City Council - Special Meeting

Good evening. We are holding a special session of the City Council of Copperas Cove in its function as a loyal hand society for employee services. The session will be open on August 18, 2026 at 5.30 p.m. Madam Chairwoman, please call the attendees.

Mary Yancy. Christina Strauss, present. Rita Hogan. Howard Hall.

Present.

John Hill.

Present.

Dale Chudway. Rona Hart. Jack Smith.

Good evening, Mayor. Good evening, Mayor, City Councilor and City Director.

In June last year, they met, consulted about self-insurance and gave us green light for the transformation. This was another part of our health initiatives that we have been pursuing for 12 years. We were successful in extending the tariffs for our employees to an average of about 2% per year. Some years were higher, some lower, sometimes there were vouchers, but we were very successful. So we went to self-insurance, which was the perfect time for it. Normally, we have one or two high damage cases in a year that affect our extensions. This year we had ten. And we have already taken our stop loss insurance into account twice. If we hadn't traded, we would now be in great difficulty. I have Tadoro from our insurance BKCW here, who will tell you more about it and will hold a short presentation.

And.

I think down.

Down is better.

Good evening, mayor, council members, city director and employees. I appreciate that everyone is here. Again, my name is Tadoro. I am from BKCW Insurance and I am happy to give this update for the city. As Mr. Davis said, this is a short update on where we were, where we want to go and where we are now. When we looked at ourselves last year, we knew that insurance costs were rising. That's a constant topic we hear about. That's why I wanted to give an update on where we are. As Mr. Davis already pointed out, we have so far made a total of 1.386 million in planned damages this year. 50% of these expenses were spent on 10 major damage cases. And that's no accusation against anyone. That's exactly why insurance is finally there. Most of us use it and hardly use it, but if we need it, we need it all at once. And if we need it, it's there for us. I would like to emphasize that the sliding average of the city over the last 10 years is around 2%. This is the best value in our entire customer portfolio. I can't say that often enough. The commitment of the city to wellness programs and all the measures it takes are the reason for it. I say this to every city and every employer over and over again. If you want to know what to do, follow this plan. Here it is. As Mr. Davis mentioned, we see savings of probably $680,000 to $970,000 per year. compared to today's model. I really want to emphasize this in order to remind you of what we have done and how we have created this plan. We use a captive stop loss provider. This is the company through which we conclude our stop loss insurance, namely ParoHealth. This is how we can share the stop loss risk pool with over 4,000 medium-sized employers like you. They provide tools for savings and solutions for cost reduction that help to control this risk. As part of this stop loss insurance, you also use a national stop loss insurer for the insurance part. Sunlife is this partner that functions as a captive to achieve the best conditions for the stop loss provider. There are capitals built in there to protect the employer as well as long-term insurances in case we have a very high damage case in the future. We are protected against it and this person will never be subject to higher self-employment than anyone else. We have an administrator named Maritain Health, who uses the Aetna network for damage reduction, as well as the pharmacy management company SmithRx. When we were working together with Mr. Davis, he said, well, Ted, that will mean a lot more work. Yes, it's a lot more work. We all invest a lot more work. We meet more regularly. We talk to each other more regularly and the e-mail turnover has increased significantly. But as we all know, if we work hard, this hard work pays off. And this is one of the cases in which it continues to pay off for the city of Koperkow. Our damage survey after nine months shows total payments of 1.1 million. With an average of 219 registered employees and 327 members. We had expenses of $564 per employee per month, or $379 per member per month, per member per month. As already mentioned, our threshold for major damages is $75,000, which you approved last year. Our estimated total payments for the year therefore amount to about $1.9 million. At the time of production, we have spent about $900,000 for medical services and about $210,000 for medicines. So you see a division of about 80 to 20 between medical costs and pharmacy costs. As discussed, 50% of this demand falls on 10 people. That means $500. We have a so-called experience score. In the renewal process, due to the participation of the city in various programs and the measures of Mr. Davis, we were below the average value of 1. If you assume that 1 is the best possible value, if we are below 1, that means a reduction. If we are above 1, that means an increase in the formula. The evaluation of the stop loss renewal is based on the participation of your company and its leaders in the program, as well as an overall evaluation. At the time of this creation, we had no stop loss damage. So we had a group experience score of 0.5, which is good. We were in the second quarter in the first year, which is really good for our cost reduction measures. Our employees have already been involved in the cost-limiting measures in the first six months of the planned year, and there are many of them. At the time of the damage check and the stop loss renewal, we had a stop loss rate of 0%, which is also good, since we did not have to take it into account. The trend indicated that, and that was known, but we hadn't quite taken it into account yet. So we were able to achieve an over-average stop-loss renewal, which is delightful. As you can see here, the current rate for stop-loss was $15,024. Our self-preservation is at 1.57 million. This is the maximum damage sum that we will pay in a year. Then we have the stop loss rate for the total sum. This is the protection. If you remember last year, I spoke of the insurance that insures everything so that we never pay more than with a fully insured extension. This is this insurance. Our total premium for the insurance, i.e. only the insurance part, is at 407,000. Then we have our guaranteed network rate, at which we had a slight increase, as well as a yearly administrative fee of 133,000. In total, 25% of our total expenses flow into administration and insurance costs. 75% are intended for damage regulation and remain with the city until a damage case occurs. So how would it have looked if we had stayed safe in the face of the damage we had? Last year we had a Baylor Scott & White extension of about 1.9 million. We had an expected self-financed plan of 1.8 million. And we had a worst-case scenario of 2.1 million. As Davis told you, we had ten damage cases. In the normal year we had two. So we didn't have the best year, but we move exactly in the middle. So we perform as if we were fully insured. But what does that mean? If we were fully insured, we would have had these ten damage cases and would have gone beyond the limit. then the numbers would have had a massive impact. I told Minister Davis about an extension that I submitted today. We would probably see an increase in the extension rate by 45 to 60 percent. And everyone says that's a lot. I took the name Sensenmann, because many employers see me as if I were the Sensenmann. I don't make the decision. I'm just the carrier of the message. What we see on the market is actually an increase of 45 to 60 percent. And people ask how that can be. I mean, what happened? 25 to 30 percent of it is something that no one can control. It's out of our control. All insurance networks have moved there and in the last two years the contracts with the hospital systems have been renegotiated. And they all, really all, have negotiated. You read about it and hear about it, or you hear statements like, oh no, what are we supposed to do? And these move in the range of 20 to 25 percent. The insurance tariffs for employers are being published. The contract is being handled. So what's behind it? They're already following up on the payments and the bonuses. So we're seeing exponential increases there. I just said to Mr. Davis that I'm going to hand over a contract extension today. It was an amazing extension with 12%. But they had a damage rate of 75%, which means that 25% of every dollar went directly to the insurance company. Only 75% actually flowed into paid services and the administration. I'm allowed to make an increase of 12%. That sounds almost criminal, but at the end of the day it feels good because it's the best I've handed over to a fully secured cycle for a long time. And then Mr. Davis told me that they have a PPO plan with only six members. This plan alone actually had an increase of 37%. The employee rate for this one PPO plan, which is very similar to the city plans, is a plan with high self-preservation and HSA compatibility.

