Council - Special Meeting

Let's get the show. Okay. Okay, calling this special meeting of the Hackinac City Council to order. It is Monday, December 29th, 2025. It is 5:31 p.m. Um, if you can read the notice, please. In this meeting is being held in accordance with the open public meetings act NJSA 104-6 xet notice of which was sent to the record and the star ledger and was posted on the municipal bulletin board. Thank you. Can you call the role please? Absolutely. Mayor Gaines here. Deputy Mayor Tumi, Councilman Carol here, Councilwoman Clark Collins here,

Councilman Diaz here. Okay, if everyone can rise to the flag salute, please. I pledge algiance to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all.

Thank you. We have no approval of minutes. We have no resolutions for executive session. We have no proclamations and presentations. We have no reports and presentations from professionals and department heads. Uh, any member of the public wishing to speak on any agenda item? Can I have a motion to open to the public? I'll offer. Second. All in favor? I. Any opposed? Any abstensions? Anyone from the public wishing to speak on our sole agenda item for this evening? Seeing none, motion to close to the public. All offer. Second. All in favor? I.

Any opposed? Any abstensions? Okay, we have one item on the agenda for today under new business. It's resolution 508-25. Can you read what that resolution is and then um before we vote, we'll have some discussion. Resolution 50825 is a resolution authorizing extraordinary unspecifiable services contract to Sun Life Insurance.

Thank you. Okay. Um before we vote on this, I did want to ask for uh some folks to come forward and just explain a little bit about what we're voting on this evening. Um how we arrive at this resolution. So, I'm going to um allow either Chris Pzano or Jim Mangan to um rock paper scissor decide who would like to come up and and take that task on. I'd like to Oh, Jim. There you go. Okay. Great idea. Thank you, Jim.

Yeah. Yeah. I'm going to start it off because um first I just want to give you a quick background on uh self insurance for health benefits. Now, I've given you a a really really quick briefing one time before, but you just have to understand the background to understand the resolution for tonight. [snorts] If I repeat myself, um I apologize, but it's important that you understand the background. Okay. And Jim, I before you get started, I don't mean to interrupt you, but just um I also want to make sure that don't don't worry about repeating yourself because I want to make sure that everyone is aware in the hall or who's watching just to make sure that people are clear as to what it means to be self-insured and and the nature of the resolution. So, don't don't worry about that. Okay, good. Thank you.

Okay, so for health benefits, we're self-insured. Now what that means is that for our employees and for our retirees um what we do is we pay for the actual claims whereas in traditional insurance you would pay your insurance company a premium um and the insurance company would pay for the actual claims. Okay. Uh that's how we work it. Okay. Um so in other words employee goes to the doctor. Okay. Doctor takes the bill, sends the bill to Blue Cross. Blue Cross pays the doctor and then instead of sending the city a premium, a bill for a premium, here's your insurance bill for the month and it's the same bill month after month after month, they add up what our premiums are for the month and they send it to us and we pay for the actual claims. And that's how that works. And because we pay for the actual claims, we have to have insurance if there's some type of really expensive medical procedure or some ongoing event medically that is going to just drive costs up. An extended medical stay. There could be a u a really expensive medical therapy. You know, something that's, you know, way beyond our capacity to pay for it. Okay. So, we have a threshold um that we pay for for each claim. All right. We'll pay up to $175,000 for an individual claim. Okay. After that, our stop-loss insurance carrier picks up the tab.

I'm sorry. When you say, and I apologize, mayor, if I may, when when you say individual claim, you mean individual claimant employee? No, an individual claim. Okay. Um, you know, an individual claimant can have one individual claim. Okay. So, correct me if I'm wrong, Chris. An individual claimant can have multiple claims. Yeah. Okay. But the Hold on. We're going to have to introduce a second. So, go ahead. Okay. Thank you, Mayor.

Okay. So, that's called the stop-loss reimbursement. So, for an individual claim, uh, we're responsible for the first $175,000. After that, our stop-loss carrier, who is Sunlife, subject of the resolution tonight, picks up the tab, um, pays the, uh, pays the balance of the claim. Okay, that's how self- insurance works. Okay, now self- insurance can be good, can be bad. Um, for us, for a long time, it was very good. Okay, we had a number of very, very good years. uh people didn't get hurt, people didn't get sick, our claim costs were very low, whereas most municipalities in New Jersey are on a state health benefits plan and they would get premium increases year after year. Rule of thumb for CFOs that are in a state health benefits plan is you contemplate a 10% increase in your premiums when you do your budget. Well, for me, what I would do is I would look at our claim data from the year before and see what that was and project the following year. Well, in the period from 2014 to 2021, our claims were relatively flat. In fact, our total claims in 2021 were actually less than they were in 2014. We had a lot of good years. And when you're self-insured, when you have good years, it's great because you don't have to share that with anybody. So, it works out very very well.

Can I ask one question? Yeah, sure. Uh, so my question Okay, so we had four years or five years of good years that you didn't uh spend any money. Did the monies that we have did we save? Yeah. And where did we Yeah, that's a that's an excellent question. And where did we put it?

Yeah. So what we do is because we don't know if we're going to have a good year or not. All right? So you know what you do is hope for the best, plan for the worst. So what you budget it. So what I did then was that's when I created the um health benefits trust fund. So what would happen is when the year ended, whatever money was left over, instead of it going to surplus, it went into the health benefits trust fund and we built up that trust fund. Then the trust fund got pretty healthy over over time because we had these these really good years. Sorry, Jim. I don't want to don't lose your train of thought, but can you just orient us into approximately what year you're talking about in terms of the trust fund being established?

Um, I think the I think I established the trust fund in 2018. Okay. Yeah. So by by 2021 balance in the trust was about one and a half 1.6 six million I think something like that. Okay. So, as I was saying, good years, you don't have to share it. That's great. Bad years, the problem is just a quick question. What do you mean by you don't have to share it?

Okay. when um when you're part of a large pool like the state health benefits plan, okay? If you have a really really good year, you have almost no claims at all, you don't get any benefit out of it, you know, because every other town that's in it could have a terrible year of claims, you know, and they don't have to, you know, they don't get penalized for it. You don't get rewarded for having a very good year. You don't get penalized for having a really bad year. You know, you pay a premium. Well, when you're self-insured, if you have a really, really good year, you do get rewarded. You didn't pay for the claims. Then you got the other the other side of the coin. When you have a bad year, you can't share you can't share that risk or that extra cost with anybody. It all falls on you.

That's the downside of self- insurance. It's risky. you can't share the risk with anybody. So for us 2014 to 2021 a it was great. You know during COVID it was even better. Um COVID years were excellent because during COVID nobody went out, nobody went out of the house, nobody got hurt. Um nobody did elective surgery because nobody wanted to go near a hospital. So if anybody who was up for elective surgery just just postponed it. Um so our claim cost went way down during COVID. Now after COVID about midway through 2022, all those people that had been postponing their elective surgery, they all got it. They all went for elective surgery. And in beginning halfway through 2022, that's when we saw our claims start to take off. Not just us, you know, throughout New Jersey. uh midpoint of 2022, medical claims took off. All throughout 2023, medical claims moved way up. 2024, medical claims moved up. 2025, medical claims have been going up. Okay? And it wasn't just the postcoavid. Um you remember in in 2023 uh we also had you know the after co uh there was uh there was inflation. Inflation went up to 7 and a half%. Uh highest inflation we had in 40 years. Well inflation's come back down. Inflation's about 2 and a half% now. But for a while it was 7 and a half%. It was very high. Even though inflation's come back down, we still have what's called medical inflation. There's still a shortage of medical personnel, medical supplies. So medical costs are still high. Okay? And that's still driving

high costs for everybody in New Jersey, not just us. you know, the um you know, you read the articles, the um state health benefits plan premiums this year are going up 36%. And uh you know, our claims have been going up every year. Now, the um Excuse me, I have a question too. And so the the surplus that you're talking about that we had a that went into the trust uh trust. So, how did that come into play? Did did

Okay. Yeah, that's that's another good question. Okay, so we had these good years. Okay, we build up the trust. Okay, so like I said, 2021 the trust is about 1.6 million. Okay, 2022 claims uh our medical cost exceeded the budget. Now that's why you have a trust. You have a trust for when you have bad years. Okay, so we blew through the budget. So then we start using the trust to pay for what the budget didn't didn't cover. And then in 2022, we increased the budget hoping that this was a one-time event. But then in 2020 in 2022, the claims took off even more, blew through the budget again. We had to go to the trust again in 2022, increase the budget in 2023. But that did that was that all used in 2022? That's that

trust? Well, we used some of it in 2022, some of it in 2023, and some of it in 2024. Okay. Because so now it's depleted.

