R-11-12-15-11C1 - 12/15/2011 RESOLUTION NO.R-11-12-15-11C1
WHEREAS, Aetna Health, Inc. ("Aetna") has submitted a Letter of Understanding regarding
the extension of stop loss insurance for the period January 1, 2012 through December 31, 2012; and
WHEREAS, the City Council desires to approve the Letter of Understanding with Aetna,Now
Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,TEXAS,
That the Mayor is hereby authorized and directed to execute on behalf of the City a Letter of
Understanding with Aetna for stop loss insurance, a copy of same being attached hereto as Exhibit"A"
and incorporated herein for all purposes.
The City Council hereby finds and declares that written notice of the date, hour, place and
subject of the meeting at which this Resolution was adopted was posted and that such meeting was
open to the public as required by law at all times during which this Resolution and the subject matter
hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act,
Chapter 551,Texas Government Code, as amended
RESOLVED this 15th day of December, 2011.
�y
ALAN MCGRAW, Mayor
City of Round Rock,Texas
ATTEST:
SARA L. WHITE, City Secretary
O:\wdox\SCClnts\0112\1 10CMUNICIPAU00239113DOC/rmc
Kendra Hoduskl
XAetna: er
MMA Highwayenior Account Suite 50
Great FNlis corporate ca.131d 3 Soso captor of Tehcea Highway North sone iso
Austin,TX 78759
Phone:5121884-2971
November 22,2011 Fax 512-348-7408
Cry Of Round Rock
Karin Holland
221 East Main Street
Round Rods,TX 78584
Dear Ms.Holland:
Thank you for allowing us to serve your health Insurance and health benefit needs over the past year. We are hopeful that this package
will provide you with the information you need In order to develop your compenys future benefits program. As we approach the
January anniversery of your program with our company,we are pleased to present you with our renewal for ire 2012 policy period.
At Aetna',we believe it Is fundamental that you understand the full financial picture of your benefit plan.Therefore,the enclosed package
provides the following Important information about the cost of your current program,potential changes you may want to consider and the
value that Aetna brings to you and your company.
■ Future Program Costs-This section Illustrates the cost projections to operate your current benefit program for the period
01/0112012 through 1213112012. This section contains the following:Stop Loss Exhibit.
-Also Included in Oft section is renewal Information regarding your Stop toss coverage. For Option 3.AeWe charge for your
Stop loss protection levels will decrease 0.7%over the current rate.Your aggregate trigger factor will increase 2.7%.
■ On Lou
Stop Low AssuMpbm-This section Includes specific Information regarding whafs included and excluded from your Stop
Loss quotation,plus there is a separate page explaining leveraged trend.
■
The Aetna Difference-This section outlines the latest Aetna fads that we would like you to know about our company. We
hope that by reading this Information you will better understand the many ways we are striving to provide quality healthcare
programs and services to compades like yours.
In the absence of any crenges Impacting the conditions of this renewal as outlined in the Financial Assumption section,the rates,fees,
and fedora presented here will remain in effect through December 31,2012.
If you would Ike to make any plan changes,please contact me by December 1,2011. if you have any questions,
please contact me at 512IW4-2971.
We are committed to working with you to provide quality products and services that reinforce your decision to do business with Aetna and
help manage your current and Moo health care costs.
Accepted for City of Round Rock
BY-
Title:
Date:
Srnoerely,
MMA Senior Account Manager Senior Undefwrltlng Consultant
Aetna Is the brand name used for products and services provided by on*or more of the Aetna group of subsidiary companles.The
Aetna companies that offer,underwrite or administer bereft coverage Include:Aetna Health Inc.,Aetna Health of California Inc.,Aetna
Dental Inc.,Aetna Dental of California Inc.,Aetna Hauch Insurance Company,Health Insurance Company of New York, Aetna Life
Insurance Company(Aetna).in Maryland,by Aetna Health Inc.,151 Fannington Avenue,Hartford,CT 06156.
Each insurer has sole financial responsibility for its own products.
Health benefits and hearth insurance plans contain limitations and exclusions.
Polley form numbers Include OR-MR-9N,OR-23,GR-291GR-29N,GR-700-W,andlor OR-611435 and/or OR-96476.
EX
BIT
I
Stop Loss Exhibit
ASC
City of Bund Rock Contractholder Number•619919
Renewal Period:M112 through 12131/12
•Minimum Stop loss Aggregate Limit will be ad using the ileal month enrollment x
Stop Loss Aggregate Until(PEPM)Composite Factor x number of contract months.