It is a self-preservation dollar.

The rate is only for the employee. In order for this employer to cover 100 percent of this PPO plan, he would have to spend 1074 dollars per employee. It is a community organization and these are tough news. That's why I say that I have accepted these tips. In fact, we have other plans that we can use so that the other 60 members will not see this increase. But it's tough out there. If we look at this and understand that we could be in a model with an increase of 45 to 60 percent, where we are talking about 2.8 or 3.1 million, I am looking for solutions everywhere. In recent years, we have actually made the decision to focus on something else and implemented it last year. Therefore, you see an extension of 2.1 million, which exactly corresponds to your worst-case scenario from last year. And therefore, thanks to this decade of discipline and management, as well as the commitment of the employees, And all at KIT this sliding average of 2%, of which they are profiting again today. The industry scale, if you google how much the health insurance contributions increase annually, is 10 to 15%. So if we continue to accept an increase of 10 to 15% per year, it won't take 10 years to double. Normally it takes five to seven years for us to double. That they have not doubled in this period of time and are at a 2% trend is proof of their leadership strength. And I can't emphasize it often enough. It is proof for the employees in the COI type program. So once again to highlight it. You probably saved over a million dollars. Only by making this decision last year. You will see an impact on the budget of about 5%, which is about $100,000. And this sets your average of 2% off. I just want to leave it at that. Even if wellness and similar expenses sometimes appear superficial or unnecessary, they are the success plan if they are implemented correctly and everyone is engaged from top to bottom. Das ist das Rezept für den Erfolg.

As Tad already said, the increase that we will see at about 5 percent instead of 40 to 60 percent, which is phenomenal for our city and has saved us a lot of money in our renewal as well as in our this year's budget. The recommendation of the staff is to implement the self-insurance program and continue our cooperation with BKCW. I would also like to thank the mayor and the council, because they followed the recommendations of the employees last year, especially due to the considerable work that Mr. Davis and Mr. Duerr have put into developing our self-insurance program. Thank you for having approved this in our budget so that we could take this path. As you may or may not have seen, there was an enormous effort behind it to get to the point where it could be included in our budget. Monthly preparation, analysis, planning, design and training of our team members. And after you have implemented it in the budget and we have implemented it, you see that this year is exactly the right time for this change. Es hat Geld im Haushalt gespart und das ist Geld, das von den Beitrags- und Steuerzahlern kommt. Langfristig sparen unsere Bewohnerkosten, da unsere Ausgaben nicht so stark steigen. Also danke, dass Sie das letztes Jahr genehmigt haben. Gut gemacht, Herr David.

All right, that's the only point for the special session. It's now 5.49 p.m. We'll have a meeting and start the regular session at 6 p.m.