Not completely. It's down to about 300,000. You use the trust when the budget runs out. Okay. And because the budget runs out, you can't replenish the trust. That's where the money from the trust comes from. All right. So now there's only 300,000 left in the trust and that's where it went. You you build a trust for when you have a bad year. Okay. And unfortunately for us 22, 23, 24, now 25 have all been bad years. Okay. So yeah, so the trust is now down to about 300,000. Can I can I ask so when when you say 22 23 24 and 25 are all bad years bad year to me suggests that it's an anomaly. You know, you win some, you lose some, but it seems like there's been a a sustained pattern of losing some. And so I'm curious as to um what attempts have been made in terms of foreseeing where we are today and perhaps mitigating them when it was the second year of a bad year or the third year of a bad year or the fourth time that you had to dip into the trust fund um and now it's down to $300,000 give or take. what has been done to prevent this this cliff that we seem to be on at this moment.

Okay. Well, keep in mind, you know, holding the line on health benefit costs is very very difficult. Okay. Because the health benefits are defined in the labor contracts. Okay. Now, we've been working on reducing health benefits in the labor contracts since 2016. Okay. And the only way you can reduce health benefits and labor contracts is by increasing salaries. So we started doing that in 2016. We introduced a plan where the outof network benefits um instead of the city paying 80% the city would only pay 70%. Now, in order to do that, yeah, we did have to offer the employees um higher salary increases, but we also told them that because it's a cheaper plan, their health benefit contribution is smaller. Okay? And right now, we're at the point we've been offering that to all the unions. There are only two unions right now that don't have that plan. It's a fire officers and uh and white collar. all the other unions have opted for that plan. So that that holds the line on some of the health care costs. Okay. Um that's a long time coming though. Uh that was one thing. Um Chris will tell you that when we started seeing the uh the increase in costs in 2023, we were discussing it in 2024. He'll explain to you uh what we did in 2024. But um and then obviously we had to increase the budget increase the budget um by 11 million in 2024 and 2025. Um that still isn't enough. Okay? Because you know we didn't have enough

in the 2025 budget had to cover that with transfers. But what happened in 2025, which is different, is I track uh our claim costs and I just look for trends. I match it to last year. Do that all the time. January of 25 matched against January 2024 was way higher. Okay? Could be a one-time event. Could be left over from last year. February, same thing. way higher than 24. March way higher than 24. Now Chris is looking at the same data that I'm looking at. So we we contacted each other in late March said, "Are you seeing what I'm seeing?" Yeah. So we got together in April um because if this trend continued, we were going to have a real problem in 25 which we do. So we got together in in April to figure out what are we going to do if this trend continues because we have to do something because if that trend continued um we were going to have a catastrophe before years end. Okay. So in May um he and I sat with our representative from Blue Cross and I'll he can explain what we implemented. Okay. Um before you um

why don't you jump in go into that I I do have just a few questions. So we're proposing the ordinance 508.25 authorizing [clears throat] Sun Life Insurance to take over our health benefit plan. Just the the stop-loss portion. Just the stop-loss. Okay. And they're the they're the current provider. It's renewal, right? Okay. No, I'm just asking. No, that's okay. I just wanted to make that clear.

The All right. So, I know that we're not talking about the health plan itself. We're talking about um the stop loss. Um, is the city continuing to go with Horizon as their main insurance carrier? Yeah. And then you have I think there were a couple of different choices to make it cheaper and we're continuing to do that.

Well, we have different plan options. Okay. And depending on your hire date is what plan options are available to you. You know, if an employee was hired uh prior to uh an employee was hired prior to 2010, um they have several 2011 was chapter 78 and that's what that's that's when things changed. Yeah. Yeah. Well, chapter 78 is the law. So, that's not an option. I'm just I'm just I I want Well, because you got to remember I am retired as a police officer. Some of stuff does affect me, some of it does not.

Um, I don't see anything here that's going to reflect or do anything with me. But again, as XPBA president, um, some of the wording that we have put in the contract, the contract is contract. So, we're just talking about stop-loss, right?

Right. Well, and just remember, you know this, but just so everybody else knows, when somebody retires from Hackinack, whatever insurance they have when they retire stays with them for life. Yeah. So, we don't change that. So, we we couldn't change it. All right. And you're 100% correct. We're not talking about any of that. Yeah. The resolution for tonight is about the stop loss. I'm reading now. I just want to make sure. Okay. All right. But uh Chris is going to talk to you about what we did this year to try and rein in the really high claims. Okay.

Sorry. Before we pass off to Chris, and this maybe this is a Chris question, but I I just wanted to ask because the timeline in January 25 the claims were higher than January 24. The same for February, same for March. in April. You mean if my recollection is correct, and it may not be, so please correct me if I'm wrong, but I believe the budget was introduced My recollection was that it was introduced in April. Is that correct? The budget for No, no, the budget was introduced in May.

It was introduced in May. Okay. Yeah. So, so, um, should I expect to hear Chris describe how this was budgeted for in terms of the budget that was established after you've tracked January, February, March, April, and then had the meeting in April. Should I anticipate an explanation as to how this increase was being accounted for in the budget that was presented once the problem was identified? Well, the the budget, right, um may have contemplated what we were talking about. Um but

can you explain can you explain what you mean by that? Well, when I did the budget, all right, it's all based on last year's claim data and the claim data up to the time that we're doing the budget, right? You can't say that, okay, well, January through April was terrible, but it's going to get great, so I'm only going to But now, you know, we don't do that. I agree with you. You have to say January through April's been terrible. April to December is going to continue to be terrible. So, we we anticipated Oh, yeah. that May through or June through December were all going to be terrible. Okay. And then [snorts] uh and then May was even worse.

Um and then June got better. Okay. But all right. So then I have another question because I'm again reading the resolution and I was told or emailed that Horizon is not is refusing to cover us. There was a letter sent by Horizon saying no that so the the letter that I the email that I got is not correct. I think uh if I can, Mayor, if I may.

Yes. Um, I think some of the information that was disseminated over the weekend after Christmas uh attached um a response from certain insurance companies who who refused to bid the stop-loss. We we we sought um our you're going to hear from our the city's uh insurance consultant and broker went out to market because the renewal was so high from whatever this company is that we have in front of us today.

Yes, they're all named these great names. So, we've got Sunlife and they they have a 47% increase looking down the barrel for the city. So, of course, they went out to market and tried to get some other people who were in the same business as Sunlife writing stop-loss, you know, insurance. And apparently, we at least two came back saying that the city's experience, the claims were such that they didn't want to bid it. Is it is that accurate? That's accurate. So I think that's what that which

and that's what I'm saying because I see here as part of uh the second or third paragraph whereas the city asked other stop lo uh loss insurance carrier providers to quote the city for 2026 and they have refused to bid for the city stop loss coverage due to the claim experience that the city has had over the years, particularly 2025. I'll stop there. When were we, the city advised of that cuz I am understanding that there might have been some correspondence that were sent to the city that nobody responded to. Well, I can tell you that I'm asking

that we met with um Horizon Blue Cross, myself, Chris, city manager, and they told us that they were going to give us a quote on the stop loss in early December and the following week was when they declined. We were expecting to get some type of a quote from them. Um and then within the week, uh they declined. And as far as the email that I have, it was the letter from Horizon telling us sorry in two sentences. Mhm. That we will not cover you anymore. Yeah. Wouldn't you think

they declined to But wouldn't you think that Horizon would have sent a better explanation to us instead of just saying, "No, we're not going to do it this year." No. when somebody declines to to bid, they're not going to give you an I think it's a question that's probably better for the broker, right? So, when he comes on and does that, I think that makes more sense. Okay. So, good evening everyone. Um, I could give you some insight. So, Chris, why don't you, for the record, why don't you just identify my name is Christopher Bzano uh from Acure. Uh, been the insurance consultant here for probably 10 years now. So, your role in the city of Hackinack is you're the insurance consultant. Yes sir. And you're the broker. That is correct.