•Premium rales are b91ed and Aggregate Fallon are administered on a composite beak.
•Please no the Stop Loss Caveats for additional Information.
CONCESSION 11.22.2011 Lasering Option Lasering Option
Straight Renewal Proposed "111 afit/ Proposed
Current Option 1 Option 2 _ MM69 Option 4
Plan Characteristics
Individual Limit $ 100,000 S 100,000 8 100,000 Mil,; S 125,000
Aggregate Limit 125% 125% 125% i4111W 125%
Stop Lose Coinsurance Level 100% 100% 100% W% 100%
Mental/Nervous Appy Yes Yes Yea Vils Yes
Conlrw Bask Paid Pall Paid I* Paid
Terminal LiabiWy Option No Extension(WA) No Extension(WA) No Extension(WA) 0 No Extension(WA)
Benefits applied to ISL RwUodloai RxUodkai Rw?AK pi 0010401,
Beneflis appbd to ASL Rx4Nedkai RxlMm" RwUedkal a,1111 I Ph RxlMedkal
Commissions 0% 0% 0% 0%
Individual Lifetime Stop Loss Payment unlimited Unlimited UN4nked td> tlpl Uninvited
Maximum Annual ASL Payment S 1,000,000 $ 1,000,000 $ 1,000,000 S 1,x,@00 $ 1,000,000
Policy Period Length(months) 12 12 12 i3 12
Cost 3 Factors
Total Expected Nwpooled APM Claims $ 1,683,220 S 1,370,982 $ 1,370,962 i $ 1,370,962
Total Expected Non-pooled Me"Cpm: S 4,013,710 $ 4,124,039 $ 4,124,039 $ OWN, $ 4,124,039
PoolinglCoinsurence Adjustment - - 1",4t1 97,415
Lasering Adjwlment - 150,000 1 137,500
Attachment Point 8,998,174 8,888,751 7,058,251 $PDA* 7,162,395
Lives covered under Stop Loss 777 758 758 1111111 758
RateCosWefmonth $ 91.90 ; 106.23 $ 100.10 $ X1.11 S "All
Trigger Factor $ 760.34 $ 767.14 ; 777.91 $ i ; 789.51
ISI Rab $ 87.80 $ 101.10 $ 95.97 8 "Ali $ 01.98
ASL Rab 3.77 3.57 3.57 dlS 3.63
State Asseament Rab 0.33 0.56 0.58 1#M 0.58
Comparisons
Annual Stop Loss premium $ 833,717 $ 949,588 $ 903.027 0 _ $ 778.472
State Assessment Fee(TX) S 0 $ 5,000 $ 5,060 1 1" S 5,0!10
Toed Stop Loss premium $ 833,717 $ 954,647 $ 908,107 S WA4*. $ 781,653
(at proposed Was of 768)
Maximum Claim Liability $ 8,807,088 $ 8,868,774 $ 7,056,292 1 /,009.40 $ 7,162,435
(at proposed Wes of 758)
%Increase In Reteteehnonth 14.5% 8.9% 11CM (e.3%)
%Increase In Trigger Factor 0.9% 3.7% t`7!i 5.2%
08/06/2011 www.aotne.com ASC Slop Loss
Stop Loss Assumptions
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
This caveat document outlines specific Information for the quotation provided on 0810812011.
■ Stop Loss is available to cover claims for all of the Plan Sponsor's eligible employees and their dependents
who are enrolled on a timely basis and are covered under the ASC plan,provided the employees satisfies
the following definition:an employee means an employee of the Insured who Aetna determines is physically
able to perform all the regular duties of employment,is regularly working at least 25 hours per week and for
whom the insured is deducting any required U.S. FICA taxes. Retirees under65/over 65 have been included
In this quotation at the Plan Sponsor's request.
■ This Is a firm quote.
■ Multiple ISL Levels-Multiple Individual Stop Loss levels are provided. Due to concerns about anti-selection,
a chosen Individual Stop Loss amount cannot be decreased at a future renewal unless the number of Stop
Loss lives changes substantially;at which time,Aetna will suggest the appropriate Individual Stop Loss
amount for the renewal year.
■ Stop Loss Policy Year-The Stop Loss policy year must agree with the ASC contract year,both of which
must end on the customer's standard renewal date.
■ Texas Assessment
Your Stop Loss Rate includes a state assessment for the uninsured risk pool in TX. This portion of your
premium is used to fund a required assessment levied by the state(s).
