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ACES insurance collaborative explained

July 19th, 2017

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ACES insurance collaborative explained

Thomas Danehy and Timothy Howes
ACES Executive Director Thomas Danehy and Assistant Executive Director/Finance & Operations
Timothy Howes established the ACES Insurance Collaborative that North Haven joined.

June 21, 2017 03:23PM
By Ken Liebeskind The North Haven Citizen
Read article on myrecordjournal.com

A reduction in insurance costs of $1.2 million for the town of North Haven and the Board of Education brought about by participation in the ACES Insurance Collaborative enabled the town to pass its $96,568,811 budget for fiscal year 2017-2018.

The Citizen met with Thomas Danehy, ACES Executive Director, and Timothy Howes, Assistant Executive Director, Finance & Operations, to get details on the organization’s self-insurance plan.

Citizen: Did ACES actually start the self-insurance collaborative?

Danehy: Yes, it was a collaborative effort. We’re designed to support local school districts to do things more efficiently, and one of the needs they’ve had for a long time is the escalating cost of health insurance. Carol Merlone, the Ansonia superintendent of schools I met with initially, gave me the idea. We met with attorneys to see how this would work and we came up with a rough draft that I put out to all area superintendents in the greater New Haven region. Initially we had eight districts interested. Ansonia is there and we have the North Haven Board of Education and the town and ACES. We can economize by having a larger group that gives us better bargaining power to negotiate with insurance companies over rates.

Howes: We knew we wanted a smaller group at first to get it up and running, like the founding fathers of the country, the same thing with the collaborative. We prequalified those folks to make sure we have the right mix to start it. In doing so we found that all of us will save about $5 million. Almost $1 million per group. Every group is responsible for their own claims, so the collaborative doesn’t work as its own insurance company. Efficiencies are group discounts on administrative fees and prescription drug discounts, but everyone is responsible for their own claims. We’ll get further savings after we add more groups. It is designed to get those efficiencies into play and it worked out great for North Haven and Ansonia and helped them through their budget process.

Danehy: It’s 600 members for the North Haven town and Board of Education. We went out to bid with Aetna, Cigna and Anthem. We moved over to Anthem and got a great deal doing it. The collaborative starts July 1.

Citizen: Approval was needed from the town and the Board of Education to join the collaborative?

Danehy: They have to get approval, whether it’s the Town Council or the Board of Education. They can keep their own broker and all the members will receive new cards.

Citizen: Individual employee coverage doesn’t change?

Howes: It’s the same plan in their contract. It’s just the back office administration functioning that changes, so it will be seamless for employees.

Citizen: It’s no longer the responsibility of the insurance company to pay claims so the town pays them itself?

Howes: They pay the claims but they draw daily. We pay the administrative cost and they pay the claims. Third party administrator claims are drawn every day so they pay the claims but get money right away.

Citizen: How does stop-loss insurance work?

Howes: In two ways. If claims for an individual in a given year are more than $175,000 the collaborative pays up to $175,000 and stop loss pays the difference. In the aggregate form if there is a lot of cost in a given year anything over $10 million is covered by the stop loss. Anthem provides stop loss insurance. All the companies bid on stop loss and Anthem was the best.

Citizen: How much will North Haven save through the self-insurance collaborative?

Danehy: Going on ACES data with a similar number of employees the savings are $1.2 million. I can’t speak for North Haven, but the sample with 600 members is similar.

Citizen: How will membership in the collaborative work?

Danehy: There are five voting members. The North Haven Board and town have a vote, Ansonia has a vote and ACES has two votes. If other towns come in they’ll have a vote. They vote on how we set fees and rates for the upcoming year and vote on things like how much the stop loss would be. In a few years they can vote on a new carrier. We’ll meet monthly.

Citizen: The collaborative starts July 1. Is North Haven involved for a specific amount of time?

Danehy: In the plan there is a three-year initial commitment, that’s what we asked for so towns won’t come in and leave.

Citizen: We initially reported that Brown & Brown is the insurance company behind the collaborative.

Danehy: Brown & Brown is our broker. It’s a collaborative effort and they helped us administer it.

Citizen: Is this the first time ACES has done an insurance collaborative?

Danehy: Yes, it’s the first time we’ve offered insurance, and it’s a good thing. That’s what ACES is about; we take regional issues and economize. Quite a few towns want to get in next year.

Learn more about ACES Insurance Collaborative

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