Okay. So with respect to your your question, um Horizon being the administrator for TPA services also has their own stop-loss company. So [clears throat] because they have the claims and they see everything going on, what they like to do and get building up to December, they said, "Okay, you know what? If we can get another month of data, maybe we can quote this. However, when that month of data probably came in, they looked at it and said, "We cannot be competitive on that. We cannot quote we can't compete with Sunlife's renewal." So, we answered it on time. Oh, absolutely. Yeah. Yes. And then

I would like to see that. Sure. I have a copy of it right here. So, mayor, if I could, um, so I think what makes sense, respectfully, is for Chris to try to give us some context of on top of what Jim just gave us on, okay, you know, I'm in the insurance business. I'm here in Hackac 10 years. This is why stop-loss policies are good, when they work right, when they don't work right. Here's why this one's not working right. And you can also, if you can, I know it's hard because you're in the industry, avoid the acronyms like TPA is third party administrator. So when you have a stop-loss,

as I've learned over the last 15 days, when when you have a stop-loss product, insurance product, there is a third party administrator who because you have a a self-insured retainage that the city has to deal with by way of claim, not claimment claims. So the claim has to go over the 175 not the summation of the claims for a claimant which I was mis I was mis I misunderstood that thank you that this third party admin administrator who is Horizon Blue Cross Blue Shield for the city handles all the claims and they charge a they charge you a fee for it monthly monthly fee. So, if you would, Chris.

So, with that being said, once we have the the monthly flee coming in from Horizon, they administer all the claims. Then you have your stop-loss carrier that reimburses the city over the $175,000 per claim. Okay. So, can I just and I'm sorry, I apologize because this is problem I had. Maybe nobody else has this problem, but I'm just have a mental block with it. The 175 is an actual insurance claim. It's a catastrophic claim. But but the a person who submits 17 excess claim of 175,000 or a claim in excess they could have submitted 15 100 claims before that were all under the stop loss. That is correct. And that would have not touched the stop loss. Not have touched it.

As soon as you go over for some horrible issue in your life or some surgery or whatever that excess is what the stop loss cover. That is correct. Thank you. I'm sorry. Please. No. I'm gonna ask also with with the exception of with the exception of Mr. Melageri is um Chris if you can just go I'm going to ask for just for us to hold our questions so you can say what you have to say and I'm sure we'll have questions once you're done but we'll just take notes and let you

Sure. Thank you sir. So with that being said, Sunlife uh reimbures the city for those claimments over 175,000. This year in particular, unfortunately, uh the reimbursements were in excess of $9 million coming back to the city. Your premium was about $5 million. Just to keep it in p perspective, we paid them 5 million, they paid us back 9 million. Hence, our loss ratio was about 200% this year. So the saving grace to it that is if when I did go out to market to the carriers they were uncompetitive with the 47% rate because they said to me like look if we were going to quote something like this it would probably be 100% renewal if not even more because of the claims and the premium. So that being said, that's why you're looking at Thank God we instituted a 50% renewal cap in our contract when we first put this in place back in 2020 or 20. When did we leave HM? Whenever we left HM

left them in 2019

19 we instituted that was part of my mandate was that because going into self insurance just for these purposes even though we were having good years we had to always think down the road that if we were going to have a bad year we had to cap our our renewal process and thank God we did that. So that 47% that you're looking at albeit as a big number the number could have been a lot bigger if in fact that we would have gotten anybody to quote it at that rate. Um so that being said um the stop loss kicks in and you know you we do need to carry it to get it you know to keep this in place as an obligation to you know paying these claims getting reimbursements going forward. Uh I did not recommend increasing the individual stop loss because you can increase it or decrease it the 175,000 by increasing it. It's just going to add more liability onto the city under under that level. So it just doesn't make sense. We're here now. We're going to keep it there now. Right where it is. And hopefully what we're doing going forward is hopefully what we we put in what I should say is back in June we changed because most of the well I should say 95% of the high claimants that we're discussing are all out of network claims. The providers do not have a contract with Horizon. They're not in network. They can bill whatever amount they want. So what we did in June was we put in a company called Zealus effective July 1st.

Zealous was

24 24 we put in zealous and then in 2025 this year we changed the fee schedule on the out of network reimbursement. So whereas we were paying based on a regional level here in Hackinack for all intents and purposes where the rates could be let's say a knee surgery is $10,000 here in in Hackinack, we changed the fee schedule to compare it to a national level. So whereas a knee uh a knee surgery in Iowa only pays $2,000, we have to take the national scope now. So we we've reduced the amount of payment that's going out the door. That was in July of this year. Going forward, in addition to that, what I've recommended is putting in Evokor. They're a third party through Horizon that is going to pre-certify and pre-authorize all out of network claims going forward. Now we have seen some different um some levels of claims coming down with the effect of this so far with what we put in. And I think Jim, you you've seen

Yeah. Go ahead.

So what Chris said about first about zealous was that was something that we did in 2024. Okay. Uh what it does is it it implements another layer, another set of eyes looking at each of the claims um to make sure that uh we're they're charging. No, it's another set of eyes looking at the claims to make sure that they're charging the correct um you know, yeah, the the correct amount and we're not overpaying it. When we met with Blue Cross this year in May and we saw the costs that we were paying January through April, uh we said we have to get even more aggressive. Okay, that's when Blue Cross suggested that we change the network reimbursement rate and we go with this national rate and we said okay that's what we want and implement that as soon as possible you know said okay we can put that in we'll we'll put that in place for January now in the period from January uh through May we were running on the average of $1.8 8 million per month higher than January through May of 2024. 1.8 million per month higher than the year before. That was that was the trend. That was that was the runaway train that we had to try and stop. We implemented this uh fair health network uh reimbursement rate in June for the period from July of 2025 through October 25. We don't have data for November, but from July to October, the same fourmonth period. Wait, rather than rather than guess

give you the actual number. Yeah. For the period from July through October 2025 as compared to July to October 2024 per month, our claims are down $161,000. So from $1.8 8 million over to down $161,000. Okay, that's what the change that we put in effective June 1 had. Okay, so still too early. Okay, we do have four months worth of data. We don't have November's data yet and obviously we don't have December's data yet. Um but cautiously optimistic. Okay. Then what Chris had said about Evercore, that was the meeting that we had earlier this month with the city manager. Um that we're going to implement that on January 1. That's yet another layer. only this time what they're doing is instead of looking at the price being charged, they're going to look at the actual claim itself to make sure that it is a medically necessary claim. Okay? Because we can't do that. We're we're all lay people here, okay? [snorts] Um and if it's not medically necessary, well then the claim will just be outright denied. Okay? and that'll be in effect for January 1. And we're hoping that that's between these two things. This is how we're going to try and control these costs going forward. Problem is our claims experience from 2024, 2023, 2024, and this year, well, definitely January through May.

and possibly that's what our stop-loss premium is based on. Now, as Chris said, our 2025 premium was about $5 million and the 2026 premium is about 7.5 million. It's a $2.5 million increase, 46%. Yeah, that's definitely high, very high, very steep. But for that $5 million premium in 2025, we're being reimbursed $9 million. This is why nobody else wanted to bid. Who's going to bid better than 7.5 million on a policy that paid out $9 million in claims? Nobody. Yeah,

the the unions. Um, so if you went from a 7030 type reimbursement and now you're going to a 6040 type reimbursement. Um, have the union said anything about that? No. I think we should hold off on that. We can talk in close session. We've looped in labor counsel to advise us going forward on this issue. I agree. Thank you. I apologize. No, no, nothing to apologize. No. Yeah. If I could just say one thing about it though, it's what we've done. We haven't changed anything. Yeah. I wouldn't say anything more on that. Thank you. Okay. Yeah. No, I I appreciate it. Yeah. Okay.

All right. So, um Okay. So, the resolution that's before you tonight, okay, is to renew that Sunlife uh contract, that stop-loss contract 2025, $5 million premium, which paid $9 million in claims, and the renewal is a $7 million, $7.5 million premium. Okay? Um, now, I won't kid you, uh, we do have another problem in 2025. And with that $9 million in reimbursements, the we don't get our reimbursements right away. Okay, sometimes it takes up to a year. In October of this year is when I got the last of my reimbursements from 2024. Now I'm used to getting reimbursements a year late. You know, that's just something I've gotten used to. That's the problem is that this year the reimbursements are so high that having to wait for them until well into 2026 that's created a cash flow problem for me which is just something that I have to deal with. Okay. It's the only thing I can do is ask plead, you know, uh to Blue Cross and the stop-loss, please expedite my claims, you know, get me my money as soon as possible. Um, that's that's been an issue. That's been an issue for me, you know, it's just that I have to try and manage the money as best as I can. Okay.