■ Rate/Factor Adjustments-We reserve the right to adjust the premium rate and Aggregate factor during the
policy year if there are a)changes to the medical plan,b)deviations from any of our quote assumptions
(e.g.policy period,type of Stop Loss coverage,runoff coverage for employees who terminated prior to
the renewal date,etc),or c)changes in other factors bearing on the Stop Loss risk that result in a combined
manual change of 10%or more(e.g. ,single/family split,age/gender mix,etc.). However,we will not
change the rate or factor based on changes in the make-up of the group unless the number of covered
employees(either in total, by type of medical plan,by singla/family split,by age/gender or by location)
changes by more than 10%from the number assumed in the quote. We also will not change the rate or
Aggregate factor based on actual Stop Loss experience after the effective date.
■ Family Participation-This quotation assumes 46.3%family participation.
■ Large Group Acquisition-in the event that a large group(in excess of 10%of total covered lives)is acquired
after the original effective date and is covered under the Stop Loss policy,we reserve the right to underwrite
the Individuals within this group based on current large claim data provided by the customer. If this
information is not forthcoming,we will apply the Actively-at-Work and Dependent Non-Confinement
underwriting rules to those in the new group on the effective date of their coverage under Stop Loss. Aetna
agrees to waive the Pre-existing conditions provision when comprehensive claim experience is provided.
■ Coverages Excluded from Individual Stop Loss-Non-integrated(APM, PCS)drug benefits will apply to the
Individual Stop Loss limit while separate ancillary benefits such as: Dental,Vision and Temporary Disability
will not apply to the Individual Stop Loss limit.
■ Coverages Included under Aggregate Stop Loss-Aggregate Stop Loss coverage includes the following
benefits: Medical and Pharmacy
08/08/2011 www.aetna.com Stop Loss Assumptions ASC
Stop Loss Assumptions
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
■ Mental/Nervous and Substance Abuse-Mental/Nervous and Substance Abuse claims will be covered by
Individual and Aggregate Stop Loss only when Aetna's vendor provides these benefits. If these benefits are
provided by an outside vendor,the claims resulting from these services will be excluded from Individual and
Aggregate Stop Loss.
■ Large Claim Adjustment-(Applies to Option 1 and 3)-This Stop Loss pricing includes a premium adjustment
for large claimant(s). Since Stop Loss is designed to protect customer's from the"unknown"risks,and
thisithese claimant(s)is/are a known liability,the expected cost of the multi-year claims over the Individual
Stop Loss limit will be risk shared with the customer through a premium adjustment of$46,539 that has
been built into the renewal rate.
Aetna agrees not to laser new individuals upon renewal other than those Identified in a takeover situation.
Lasering alternatives may be presented along with a no laser option.
■ Lasering(Individual Stop Loss Levels)-(Applies to Option 2 and 4)-in lieu of the large claim adjustment noted
above a lasering Option is being offered. Based upon a review of the large claim information,it has been
determined that the following claimant(s)will be lasered:
(Name) (EE SSN) (Special Stop Loss Limit)
J Hurd 455-32-3288 $400,000
A separate claim account will need to be established for each lasered Individual Stop Loss level.
The Aggregate Stop Loss factor has been adjusted to reflect Aetna's increased liability as a result of the
lasered individual(s).
■ Reimbursement for Aggregate Stop Loss Claims-The monthly budget feature standardly applies to
Aggregate Stop Loss claims as long as the Stop Loss policy remains in effect;however,this feature is not
available under the following conditions: 1)when customers choose to fund claims through multiple
primary wire lines or 2)when customers choose to fund claims through one primary wire line and report
through one or more internal wire lines. For these plans,reimbursement will be made within 120 days
after the policy year end.
The Aggregate liability limit will equal the soli trigger factor times the number of months in the policy year
times the total number of covered Stop Loss lives reported for that policy year(exception:when a customer
drops in size during the policy year,the actual enrolled lives at the start of the policy year will be utilized to
determine the liability limit for that policy year).
■ Maximum Annual Aggregate Stop Loss Payment Amount-This quote assumes$1,000,000 Maximum
Annual Aggregate Stop Loss Payment Amount.
■ individual Lifetime Stop Loss Payment Amount-This quote assumes an unlimited Individual Lifetime
Stop Loss Payment Amount The Individual Lifetime Stop Loss Payment Amount will be capped to be no
greater than the underlying lifetime medical plan maximum,for a given Participant, minus the Individual
Stop Loss Amount in effect for each policy period.
