On Tuesday night the St. Charles City Council members were presented with an outline of the new insurance coverage for the City employees. The presentation was made by Matt McWilliams of AIG, the new broker of record. McWilliams went through the coverage first to demonstrate how coverage with the new policy would be equal to or greater than coverage with the current policy. McWilliams presented information from United Health Care. The new insurance would be fully insured. Currently the city has self insurance and the Council plans to fully insure the City. McWilliams pointed out the new insurance coverage will save the City taxpayers anywhere from $400,000 to over $1 million. According to McWilliams, there are some discrepancies between the numbers the City has given him and the numbers the current company, Marsh Advantage, has provided his company. The discrepancies prompted Councilman John Gieseke to ask for a forensic auditor to come in and investigate all aspects of the City’s insurance.
Early in 2003 the St. Charles City Council was presented with a change in broker of record by then Human Resource Director Carrie Caskey. During the discussions John Scherr, former councilman Ward 5 and Councilman John Gieseke argued that using one company for the City’s insurance information and insurance coverage was dangerous. “This change would mean we get all our information from one source,” Scherr told the FCN in a previous interview. Gieseke and Mark Brown, Councilman Ward 3, pushed the City to go out to bid when Caskey brought forward the renewal of the insurance policies. Caskey and the representative from Marsh told the Council they had gone out for bids and Safeco was the best deal the City could hope for. During his closing presentation Tuesday, McWilliams reminded the Council that every bid he received was lower than the cost Marsh was offering the City. A Marsh executive plead guilty on January 10th to charges Marsh had rigged bids and asked brokers to give phony bids to make their cost look appropriate.
The presentation demonstrated Marsh had been charging on a two-tier system. That meant even if a person was married with a spouse, the City paid the same amount as a family with six kids. The new insurance plan creates a four-tier system which, according to the presentation, saves in excess of $700,000. The presentation used the cost the City charges for COBRA of those who are retired and compared that with the four-tier system. The City is bound by Federal Law to charge the actual cost to those who are covered by COBRA with a maximum 2 percent administrative charge. These changes will also decrease the amount those who retired with the City are charged for their insurance.
The Council was cautioned there are some charges with the current carrier that will be expended so some of the saving will be used to “run out” the current plan. “That does not take away from the fact that we are saving the money with the new plan,” commented Councilman Mark Brown. “The previous Human Resource director tried to force us to take the old insurance, I took a tremendous amount of criticism because she left, fact is she was pushing a plan that would have cost us a tremendous amount of money without taking any bids.” The Council is voting on the contract with UHC at the next Council meeting.