Can I ask you Sure. If Horizon doesn't expedite, how do you plan to deal with that?

Well, I'm I'm dealing with it right now. Okay. Horizon has to get the information to the stop-loss carrier, and then the stop-loss carrier issues the check to me. There were definitely communication issues between Horizon and the stop-loss carrier. and I was all over him on it and he was all over both uh Horizon and uh and the insurance carrier about it. Okay. A lot of issues got resolved back in October and uh and November and I did see a flood uh a real flood of checks in October. Okay. Um but I they still they they owe us right now about $5 million. Okay. And while it's not unusual for 2025 claims to be paid in 2026, um it's it has created a cash problem and and the cash problem has created issues. It's not a deficit issue or anything like that. One of the issues it's created is that um my revenue projection for interest income isn't going to hit projection because we didn't have enough as much cash in a bank as I planned. So, we didn't make as much an interest as I planned. You know, things like that. It's

okay. I'm I'm not understanding. My question is how do you make up for or how do you make up for the amount until you get reimbursed for it? Where what account does it or or where does it come from as far as

Okay. No, what it means is that because I don't have that money coming in, for example, in the budget, so I had to cover that in the budget with transfers. So, you see when we do transfer resolutions, and you'll see we've done uh two very healthy transfer resolutions. Uh one in November, one in December, um one was about a million dollars being transferred into health benefits. And then on uh December 10th, we transferred another $900,000 into health benefits. Now, what'll happen is that money will come in sometime in 2026. Now, if I had if I had gotten the reimbursements in time, I wouldn't have had to make those transfers. So, these are these are just issues I have to deal with. Okay? But, you know, it's it's just part of the job.

So, I I'm sorry. Did you have a question? I'm sorry. I I have a question regarding the transference. Uh when when you uh when you talk about transfers uh some amounts uh that means that is the possibility that it may help uh hurt another areas where we getting that money from. Yeah. No, because what I do is I transfer it from areas of the 2025 budget uh where we had overbudgeted or we had money left over. Okay. Maybe there was an area of the budget where uh we expected something to happen and it didn't happen. Um somebody retired for example.

Can you give us an example? Um yeah, let me think. Uh for example, you know, somebody could have retired, okay, that I wasn't contemplating. Um tax collector retired in May, okay? And I budgeted her full salary for the year. She retired in May and uh the new tax collector makes a lower salary. Okay? So there was excess money in the tax collector's salary budget. Okay? So I would transfer that money out. That's just a a simple example.

Um, so I don't know. I think this might be a question for Chris, but whoever wants, Steve, this might be a question for you as well. Um, but it was stated early on, I think, in fact, one of the first things that was stated was that most municipalities are in the public insurance plan. And so what I'm trying to figure out is why is the regular insurance plan, the public insurance plan beneficial for it sounds like most municipalities in New Jersey, but in Hackinack, um we feel that being self-insured is the appropriate decision. Well, we we don't feel that way.

Well, I Well, or at least I I don't feel that way. Um, personally, my personal opinion is, well, I guess I'm asking for your your professional opinion in terms of, you know, if if we are one of, and again, I'm not speculating in terms of an exact number, but it sounds like we are one of few municipalities

in New Jersey that are opting to be self-insured. And at the beginning of this meeting, it was described as sometimes it is advantageous, sometimes it is not advantageous, even though there's been a pattern of the last four years at least of it not being advantageous. So I'm trying to figure out why for the lion share of municipalities in New Jersey, they have all made one decision and here in Hackinack, we have made an alternative decision. Can someone explain that to me?

But just my my professional opinion. Uh I would prefer the state health benefits plan only because there's no risk. There's a lot of talk going on about how expensive the state health benefits plan is right now. Like I said, their premiums went up 36% this year. Okay. But um there like I there are benefits to u self- insurance and there's not. I like the fact that you know how much your health insurance budget is. there's no surprises. Um, getting there is a different story. And to be honest, that's a discussion for close session to be honest.

So, and and I don't know again if this if there's something that's not appropriate for for this forum, let me know. But I guess I'll ask the question a different way because I don't know if I got an answer to it. And it might not be a question. It might not be a question for you. It might be for someone else. But if there's a 36% increase to the public health insurance this year, I have not heard of municipalities saying this is too rich for my blood. Let me go self-insure bodgingwood. I I'm not hearing that. So yes, please.

Okay. So not every municipality is big enough to be self-insured. They can also be out of the state and be fully insured, which is buying insurance direct from Horizon um on a fully insured basis. Same program, same concept, fully insured. The state is ironically a self-funded program. It's just that they give everybody the same exact rates for the different plans that they offer. It's what we look at it as a last resort for a municipality if they're running so bad that and when if you're out of the state you can't get insurance. Let's say you're going to get a 55% and or 30%. In good years you the state maybe went up 12%. So that the municipalities would go into the state health benefits. Now this 36 that they or it's actually 37.8% 8% this year that they're they're coming out with. Um about uh 50% of those municipalities and school boards that are in the state health plan have been getting their data to pull out of the state health benefits. So I know for in fact like one of the hiffs that we've approached to put the city in here, the city in that ironically declined us because of the claims issues. um they've took on about 36 municipalities out of the state this year alone just by way of this. So the answer to your question is yeah a lot of people are saying the 38 is way too rich for us. They're not necessarily going to a self-funded program. They're going to another fully insured program. So they'll get their monthly rate. They'll get their um you know the benefit of their you know if their claims are good they'll get a lower renewal. Uh but they're not going to have to share that with anybody. So, and and I'm not trying to belver the point. I just want to try and get clarity because it seems like the underlying issue is the self- insurance.

And so, are there other municipalities that anyone can point to that are population or that have a similar workforce that have a that are also self-insured?

Yeah. One of the things Mayor Chris and I talked about in 2024, and we actually tried, didn't work, was creating our own HIF, our own health insurance fund. Um, along with Union City and the city of Planefield. Um, all three of us are goodsiz municipalities. Put the three of us together and that's that's a good size health insurance fund. Um, ultimately the logistics just didn't work out. But, uh, I was really hopeful that that was going to work because that's the benefits of self insurance with a good enough group that we could spread it out. Um, but it just it just didn't work out.

If I can, mayor, did Chris, did you answer the mayor's question? No. Yeah. Yeah. So as it again as it relates to the state health benefits um no the question was are there any municipalities that you can name that are similarly situated as Hackinac who are self-insured and are having a good experience? Yes. The answer is yes. And can you name any?

The city of Union City would be one. They were self-funded. They ended up going into a HIF because their claims were a lot lower and they wanted to get out of the risk game. They were doing well. They weren't as bad as you guys unfortunately are this year, but um they were ended up um staying self-funded for close to 10 years. Um and then what they they ran into was going into a HIF, which is a self-funded pool, but they're sharing the risk with other municipalities. And Chris, can you just just for our edification and for everyone's edification, can you just let me know what

by what rubric you are saying that Union City is comparable to Hackinack?

Same number of lives roughly around 600 to 700 covered lives. Um different benefits altogether. So I can't compare your benefits because contracts are all different. um but similar benefits in that in that aspect that uh city municipality um I'm not quite sure the logistics of the cities or you know uh populations but to that extent the workforces are similar the same same problems is that their attrition their turnover is very low um the retiree population is still there difference being with them though um their problem lied and I'm not going to say anything out of context next year. Uh their over 65 population was a very high driver of claims over there. So we were able to institute a Medicare advantage for that over 65 population and s and um put a stop to that. Here when we did the analysis the over 65 population was minuscule in terms of claim dollars. It wasn't it's not even a problem even today. It's not because Medicare subsidizes most of it.

So, I hope that answers your question, sir. Thank you. You're welcome. The last last thing. Wait, can you use the microphone, please? Um, so the Mr. Mangan on the last page of your letter to us, describe the information for solicitation of quotations. Labor Union Life Insurance Company declined to offer a quote, which was A and B. Horizon Blue Course and Blue Shield Public Sector declined to offer a quote. Those two, what are we doing with them? Um, well, that's it, right? Yeah. I mean, if they won't That's it. We're not That's it. I mean, if they don't quote Yeah.

