Community Living Group Benefits Consortium

1. Community Living Group Benefits Consortium OASIS Finance Group Meeting 28 October 2010

2. Preliminary Results of Pilot Project • 5 agencies (larger) provided “high level” data for a 7 year period. • Analysis indicated Consortium arrangement could have saved in the order of: • $2.5 million – Extended health care/Dental Benefits. • $1.1 million – disability. • Further data and analysis needed to firm up possible savings.

3. Prevalence of Consortium Arrangements • Wide-spread in health sector. • Wide-spread in municipal sector. • Becoming more common in not for profit service agencies.

4. Why Are Consortium Arrangements Becoming More Common? • Cost of group benefits: • Can be as much as 8% to 10% of payroll. • Annual cost increases of 15% to 30% not uncommon. • Agency budget pressures (flat-lined funding in face of ever increasing costs and growing demand for services). • No area of expense can be exempt from scrutiny – cannot defend limiting/cutting services while overpaying insurance companies. • Small benefits supplier market (3 major insurers); to compete, agencies must combine and deal from strength. • Ensure access to insurance markets for smaller agencies.

5. What Would CL Consortium Look Like? • Each agency would keep its own plan design. • No cost subsidization between agencies. • Combine cash-flow to get financial arrangement with insurer that would only be available to large employers. • Share practices that will lower benefits costs (see next slide for actual results achieved).

6. Results Achieved by Sample Consortium • Profile: • 8 independent employers across Ontario. • Approximately 5,000 employees. • Government funded. • Consortium in operation for 13 years. • Results (Recent 7 year period): • Cost of LTD reduced by 50%. • 7th year of decreasing LTD rates (in insurance market rates rising by 20% to 30% annually). • Absenteeism reduced by 22,500 days annually (savings approximately $18 million annually). • Health care costs flat-lined or modest increases (in insurance market rising by 18% annually). • Dental costs flat-lined or modest increases (in insurance market rising by 12% annually).

7. Complete the Pilot Project • Need 5 years of annual renewal reports. • DMASL will complete analysis and report back with accurate costs. • Totally confidential process: • All analysis conducted internally by DMASL actuaries/professionals – no contact/disclosure externally. • no contact with existing brokers or insurers. • Pilot project conducted on a “pro bono” basis.

8. Ongoing DMASL Services to Consortium • Full platform of services to Consortium members: • Negotiate with insurance markets. • Prepare annual renewal reports to each agency. • Prepare quarterly progress reports to each agency on ongoing costs during plan year. • Provide input to agencies on annual budgeting. • Handle all claim disputes on behalf of employees. • Monitor insurer services and agree remedies for service problems. • Conduct employee education meetings on benefits. • Review all documentation (contracts/booklets etc). • DMASL remuneration for services from insurer disclosed and approved by Consortium members.