■ Producer Commissions-There are no producer commissions included for Stop loss.
■ Prior to acceptance of this proposal,we reserve the right to withdraw or modify it for any reason. However,
in no event may this proposal, as it pertains to Stop Loss, be accepted after the earlier of a)90 days from
the date of this proposal,or b)the proposed effective date for Stop Loss coverage.
08/08/2011 www.aetne.com Stop Loss Assumptions ASC
Stop Loss - Aetna Competitive Advantage
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
Features and Benefits of Aetna Stop Lose Insurance
Aetna Stop Loss Insurance offers a number of features and benefits to the customer. This is what`The Aetna Advantage'is all
about-how we have differentiated ourselves from the competition. Asina's Stop Loss product provides immediate
reimbursement,'monthly budgeting feature,and coverage for mental heaitinlsubstance abuse and transplant claims commonly
excluded from Stop Loss policies.
i
Each one of the features and benefits fisted below in the`Features and benefits'chart provides an Important return to
customers and demonstrates'The Aetna Advantage'
Features and Benefits
Feature Benefit Com ve Advanta
I
Monthly budgeting feature for Aggregate Less variability In month-to-month costs and Often no monthly budgeting.
Stop Loss allows for simple monthly cash-flow advantages. i
budgeting and tracking of Stop Loss
aggregate liability.
i
Regular Stop Loss claim auditing and Aetna's auditing and MCM avoid some Third party carriers may lreadjudicate'
Medical Claim Management(MCM) claims that otherwise would have been claims and may reject a significant%of
programs help ensure tight adjudication of paid. Aetna may pay some Stop Loss dollars submitted,leaving the claims
claims initially. in addition,ensures claims that a Third-Party carrier would deny administrator and customer to recover
catastrophic claims are managed to an based on claims administration errors. disputed amounts.
aceroodate level.
Automatic claims submission.No (treater convenience and lower Paperwork to request reimbursement is
paperwork. administrative charge. No chance of often required. Claims adminlstrelors may
missing and failing to submit eligible daims. charge extra for providing documentation to
third-party carriers.
Premier Product Offering for Individual Stop No lasering and reduced experfenee loads Third-party Stop Loss carriers may load
Loss(slate approval is required). for known catastrophic claims at renewal. rates or laser at renewal for known
rata daims.
'Immediate reimbursement is not available for claims that are not administered on Aetna claims systems.
Individual and Aggregate Stop Loss reimbursements resulting from the Inclusion of claims paid during the 3 month run out
period will be handled on a delayed year-end reimbursement basis.Medical claims that exceed the Individual Stop Loss
Amount or Aggregate Limit during the first twelve months of the policy period will be handled on an knmedi"monthly
budget reimbursement basis.
00/08/2011 www.notna.com SL,Aetna Competitive Advantage
Stop Loss Leveraged Trend Illustration
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
Stop Loss is the coverage of catastrophic medical services above a deductible level(ISL).
Leveraged Trend occurs in Stop Loss as a result of the combination of:
-Medical Trend=the increase in total medical costs from one plan year to the next.
-Changes in Utilization=catastrophic claims may occur more or less frequent than other medical care.
-Leveraging due to deductible level =see example below.
Leveraging due to Deductible-Example:
The following chart assumes that a customer has a$110,000 deductible.
The customer will fund the first$110,000 of any claim.
A$225,000 claim in Year 1 would result in$115,000 being funded by Aetna
Due to medical trend of 12%,that claim if incurred in Year 2 would be$252,000,
which would result In$142,000 being funded by Aetna. So,the amount funded
by Aetna has grown 23%. The 23%is known as leveraged trend.
This is why stop loss renewal increases are higher than typical medical trend.
Year/ Year Change
Claimant $225,000 $252,000 12%
ISL Deductible $110,000 $110,000 0%
ISL Claim Aetna Funded $115,000 $142,000 23%
300000
250000
200000-
160000- ■Aetna Fund
[W Customer Funded
100000
50000
0
Year 1 Year 2
To help reduce Stop Loss Cost,you can Increase the Deductible ISL to$120,000
Year Year2 Change
Claimant $225,000 $252,000 12%
ISL Deductible $110,000 $U01WO 9%
ISL Claim Aetna Funded $116,000 $132,000 15%
Note:110K and 120K ISL thresholds available for 10/01/06 effective dates and later,in addition
as a reminder Underwriting Guidelines allow for Increases but not decreases in the deductible level.