No, I don't know. I mean, I don't know what else it would be next. We are required to try and get quotes. Well, what I'm saying is that you said decline to offer, decline to quote. I got you. Where what is our next step? Because people need insurance. People need to go on here. So, what are we doing with the life insurance and the blue horizon? Well, that's why we're we're recommending. That's what I'm saying. So you well it was part of your letter and the resolution but that's it in the resolution. That's all I'm asking. Yeah. Yeah. We attempted to get other quotes. They declined.

So our recommendation is the renewal with Sunlife. So these two are the only two you can get quotes from. That's it. That there are several others but nobody would would quote this year based on the claims history after the analysis we did. when we put it out to market, it just the the only two I that I went to that would have honestly I thought would have quoted honestly Horizon because they're they're here on your as your administrator and they have access to everything and they would love to do that but they even said it just that it was just too high for them and same thing with ULO was pronounced.

Getting back to the Union City as to the other So there there are no other towns that are on the same um self-insured plan that like we are. Uh I'm sure there are. It's just the ones that I personally handle. I I I can't. So with Union City, um and you said that they were doing really well with it. They were doing well up until a point and ironically they ran into the same situation. Now did they have Did they have a cap on their out of network or was it like a open-ended like

No, they had a cap. Yep. They were at um I think they were at 90% of Fair Health National that we did here. But we don't have a cap. Now you do. Yeah. Now, well, we have I think we're at 80 80th percent of Fair Health on National. But you do have an out-of- pocket maximum. Is that what you're talking about? Yeah. The out-of- pocket maximums are based on each plan design. Right. Okay. Thank you. You're welcome. Mayor, Mr. Wil Coats is here or auditor. Would you allow him to um to ask a question if he asked nicely? No, I'm just kidding. No, please. Mr. Wil, go ahead, please.

Mr. Wil Coats, will you please [laughter] please identify yourself for the record? Just Is your microphone on? I don't know. There's a little button on the bottom. Thank you. There you go. Oh, push. Welcome. I went to college. Yeah. [clears throat]

Um Steve Wilcox. I'm the city's outside auditor. Um would it have made a difference if early on when the wheels started coming off the bus in terms of claims going through the roof and You were 80% in 21, 100% in 22, 257% in 23. If this issue was addressed in 23 or early 24, would the possibility of either getting into a health insurance fund or or some other avenue other than being solely self-insured? Would would have that been easier at that point as opposed to, you know, where we are today where nobody's going to touch us because you on average, you know, our loss ratio was 203% over the last year.

The loss ratio you're looking at is just on the stop loss. That's over and above everything. But

it's all part it's all part equation. But yeah, and honestly, you we could have done that, but you know, going in when you're seeing these things happen uh in the preceding months, we're trying to circumvent them going forward and how we put on we can't direct care in health insurance. And unfortunately, a lot of these people, they're using that this out of network benefit that you don't see the ramification till it until after the fact. So now, yes, we could have gone out and we do go out each year. We tried to get something better than what we have. But in those three, four years that we've had that experience, uh, no other carrier was going to write it right then and then. And but we we did try. Yes. Because when I when I [clears throat] look at 610 participants,

right, based on the spend, both claims and the reinsurance, the average premium using dollars is over $45,000. Is that higher or lower than somebody that's in a conventional traditional premiumbased? It's it's a little higher. It's a little higher, but it's also based on the plan designs that you offer

here in the city. The the plan designs are so rich in benefits like the rest of the world outside of municipality world. Like my benefits, I have in network deductibles and co- insurance and I only have an in-et network plan. So my benefits are a lot less rich. Then I'm saying that nothing's better or worse, but for me and my family, what I've selected is a lot of cost sharing. When I go to the doctor, I pay a pretty amount, but I, you know, I I also pay out of my paycheck. So your benefits here, the benefits in the municipality world where they're paying a $5 copay, a $10 copay, I haven't seen that in my lifetime in about 10 years. Um, your out of network benefits, which I believe is a big contributing factor. Um, with a $200 deductible or uh even 70% to a maximum of $4,000 or $2,000,

it's it's unheard of out in outside of municipality world. uh I don't even have that luxury of having an out of network uh the ability to go out of network. I have to stay in my network.

Uh so it's things like that that do contribute. But to answer Steve's question, yes, it's a little high, but I think a lot contributes to it in terms of the benefit designs that are in place. Um and and and the usage all comes into play. that out of network portion. You only have a small portion of your population going out of network and unfortunately that those are your high claimments that all going that out of network region. You know, if those claims are in network, we wouldn't be having this discussion right now. I can assure you. And mayor, if I may, and and the resolution that's before the council tonight, okay, are you recommending that the mayor and council vote vote for that resolution?

Yes, I am. in your capacity as the broker. Yes. So, and and what what is in place now

that's going to stop the same claim experience that we had in 2025 from happening in 2026? Because let me just let me not don't answer that just yet. Let me let me back up with a preface to the question. So the issue is is that we are renewing the same kind of insurance that kind of got us in trouble at this point. You know, kind of, you know, we had a bad experience. We paid a lot of money. Um, we we have a 47% increase thereabouts. So we're we're renewing the stop-loss at a at a at a big increase. And the concern is is that are we going to have a bad experience in 26 on the out of network claims by a handful of folks because there's no there's nothing stopping it.

Well, if I may, okay, it it's not the insurance that got you into this. The insurance is basically what is saving us to some degree. Okay. Because had we not had that 50% cap in there, our discussion would be renewing, if we were afforded the opportunity to renew at a much higher rate than 45%. No question.

Okay. Going forward, it comes down to the zealous that we put in place that we've already start to see the ever core that we're putting in place effective January 1. We're not going to be able to see results probably till the end of January, early February to see if it's really starting to work. Remember, everything sets in January, resets. So deductibles reset, your stop loss resets, everything starts fresh. So we'll start to see as claims build up, we'll start to see at the end of January, when I get the February, when I get the report in February for January, we'll be able to see exactly where that decrease is coming in. So if the out of network portion though, what I would recommend doing is if you're going into negotiation, it has to be negotiated, is to considerably try to negotiate out of network benefits. either increasing deductibles, co- insurance or eliminating it as an optional plan or putting it in place. There are different things we can do to eliminate that portion of it and I think it would be very very interesting to see.

So, let me ask this if I may, mayor, just to follow up. So, so now in in light of the new programs put in place, when somebody goes out of network, correct me if I'm wrong and they get a procedure done and it's it's okay, they won't be able to get the procedure until the doctor pre-certifies it and gets it pre-authorized, assuming that happens. Okay, so now you have an a certified procedure and you have a doc who's out of network and the doc says it's $100,000. Okay. And our program now works where we have a national average where that says, "Well, that's really $38,500." Correct. What happens in that setting?

So, here's what happens. So, that claim comes in to what we have in place. It gets readjudicated based on our fee schedule that we're using, this the smaller one. They send the claim to the doctor and they give them the payment. Now, the doctor has a difference of the 38,000 and the 100,000. Theoretically that doctor can bill the patient for the balance. That is not happening right now. No, that is what they'll do is they will accept payment.

We've had it where they went for procedure cost $25,000. That's what they build. They took out my insurance. I paid my deductible and Yes. So we do have that. Yeah. And but it'll continue. Yeah. But remember, Phil, the the doctor will know what he's getting reimbursed before the procedure. They always do. They know exactly. There's no there's no surprises. That is correct. So, we can't start all this in 2026. We have to wait a year. No, starting. We're started. We've started.

Okay. So, the zealous and the other thing you mentioned are in place now. Yeah, Zeala started in July of 2024. Okay. The Fair Health uh National Network started in June of 2025. Okay. And the Evercore is starting in January of 2026. And also what we just mentioned about the uh deductibles, is that also starting in 2026? Well, what Chris mentioned was that that's something that we should negotiate going forward.

There's an issue that we have to deal with on the labor side. I'm sorry, council woman. There's an issue on the labor side that we'd have to talk about in close session on that. Oh, okay. So, that that part of it is a labor issue. Yes, it is. Got it. Okay. Thank you.

