you mentioned, since | don’t know
it was quite awhile ago that you talked about the CBS Strategy but | was not clear on what you were referring

to. Charlie, Baker, Adam.

Kim Kleiner, Admin. Services Director

My apology for using the acronym in the first place; Collecting Bargaining. So we have a Strategy Team
between members of management for the City, HR, Legal, and the members from the Employer Boards,
whether it is you know a member of the Fire Commissioners and the Police Commissioners, so when | speak
of Employer Boards that is what | am referring to.