This example is illustrative,the trend numbers and factors do not represent your case specific
experience or actual stop loss deductible.
08/08/2011 www.aetne.com Stop Loss Leveraged Trend ASC
ROUNDR(xK,TE]AS City Council Agenda Summary Sheet
PURPOSE.PMoM.PR(3sPUM
Agenda Item No. 11C1.
Consider a resolution authorizing the Mayor to execute a letter of understanding with
Agenda Caption: Aetna regarding 2012 policy renewal for Stop Loss insurance coverage.
Meeting Date: December 15, 2011
Department: Human Resources
Staff Person making presentation: Cheryl Delaney
Finance Director
Item Summary:
Consider a resolution authorizing the Mayor to execute a Letter of Understanding with Aetna Health, Inc. for Stop
Loss Insurance.
The City used the Reverse Auction Method in an effort to obtain Stop Loss Insurance that would best meet the
needs of the City.Aetna was selected as the insurer that best suited our needs considering coverage and price.
Cost: $828,092.00
Source of Funds: Self-funded Health Insurance
Date of Public Hearing(if required): N/A
Recommended Action: Approval
EXECUTED
DOCUMENTS
FOLLOW
Kendra Hoduski
XAeftw MMA Senior Account Manager
Great Hills Corporate Ctr.Bld 3 9050 Capital of Texas Highway North Suite 150
Austin,TX 78759
Phone:512/864-2971
November 22,2011 Fax:512-346-7406
HoduskiK(Maetna.com
City Of Round Rock
Karin Holland
221 East Main Street
Round Rock,TX 78664
Dear Ms.Holland:
Thank you for allowing us to serve your health insurance and health benefit needs over the past year. We are hopeful that this package
will provide you with the information you need in order to develop your company's future benefits program. As we approach the
January anniversary of your program with our company,we are pleased to present you with our renewal for the 2012 policy period.
At Aetna',we believe it is fundamental that you understand the full financial picture of your benefit plan.Therefore,the enclosed package
provides the following important information about the cost of your current program,potential changes you may want to consider and the
value that Aetna brings to you and your company.
■ Future Prooram Costs-This section illustrates the cost projections to operate your current benefit program for the period
01/01/2012 through 12/31/2012. This section contains the following:Stop Loss Exhibit.
-Also included in this section is renewal information regarding your Stop Loss coverage. For Option 3,Aetna's charge for your
Stop Loss protection levels will decrease 0.7%over the current rate.Your aggregate trigger factor will increase 2.7%.
■ Stop Loss Assumptions
Stop Loss Assumptions-This section includes specific information regarding what's included and excluded from your Stop
Loss quotation,plus there is a separate page explaining leveraged trend.
■ The Aetna Difference-This section outlines the latest Aetna facts that we would like you to know about our company. We
hope that by reading this information you will better understand the many ways we are striving to provide quality healthcare
programs and services to companies like yours.
In the absence of any changes impacting the conditions of this renewal as outlined in the Financial Assumption section,the rates,fees,
and factors presented here will remain in effect through December 31,2012.
If you would like to make any plan changes,please contact me by December 1,2011. If you have any questions,
please contact me at 512/864-2971.
We are committed to working with you to provide quality products and services that reinforce your decision to do business with Aetna and
help manage your current and future health care costs.
Acy: of R d Rock
BY:Titl
Date: 17• t G• I
Sincerely,
MMA Senior Account Manager Senior Underwriting Consultant
Aetna is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.The
Aetna companies that offer,underwrite or administer benefit coverage Include:Aetna Health Inc.,Aetna Health of California Inc.,Aetna
Dental Inc.,Aetna Dental of California Inc.,Aetna Health Insurance Company,Health Insurance Company of New York, Aetna Life
Insurance Company(Aetna).In Maryland,by Aetna Health Inc.,151 Farmington Avenue,Hartford,CT 06156.
Each insurer has sole financial responsibility for its own products.
Health benefits and health insurance plans contain limitations and exclusions.
Policy form numbers Include GR-9/13114N,GR-23,GR-29/GR-29N,GR-700-W,and/or GR-88435 and/or GR-96476.
Stop Loss Exhibit
ASC
ContracthoWer Number-819919
City of Round Rock
Renewal Period:111112 through 12131/12
•Minimum Stop Loss Aggregate Limit will be set using the first month enrollment x
Stop Loss Aggregate Limit(PEPM)Composite Factor x number of contract months.