Okay. I I have another question. It seems like uh the uh out of network is the uh is the main responsible uh for us to be in this kind of a situation right now. But my question is if we are still keeping the out of network procedures being presertified been authorized uh that will be a guarantee that we won't be put into this again in terms of the amount of money that we will have to

it's not a guarantee. It it's what it's going to do. It's going to lessen the amount of claim dollars that we'll be paying out. So whereas before we were paying on a higher fee schedule, now you you're going to be paying that same claim. Let's say it was a knee surgery last year where you paid out 50,000 on it. If that same knee surgery comes in, putting aside inflation, anything else, now it comes into our system now that you have we have in place. Let's say it comes out to 24,000. So the amount of that claim is going to be diminished.

Okay. All right. Thanks. So, I I want to be um sensitive uh to not discuss any labor issues in terms of negotiations or anything like that or potential negotiations items um in the in the town square here. But um I guess my question I it's a piggyback of something that the council woman asked a little bit earlier. Evercore is something that is a new tool that we'll be using. Um are there other tools that we can be using in addition to Evercore? Um andor if that does not work to mitigate the costs, what other options would we have? Because right now the trend is that we are trending upward and I I respect Mr. Mangan's analysis that in the last maybe four months absent November and December which we don't have data for yet we've trended downward a little bit but the trend downward has not come anywhere near the trend upward of the first six months. So, are there other ways that we can, you know, it's like if you have a cold, you can take one medicine or you can take, you know, a couple different medicines that aren't going to conflict with each other. Is there anything else that we can be doing given where we're at financially with this?

As far as the tools that we put in place, no, that that we we we're pretty much we're we're using every tool available to us. As new tools come out and we're aware of them, we'll absolutely try them and jump on them and put them in. if it does not work. Um, and part of my recommendation is always going into the state health benefits as an option. Um, that's always your option to do that. And I've kind of I I did recommend it last year and you'll see my April meeting is a was something to consider doing um to stabilize the program. You may pay a little bit more going in because it's a set premium per month uh but it will stabilize your program. It's not going to fix your problem. The problem is that out of network availability that you have built into your contracts that uh your your population is afforded to. Um unfortunately these people that are doing it um they the doctors unfortunately take advantage of that situation. And and again that's not a hackin sack thing. That's an industry thing. the these guys are, you know, they're doing it not just to Hackinack, they're doing it to every every municipality. They directly market to your folks that work here to get them in their door and they'll say they accept everything. Unfortunately, that's the problem. I unfortunately don't have an answer on how to police that.

I understand that and I I just want to be clear and I know this this is what you're saying also, but I want to make sure it's clear to anyone who may be watching. You know, it is at no fault of an employee who has a a long-term illness or has some sort of it's not it's at no fault of the employees if there are folks that they are seeing that are I'll I'll say being somewhat predatory in terms of you know inviting them to seek service there and it being incompatible with our healthcare. So, um yes, please. Do you mind if I ask a question?

I do not because this one's bugging me as it is our city attorney. You know, we both came away from that last meeting with you and you that 175 was relayed to us. It was 175,000 per employee maximum. And I'm looking at the high claimment report and every high claimant has one time 175,000 as if we paid it and then the best the rest of the balance went to Sunlife. But you're saying it's per claim. Can you please clarify that? So the the the claimant if that claim goes over 175,000 for that particular claimment it's you it'll be on your high claimment report. So so any claims that are related to that

it's a cost. It's what that employee was build for the year. For the year. So it's not a one claim that they put in. It's right. It could be okay 20 can 20 claims. It could be, you know, you you're going to see on on uh the claim, you'll see, you know, multiple I just wanted to clarify. It was led to believe that it was a particular claim had to be over 175. I'm sorry that I misunderstood, Rich. I It's one ailment if you want to use that word. Um but no, it's not one individual claim, not one bill. Right. So So just to clear it up and I'll I'll move if I may, mayor, I'll move I'll move quickly. Um, God forbid someone has cancer, that's a claim. Exactly.

And that's a chronic treatment course. And if that treatment course is a million dollars and God willing, the person is cured, great. Thank God. Um, but 175 is the city pays. Correct. Everything after that is a stop loss. Correct. Okay. Other than deductibles and all. But just say that same individual breaks his leg. and breaking your leg. Just say it's $10,000. That $10,000 is covered 100%.

Right? Because we're self-insured of 175. And and if I could just ask this, so just so it's on the record. So So So assuming that the mayor and council were to to vote for this renewal tonight, insurance stays in place in 2026. Assuming that by May of 2026, you come to the city and you say, "Hey, there's a there's another program you can go into this group. You can go into state insurance, you can do something else and it's going to you're going to do better and this is the way to go. Can we can we get that insurance at that time and cancel what we just renewed?

Absolutely. So, what we can do is and this is why Jim and I, you know, we're in constant communication during the first three months of next year, the first quarter, we'll have a bet a good indication of where we are trending. And I I personally believe that you're probably going to see in terms of stop-loss reimbursements from what I'm looking at reportwise close to 5 million next year. This year at 9 million. So if we can knock that in half and five million is probably where you should be as a as a normal course of business. Um but we'll know that probably by April of next year and in gives us enough time that I can say to the city and say, "Hey, listen. July 1 may be an opportunity for us to jump into a health insurance fund. Um, we can do that, but we will have to, you know, prepare for it in the sense that we'll have runout claims um, after the fact. If we cancel everything effective July 1st, we're going to still have claims that come in that need to be paid after the fact. So, that being said, the answer to your question is yes, we can absolutely look midterm.

Just a couple of things. Yes. Go right ahead. Getting back to zealous. Zealous. So what exact Can you clarify it for me again? What exactly does zealous do? So zealous will get the claim in. They will scrub that claim to make sure it is one medically necessary. Two, making sure it's meeting all of the fees schedules that we have now in place associated with. Okay. Because that was going to be my followup. Are are we looking to see the for the claim? Are we looking to see if it's really correct considered a necessity? Right. Okay. Yep.

So, but what do we know about Zealous? How how efficient is the comp? How good is the company? What is the background of Zealous? Because I hear that there's a lot of complaints about Zealous. You probably hear the complaints because people are seeing their out of network claims now coming back to them. They're being balanced build whereas in past they were probably never build for anything. So once somebody gets a balanced bill because Zealus is doing their job by saying well you shouldn't have we we're not paying this $20,000 claim. We're paying it at $5,000. Now, a normal doctor or any doctor that's not doing any kind of scheming or anything will say to the patient, "Unfortunately, I'm going to have to balance bill you the difference. I didn't get what I was expecting." Those are probably the complaints that you're hearing because people are not anticipating that.

So, how does it work? So, you I go to the doctor, let's say, and I I want to get on ompic, let's say, a different story. Okay. But go ahead. I'm I'm with you. That's another one. Okay. And um so but with normal insurance, if I have to get a procedure, that procedure has to get approved. Correct. Not you. You never really had that here. You We didn't We

Sorry. We're not supposed to have it. There is no preapproval. Lately, they have requested pre preapproval. I have done it reluctantly uh myself and my family but we are we do do not need preapproval many times I've gone and and they said oh we have to get preappro you know I'm talking on a personal level just recently and they said oh we have to get preapproval first so things are changing or think Okay.

Each office. So, it's not required pre-approval. I'm sorry. I'm gonna ask for you to answer the question. Can you? So, the question was asked. If you can answer it, please. Thank you. Yes. So, what we're doing is we're putting in the pre-approval pre-authorization process to ensure that the claim is a real claim, medically necessary, and then we can understand what's coming down the potential with that claim, what's coming down the road with it. Okay. So that those are things that are being worked on that are being put into place. That is correct.

So being that we were seeing this problem escalate, you know, from 2022 on, why is it that a company like Zealous wasn't considered when things started to escalate and we let it get to now and now we're trying to grasp at all ends to try to make it work. We we did introduce this. It was brought in to it. Um but at the time, the previous I'm going to assume the previous administration thought it was going to be a violation of the contract um to put those in place at the time. But we honestly we got to the point where we had no choice. We had to do, you know, I when I saw this and I I recommended, you know, we needed to get together in April because I saw the trend was still going up. We had to do something. Um, so we we ended up just making a decision to to present it to them and they they agreed that something had to be done.

Oh, okay. Okay. And one more thing in regards to the why it takes so long for the to for us to get reimbursed that Jim you said that it takes it could you know take even up to a year. Have we been in touch with them to to find out why it takes so long? They had a there was a communication breakdown which we we didn't know about. We finally found it in October. Uh we jumped on it. We got on it. That will never happen again. What

I don't understand there was he said, she said type of thing. And still to this day, I I've yet to find out exactly where the problem was, but the problem has been rectified. Um they said there was a glitch in the system with their email box that they were getting. Ironically, it wasn't just the city of Hackinack. It was some other clients too were having the same issues. So, so now there shouldn't be that much of a problem getting reimbursement. No. And I'm on top of it regularly with them. Okay. Thank you.