•Premium rates are billed and Aggregate Factors are administered on a composite basis.
•Please see the Stop Loss Caveats for additional information.
CONCESSION 11-22-2011
Lasering Option Lasering Option
Straight Renewal Proposed '�', Proposed
Current Option 1 Option 2 Option 4
�u
Plan Characteristics y'
Individual Limit $ 100,000 $ 100,000 $ 100,000 $ 125,000
Aggregate Limit 125% 125% 125% 125%
Stop Loss Coinsurance Level 100% 100% 100% 100%
Mental/Nervous Apply Yes Yes Yes
Yes
Contract Basis Paid Paid Paid Paid
Ternmal Liability Option No Extension(N/A) No Extension(N/A) No Extension(N/A) No Extension(N/A)
Benefits applied to ISL Rx/Medical RxIMedical RxIMedical Rx/Medical
Benefits applied to ASL Rx/Medical Rx/Medical Rx/Medical Rx/Medical
Commissions 0% 0% 0% 0%
Individual Lifetime Stop Loss Payment unlimited Unlimited Unlimited Unlimited
Maximum Annual ASL Payment $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
Policy Period Length(months) 12 12 12 12
Cost&Factors
Total Expected Non-pooled APM Claims $ 1,583,229 $ 1,370,962 $ 1,370,962 $ 1,370,962
Total Expected Non-pooled Medical Claims $ 4,013,710 $ 4,124,039 $ 4,124,039 $ 4,124,039
Pooling/Coinsurance Adjustment - - - 97,415
Lasering Adjustment - 150,000 137,500
Attachment Point 6,996,174 6,868,751 7,056,251 7,162,395
Lives covered under Stop Loss 777 756 756 756
Rate Costlee/month $ 91.90 $ 105.23 $ 100.10 $ 86.15
Trigger Factor $ 750.34 $ 757.14 $ 777.81 $ 789.51
ISI Rate $ 87.80 $ 101.10 $ 95.97 $ 81.96
ASL Rate 3.77 3.57 3.57 3.63
State Assesment Rate 0.33 0.56 0.56 0•56
Comparisons
Annual Stop Loss premium $ 833,717 $ 949,566 $ 903,027 $ 776,472
State Assessment Fee(TX) $ 0 $ 5,080 $ 5,080 $ 5,080
Total Stop Loss premium $ 833,717 E 954,647 $ 908,107 $ 781,553
(at proposed lives of 756)
Maximum Claim Liability $ 6,807,088 $ 6,868,774 $ 7,056,292 ^ $ 7,162,435
(at proposed lives of 756)
%Increase in Rateleelmonth 14.5% 8.9% (8.3%)
%Increase in Trigger Factor 0.9% 3.7% 5.2%
08/08/2011 www.aetna.com ASC Stop Loss
Stop Loss Assumptions
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
This caveat document outlines specific information for the quotation provided on 08108/2011.
■ Stop Loss is available to cover claims for all of the Plan Sponsor's eligible employees and their dependents
who are enrolled on a timely basis and are covered under the ASC plan, provided the employees satisfies
the following definition: an employee means an employee of the Insured who Aetna determines is physically
able to perform all the regular duties of employment, is regularly working at least 25 hours per week and for
whom the insured is deducting any required U.S. FICA taxes. Retirees under65/over 65 have been included
in this quotation at the Plan Sponsor's request.
■ This is a firm quote.
■ Multiple ISL Levels-Multiple Individual Stop Loss levels are provided. Due to concerns about anti-selection,
a chosen Individual Stop Loss amount cannot be decreased at a future renewal unless the number of Stop
Loss lives changes substantially; at which time, Aetna will suggest the appropriate Individual Stop Loss
amount for the renewal year.
■ Stop Loss Policy Year-The Stop Loss policy year must agree with the ASC contract year, both of which
must end on the customer's standard renewal date.
■ Texas Assessment
Your Stop Loss Rate includes a state assessment for the uninsured risk pool in TX. This portion of your
premium is used to fund a required assessment levied by the state(s).