Okay. So, um I'm going to um ask for us to take a brief pause just for a moment um just for about five minutes. Um, I apologize for I see folks are waiting. Um, but we're going to take a brief recess if there's any other questions afterwards, but otherwise we may be ready to to vote on this after the fivem minute recess. Thank you. Thank you so much. Thank you.

Thank you for for indulging um the quick break. Okay, so um sorry, Deputy Mayor, you were asking some were you were you good with your questions? [snorts]

I think I think I need a clarification or an I don't remember if it was answered as to why wasn't zealous introduced prior as we saw I think you answered it but I'm not I think we just wanted to hear it again. Well, if I could, uh, deputy mayor, the, um, like I said, the claims spiked the, you know, about halfway through 2022, you know, when COVID ended, right? All right. So, the claims experience for calendar year 2022 wasn't really all that bad, you know, when we looked at 2023 as a whole at the end of the year, you know, in early 2024,

yeah, that's when we said, yeah, we're having a problem. And we implemented Zealus in July of 2024. You know, when we saw the the experience from 2023, then we got together with Blue Cross and said, "What can we do?" So, Zealus didn't come into play now. It came into play in 2024. Yeah. July of 2024. Zealous was July of 2024. And then um the the fee Yeah. The Fair Health Network came into play in June of 2025 and then the Evercore will come into play in January of 2025. So you've got three different thing tools. Exactly.

So these three different tools are how do I ask it there are they do we incur extra fees for these? No. No. Okay. That's why, you know, Chris said by the end of March, um, we hope to have a pretty good idea if it's working. We knew by the end of March of 2025 that that we have problems. So, now Zealus has been in in in into play since 2024. And has there been is that where you said there's been a an improvement of sorts? Have you seen an improvement?

I haven't seen No. No. So, so we've we've had them for about a year. You would I would say um we combined zealous with the the change of the uh out of network fee schedule. That's when we started to see that, you know, the claims are starting to come down. Um the trend was starting to come down to that level that Jim had previously spoke about. I think in conjunction with changing the fee schedule because now they had to hold them to a lesser fee schedule. Zealous is really getting in there and holding them down. So you confident that by what did you say by April?

April or May? I think we'll have we'll have a very good idea if they're really working or not. I'm sorry. You said there were uh three tools in place. We have zealous that was implemented July 2024 and then Everore January 2026. What was the the third one? The fair health of national fee schedule. Okay. The pricing of added network. The pricing of added network. [clears throat] And that was implemented. And that was implemented when? June June of 2025. 25. Got it. So um and then then we will call the vote. But just one one more question. Um no.

You have you have a question? Go ahead. Um, I just need clarification from our city attorney. Um, in part of the resolution where it says the health coverage for its employees for the $175,000 claim reimbursing for each employee for the stop loss. Yes.

Where are we are you in agreements with that? Yeah, I drafted the resolution and I um I agree. I propose to have you vote on uh a resolution that says in the second whereas that the city of Hackinack currently provides health insurance coverage to its employees through an insurance program where the city acts as a self-insured entity up to the first $175,000 of medical claim reimbursement for each employee. That's actually not true. Um I'm going to correct it. known as the stop loss. It's not for each employee, as I've learned tonight. It's for each claim. So, if there is an employee who has a claim for a broken leg, the stop laws applies $175,000 to that broken leg. If they have a lung transplant, the stop loss applies to the $175,000. So, as I correct that on the record is what I stand by.

Thank you, sir. So to to follow up Phil's question, so for the purposes of voting, should there be a motion to at the time, should there be a motion to adopt this resolution as amended? Yes, as amended by the comments I've just made on the record. And then what I'll provide to the clerk tomorrow is a is a an updated resolution taking out that word employee and indicating that it's going to be per claim. Okay. And that would make it accurate. Mayor, thank you. And one more. I'm sorry not to continue, but as you know, myself and uh Deputy Mayor Tumi, of course,

we're ex employees. Do you believe that any of this um we should abstain from voting on? In your capacity as an ex employee and the deputy mayor's capacity as an exemp employee, it is my legal opinion that you do not need to abstain from voting on this resolution. Thank you. Thank you. Um, so just just one final question then we can um get thought we were gonna have a nice short meeting. We only had one we only had one item on the agenda. [laughter] This is a big

So no no no it's it's it's important. It's very important. Um, so I'm going to going back to the history as it's been outlined and um while we were not occupying these seats, you were here and you have some institutional memory of the sequence of events um regarding things that have been proposed, different conversations that have taken place. Mike, right now we are both playing offense and defense. It's really defense, but we're trying to be proactive about the claims that are that have yet to come in for 2026 and beyond. Is it a fair statement to say that there is more proactivity that could have occurred in 2023 in 2024 that could have mitigated where we are today? These three different tools that we are now utilizing. I I'm if this is not my business, but I'm assuming that these tools did not come into effect in July 1, 2025 in terms of being available tools for the city of Hackinack. And so when we're looking at a history of increases and and tracking upward over the course of years, isn't there some level of shared responsibility with the governing body to take action? I'm I'm talking about frankly the previous governing body to take action in consult with the team city manager CFO you know etc. Um, not say etc. Chris, sorry. That's not what I mean. But you know what I mean.

Trust me.

Is Isn't there No, no, no. Is Isn't there some Aren't there steps that should have been taken or could have been taken years ago, especially if, as the deputy mayor asked, there's no extra cost, it sounds like, to the city to have Evercore, to have some of these tools that we're utilizing. Why weren't we utilizing them before if they were just lowercase I insurance on our insurance policies? We did in the not that there's a problem. We didn't understand we we didn't see the problem coming. It's not like it was giving us a you know uh whirlwind. It's always it's after the fact that we start seeing on a monthly basis going forward uh that we started to recognize that coming out of COVID everything got pushed back. We had no idea to the extent of what those claims were going to be going forward. When we finally recognized that this was a trend going up. That's why we came to the the to the committee and we said look we need to do something. We have to put something in place to get these problems solved. uh if we can't solve the problem by changing the benefits or doing anything that's going to upset the apple cart, we have to put in certain mechanisms to at least put uh stop losses in for lack of a better term or controls in to help us mitigate some of those claims or to reduce the the amount of claims. The problem is is the frequency and the amount of the number of claims that are coming coming and coming that are just so astronomical. It's something I quite honestly haven't seen. I I guess it's the same question. It's the same question. But just to be clear, what I'm trying to understand is it seems like a a common sense thing to

say you're going to the doctor, you're submitting a CL. You can't submit for a reimbursement for a box of donuts without getting it cleared by someone. You know, someone has to sign off on an expenditure. So, if you're going for a medical procedure, to not have something in place that's going to vet the necessity of that medical procedure before you go out for it seems, you know, like I I want to use the word malpractice. I mean, not in a legal sense, but I mean, it seems like a dereliction of some sort of duty and responsibility to not have some level of protection before people can just put in claims that aren't being verified in advance. Is that is I mean am I am I incorrect

and no you you are correct that it goes back to the doctors being and I I I can't even say it just they can build whatever they but the doctors are going to do the doctors they're going to do what I'm saying is you you can't get upset at a a cheetah for biting you. You know what I mean? What I'm saying is we have a responsibility to try and prevent us from going to the safari. So that's what I'm trying to understand is why these things were not in place prior to there being an emergency. In other words, why did it take four years? That's in other words, yes. Why did it take four years?

Thank you, Councilwoman. Thank you. because we had we we did have several good years not anticipating we were going to come into what we had. So everything was running very smoothly until we hit that one period in which we we acted on as soon as we we saw it. But sir, the claims were going up and up and up for four years. I could I understand what you're saying,

but to his point um it's just like when I budget at home, if I see an increase continuing continuing. I'm not going to wait for for this period of time. I'm going to act on it now and say, "Hey, I'm going to call my carrier or whatever and say, "Hey, you know what's going on here? Why are you increasing me year after year to this point?" Uh, and it seems like that wasn't done. It seems like you, yeah, you saw it, but you know, not until 2024 you decided to start putting these things into place. These were some of the other things that we we did offer and and some of the other recommendations were going into the state health benefits back in 2023 or 2024. Uh to what extent if you you know I don't know if the prior administration uh obviously they didn't act on it.

Well, Mr. You were here the prior administration did you not give these recommendations and what happened? Well, recommendations in terms of what can be done to curtail health benefit costs. Okay, to me, what can we do to curtail health benefit costs? Okay, that's a labor issue. What we can do is we can negotiate u better terms for the city in terms of for health benefits in the collective bargaining agreements. That's what we can do and that's what we've been doing since 2015. Okay. It's the very very specific things that Chris is recommending. Okay. That's zeroing in on very specific uh items, you know, and that's well that's not that's definitely not something for the mayor and council. And it's really hard for someone like me to zero in on exactly what claims are causing the problems and what can we do.

But you just fix those claims. I think the reason why we're here is what claims are causing the problems. You said are they out of network ones? Correct. So that be that's what we're we're um getting ready to vote on. It's the stop losses that cover the claims that are and the claims that are causing the problems are the out of network uh claims. And council, I'm just I just want to be clear about what what we're saying. I think

again, it's it's not about there's there's no blame for someone who has a preferred doctor to go see the doctor that they're comfortable with, to go seek necessary medical attention. That's not what anyone's issue is, right?

The the question is there's a credit card that we run in terms of medical claims and there is no check. There's no password protection on the online account. There's no checks to make sure that the claims are valid necessary claims because what hasn't explicitly been said, but what is obviously implied in what you're saying is Evercore is knocking out claims that may be not necessary. Am I? So if that is the case, the suggestion then is that there may have been unnecessary claims that have been paid out by the city. Am I understanding that correctly?

Yeah. Well, we're adding potential layer. So what so the only question is why there wasn't this layer of protection right in the first place even if it seemed like everything was under control. Even if it seemed like it was a modest increase, it's still just a layer of protection. And so why wasn't this layer of protection, which seems like a worthwhile investment, why this wasn't in place in the beginning, right? Because even when things were low, that's that's the question. You're not putting this in place until January 2026 of of the year coming up in terms of

Everore as terms of Evercore. Everore.

Well, I kind of understand and there's the problem. So, you guys been here since 2021. I've never seen a case of any disability claim, any injury claim since I've been with this city for 30 years. No one investigates anything or any claim. They claim, you go to the doctor, says, "My arm hurts." He says, "Yes, your arm hurts." They approve it. It's done. I haven't seen, like I said, I could go around the block and show you a guy that is out on a back injury and he's a roofer. So, there's half the half of the problem. It's not only us. It's not only you, but you don't have any investigators going out there doing anything. So, it is the claim is the claim. If the doctor says he's injured, I go to my doctor. I go to your doctor. They all meet. They say yes. 65%.

See you when you die. Basically, I think he's referring are you referring to workers compensation claims and stuff like that? 65% whatever. Like I said, it's not only it's not only the insurance claims, it's the overall where you have people that are going to have an injury that are not injured and they get evaluated and they pay that we pay them and the state pays them 65% of their salary for the rest of the their lives and then we pick up the insurance part of that because they're covered. So it's a overall problem. That's all.

Okay. Um one last um if you like. Um we could go into close session and I could tell you about some of the recommendations I made. Um but they're not proper for open session. I would like that. Well, well, I'm Well, actually, I'm I'm curious because Well, let let me say this. I I don't know. I mean, I defer I defer to our lawyer as to what's what's appropriate for for open or closed. Um I don't know whether whether or not that's that's the case. But regardless, what I think if if the council's ready, I think are we are we ready to vote?

Yes. Are we okay to vote? Yeah. Okay. All right. So, um Okay. Resolution 508-25, please. Resolution authorizing an extraordinary unspecifi unspecifiable services contract to Sun Life Insurance. Great. Can you call a roll, please? Do we have a motion? I'm sorry. Yes. Can I have a motion to um approve resolution 508-25 as amended? um as amended. Right. If you'd like me to character Yeah. Well, after you get the second, mayor, I'll just put a brief characterization on the record. Is there a second? Well, I think we need a motion as well.

I make a motion.

Okay. Okay. So, if I may, mayor, now that the question has been called and it's on the floor, this is a vote uh on resolution 508-25, which I've amended by the comments I put on the record, and I will supply um an updated corrected version of this resolution clarifying the issue of the stop gap, $175,000 city self-insured amount um not being limited by employee as has been indicated, but by by claim. And a claim is a medical condition of an employee. In layman's terms, best way I can explain it. This resolution is to do one thing. It is to renew the stoploss policy for the city. It's a special meeting because it has to be done before the end of the year. And of course, all the context that's on the record is here, not necessarily to support passing this resolution, but because the city manager and I believe that these issues were relevant as context for what's coming next because the increase is so large. But the comments and all the stuff on the record about protocols that are going to be put in place going forward and all these other things are not and they're fine and good or whatever they are, but they're not part of this resolution. This is simply a resolution to renew stop loss so that the city can can continue its health insurance in 2026 and then later on if there's a change as as our consultant put on the record, we can have another resolution. We can have another dialogue, another discussion. So with that, uh, mayor, I'd respectfully request um that the clerk be allowed to call the role.

Yes, please. Deputy Mayor Tumi. Yes. Councilwoman Clark Collins, yes. Councilman Carol, I have state. Councilman Diaz, yes. And Mayor Gates, yes. Vote passes. Thank you. Um, motion to open to the public for public comment. All over. A second. All in favor? I. Uh, any opposed? Any abstensions? Seeing none, and seeing no public, um, motion to close to the public,

I'll make a motion. All in favor? Any opposed? Any abstensions? Thank you, Deputy Mayor.

A few words. Um, well, I don't know what to say [laughter] because because um, you know, I just feel a certain way about how things went. So, um, and and I said yes, just because we definitely need to have passed it in order for uh continuence uh for our employees, but it definitely needs to be looked into and and and fixed because obviously something went wrong along along the way. So, with that being said, thank you for all the explanations. Appreciate the clarifications. Um, and uh, and we hope that things will will get better for the city. Have a good evening. Thank you.

Thank you, Councilwoman.

Um, basically, I'm just going to echo what um, the deputy mayor said. um you know, how do we get to this? And going forward, we definitely can't let this continue. Um it has to be fixed. Um and that's basically it. So, I just want to take this opportunity now to wish everyone a happy new year. Be safe everyone. and uh hopefully going into the new year we'll have u better better resolve. Thank you.

Thank you, Councilwoman. Councilman Carol, I think I've spoken too much tonight, so I'm going to keep it nice. Uh happy new year, everyone. God bless. And Tim, I know she's due if I don't see you. God bless you. Councilman Diaz.

Well, I think uh we all have the kind of the same feeling tonight. And the good thing is at least we have the opportunity to sit down and discuss and get to some kind of solution, at least a temporary solution. Uh I would like to suggest that going forward that we have the opportunity uh to meet again at some point and continue discussing uh I'm trying to dig in to dig in in this uh in this issue a little bit uh deeper uh and just to avoid that something like this happen happen in the near future in the meantime. So thank you for being here. Thank you for the explanation, the clarification and happy new year everyone.

Thank you. So I don't forget I'm going to do my happy new year now. So happy new year to everyone who's watching and everyone who's here. Um just succinctly uh for those who are watching and I think we said this just at the last council meeting you know um this is what the work looks like. [laughter] You know there's lots of questions. It's messy. Um you know we have to make hard choices but u making sure that our employees have health insurance um is is a necessity. I I just want to state also and echo this is it's an important issue and it's an issue that um I wish there was more proactivity on before we got here. Um I I've said before we we inherit a chess board with a bunch of pieces that are already played and then we have to figure out how to move them. And um this is a bitter pill to swallow frankly. And our main concern is number one making sure that people who have legitimate health care and medical issues are getting the care that they need and that they are entitled to. um and making sure that we have funds to make Hackinac run effectively for our citizens and so and our residents. So um we do need to do better. We will do whatever we can do within our jurisdiction to ensure that happens. But I want to thank everyone for coming out to the special meeting and um to to Jim and Chris and Steve, thank you for for coming in as well and answering our questions. And with that, I need Oh. Oh, and Tom, thank you. Thank you as well, Tom. Um,

no, I don't. Uh, Tom, you don't have anything. No. No. Okay. Um, all right. Um, so with that, can I have a motion to adjurnn? I'll second. All in favor? Any opposed? Any absentions? Thank you.