■ Rate/Factor Adjustments-We reserve the right to adjust the premium rate and Aggregate factor during the
policy year if there are a)changes to the medical plan, b)deviations from any of our quote assumptions
(e.g. policy period, type of Stop Loss coverage, runoff coverage for employees who terminated prior to
the renewal date, etc), or c)changes in other factors bearing on the Stop Loss risk that result in a combined
manual change of 10%or more(e.g. , single/family split, age/gender mix, etc.). However,we will not
change the rate or factor based on changes in the make-up of the group unless the number of covered
employees(either in total, by type of medical plan, by single/family split, by age/gender or by location)
changes by more than 10%from the number assumed in the quote. We also will not change the rate or
Aggregate factor based on actual Stop Loss experience after the effective date.
■ Family Participation -This quotation assumes 46.3%family participation.
■ Large Group Acquisition -In the event that a large group(in excess of 10%of total covered lives) is acquired
after the original effective date and is covered under the Stop Loss policy, we reserve the right to underwrite
the individuals within this group based on current large claim data provided by the customer. If this
information is not forthcoming,we will apply the Actively-at-Work and Dependent Non-Confinement
underwriting rules to those in the new group on the effective date of their coverage under Stop Loss. Aetna
agrees to waive the Pre-existing conditions provision when comprehensive claim experience is provided.
■ Coverages Excluded from Individual Stop Loss-Non-integrated (APM, PCS)drug benefits will apply to the
Individual Stop Loss limit while separate ancillary benefits such as: Dental,Vision and Temporary Disability
will not apply to the Individual Stop Loss limit.
■ Coverages Included under Aggregate Stop Loss-Aggregate Stop Loss coverage includes the following
benefits: Medical and Pharmacy
08/08/2011 www.aetna.com Stop Loss Assumptions ASC
Stop Loss Assumptions
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
■ Mental/Nervous and Substance Abuse-Mental/Nervous and Substance Abuse claims will be covered by
Individual and Aggregate Stop Loss only when Aetna's vendor provides these benefits. If these benefits are
provided by an outside vendor, the claims resulting from these services will be excluded from Individual and
Aggregate Stop Loss.
■ Large Claim Adjustment-(Applies to Option 1 and 3) -This Stop Loss pricing includes a premium adjustment
for large claimant(s). Since Stop Loss is designed to protect customer's from the"unknown" risks, and
this/these claimant(s)is/are a known liability, the expected cost of the multi-year claims over the Individual
Stop Loss limit will be risk shared with the customer through a premium adjustment of$46,539 that has
been built into the renewal rate.
Aetna agrees not to laser new individuals upon renewal other than those identified in a takeover situation.
Lasering alternatives may be presented along with a no laser option.
■ Lasering (Individual Stop Loss Levels)-(Applies to Option 2 and 4)-In lieu of the large claim adjustment noted
above a lasering Option is being offered. Based upon a review of the large claim information, it has been
determined that the following claimant(s)will be lasered:
(Name) ( EE SSN) (Special Stop Loss Limit)
J Hurd 455-32-3288 $400,000
A separate claim account will need to be established for each lasered Individual Stop Loss level.
The Aggregate Stop Loss factor has been adjusted to reflect Aetna's increased liability as a result of the
lasered individual(s).
■ Reimbursement for Aggregate Stop Loss Claims-The monthly budget feature standardly applies to
Aggregate Stop Loss claims as long as the Stop Loss policy remains in effect; however, this feature is not
available under the following conditions: 1)when customers choose to fund claims through multiple
primary wire lines or 2)when customers choose to fund claims through one primary wire line and report
through one or more internal wire lines. For these plans, reimbursement will be made within 120 days
after the policy year end.
The Aggregate liability limit will equal the sold trigger factor times the number of months in the policy year
times the total number of covered Stop Loss lives reported for that policy year(exception: when a customer
drops in size during the policy year, the actual enrolled lives at the start of the policy year will be utilized to
determine the liability limit for that policy year).
■ Maximum Annual Aggregate Stop Loss Payment Amount-This quote assumes$1,000,000 Maximum
Annual Aggregate Stop Loss Payment Amount.
• Individual Lifetime Stop Loss Payment Amount-This quote assumes an unlimited Individual Lifetime
Stop Loss Payment Amount. The Individual Lifetime Stop Loss Payment Amount will be capped to be no
greater than the underlying lifetime medical plan maximum, for a given Participant, minus the Individual
Stop Loss Amount in effect for each policy period.
■ Producer Commissions-There are no producer commissions included for Stop loss.
■ Prior to acceptance of this proposal, we reserve the right to withdraw or modify it for any reason. However,
in no event may this proposal, as it pertains to Stop Loss, be accepted after the earlier of a)90 days from
the date of this proposal, or b)the proposed effective date for Stop Loss coverage.
08/08/2011 www.aetna.com Stop Loss Assumptions ASC
Stop Loss - Aetna Competitive Advantage
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
Features and Benefits of Aetna Stop Loss Insurance
Aetna Stop Loss Insurance offers a number of features and benefits to the customer. This is what"The Aetna Advantage"is all
about-how we have differentiated ourselves from the competition. Aetna's Stop Loss product provides immediate
reimbursement,'monthly budgeting feature,and coverage for mental health/substance abuse and transplant claims commonly
excluded from Stop Loss policies.
Each one of the features and benefits listed below in the"Features and Benefits"chart provides an important return to
customers and demonstrates"The Aetna Advantage."
Features and Benefits
Feature Benefit Competitive Advantage
Monthly budgeting feature for Aggregate Less variability in month-to-month costs and Often no monthly budgeting.
Stop Loss allows for simple monthly cash-flow advantages.
budgeting and tracking of Stop Loss
aggregate liability.
NNW
Regular Stop Loss claim auditing and Aetna's auditing and MCM avoid some Third-party carriers may"readjudicate"
Medical Claim Management(MCM) claims that otherwise would have been claims and may reject a significant%of
programs help ensure tight adjudication of paid. Aetna may pay some Stop Loss dollars submitted,leaving the claims
claims initially. In addition,ensures claims that a Third-Party carrier would deny administrator and customer to recover
catastrophic claims are managed to an based on claims administration errors. disputed amounts.
lanorooriate level.
Automatic claims submission.No Greater convenience and lower Paperwork to request reimbursement is
paperwork. administrative charge. No chance of often required. Claims administrators may
missing and failing to submit eligible claims. charge extra for providing documentation to
third-party carriers.
Premier Product Offering for Individual Stop No lasering and reduced experience loads Third-party Stop Loss carriers may load
Loss(state approval is required). for known catastrophic claims at renewal. rates or laser at renewal for known
catastrophic claims.
"Immediate reimbursement is not available for claims that are not administered on Aetna claims systems.
Individual and Aggregate Stop Loss reimbursements resulting from the inclusion of claims paid during the 3 month run out
period will be handled on a delayed year-end reimbursement basis.Medical claims that exceed the Individual Stop Loss
Amount or Aggregate Limit during the first twelve months of the policy period will be handled on an immediate/monthly
budget reimbursement basis.
08/08/2011 www.aetna.com SL-Aetna Competitive Advantage
Stop Loss Leveraged Trend Illustration
City Of Round Rock Contractholder Number-819919
Renewal Rate Period: 01/01/2012 through 12/31/2012
Stop Loss is the coverage of catastrophic medical services above a deductible level(ISL).
Leveraged Trend occurs in Stop Loss as a result of the combination of-
-Medical Trend=the increase in total medical costs from one plan year to the next.
-Changes in Utilization=catastrophic claims may occur more or less frequent than other medical care.
-Leveraging due to deductible level =see example below.
Leveraging due to Deductible-Example:
The following chart assumes that a customer has a$110,000 deductible.
The customer will fund the first$110,000 of any claim.
A$225,000 claim in Year 1 would result in$115,000 being funded by Aetna
Due to medical trend of 12%,that claim if incurred in Year 2 would be$252,000,
which would result in$142,000 being funded by Aetna. So,the amount funded
by Aetna has grown 23%. The 23%is known as leveraged trend.
This is why stop loss renewal increases are higher than typical medical trend.
Year 1 Year 2 Change
Claimant $225,000 $252,000 12%
ISL Deductible $110,000 $110,000 0%
ISL Claim Aetna Funded $115,000 $142,000 23%
300000 �*
ki 5 I b�xi
250000
200000
MAetna Funded
150000
■Customer Funded
100000
50000
0 —W— W.
Year 1 Year 2
To help reduce Stop Loss Cost,you can increase the Deductible ISL to$120,000
Year 1 Year 2 Change
Claimant $225,000 $252,000 12%
ISL Deductible $110,000 - 9%
ISL Claim Aetna Funded $115,000 $132,000 15%
Note: 110K and 120K ISL thresholds available for 10/01/06 effective dates and later,in addition
as a reminder Underwriting Guidelines allow for increases but not decreases in the deductible level.
This example is illustrative,the trend numbers and factors do not represent your case specific
experienceor actual stop loss deductible.
08/08/2011 www.aetna.com Stop Loss Leveraged Trend ASC