Res 13-650RESOLUTION NO. 13 -650
A RESOLUTION of the City Council of the City of Federal Way,
Washington, Establishing a Self - Insured Medical and Prescription
Benefit Program.
WHEREAS, Title 48.62 of the Revised Code of Washington authorizes cities to establish a
self-funded medical and prescription benefit program; and
WHEREAS, the City Council of the City of Federal Way has determined that a self - funded
benefits program provides an avenue for better controlling healthcare costs; and
WHEREAS, the self - funded benefits program involves a number of components including
annual premium cost development, specifically identified reserves, stop loss insurance, claim
administration and a wellness program for staff and dependents; and
WHEREAS, the City will be required to hold reserves to fund an Incurred But Not Reported
(IBNR) claim liability as calculated annually by a healthcare actuary (Three Hundred Fifteen
Thousand Dollars ($315,000) in 2014, Three Hundred Thirty-Five Thousand Dollars ($335,000) at
the end of 2015), and
WHEREAS, the Healthcare Actuary opined and the State accepted (as part of the application
process) that establishing a Claim Stabilization Reserve (CSR) equal to, and in addition to, the IBNR
liability (Three Hundred Fifteen Thousand Dollars ($315,000) in 2014) provides claim stabilization
to the Plan, in the event claims exceed the projected amounts, and would likely reduce the projected
healthcare costs increases in 2015 and 2016 to approximately 6.2% - 7 %; and
WHEREAS, the City Council of the City of Federal Way desires to establish a Wellness
Program for the employees and eligible dependents; and
WHEREAS, a component to the Wellness Program includes a two level medical plan as
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proposed by the Health and Wellness Committee;
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
RESOLVES AS FOLLOWS:
Section 1. Reserve Fund for Self - Insured Medical and Prescription Benefit Program. A
reserve fund for the self - funded benefits fund will be established in 2014 by appropriating Three
Hundred Fifteen Thousand Dollars ($315,000.00) from the strategic insurance fund. For plan years
ending after 2014 the goal will be to hold an overall reserve equal to two times the calculated IBNR
liability.
Section 2. Claim Administrative Services. Entering into an agreement with third party(ies)
to provide claim administrative services, subrogation, coordination of benefits, customer service,
eligibility maintenance, Summary Plan Descriptions, network access /management and care
management is hereby authorized.
Section 3. Stop Loss Insurance. The purchase of stop loss insurance is hereby authorized as
it is a component of the benefits program, which limits the City's exposure.
Section 4. Actuarial and Claim Audit Services. Enter into agreements for actuarial services
(for annual rate and IBNR calculations) and audit services (every three years) as required under
Washington Administrative Code ( "WAC ") for governmental partially self - insured plans.
Section 5. Wellness Program. A wellness program is hereby established for the purpose of
encouraging and assisting City employees and their dependents towards healthy life styles, which
includes the concept of a two level medical plan whereby the employee out of pocket expenses
increases if the employee and eligible dependent do not participate in the Wellness Program.
Section 6. Severability. If any section, sentence, clause or phrase of this resolution should be
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held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or
unconstitutionality shall not affect the validity or constitutionality of any other section, sentence,
clause or phrase of this resolution.
Section 7. Corrections. The City Clerk and the codifiers of this resolution are authorized to
make necessary corrections to this resolution including, but not limited to, the correction of
scrivener /clerical errors, references, resolution numbering, section/subsection numbers and any
references thereto.
Section 8. Ratification. Any act consistent with the authority and prior to the effective date
of this resolution is hereby ratified and affirmed.
Section 9. Effective Date. This resolution shall be effective immediately upon passage by
the Federal Way City Council.
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON this 5t" day of November, 2013.
CITY OF FEDERAL WAY
MAYOR, SkIP PRIEST
ATTEST:
Cm$�k CITY CLERK, CAROL M NEILLY, CC
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APPROVED AS TO FORM:
ti
CITY ATTORNEY, PATRICIA A. RICHARDSON
FILED WITH THE CITY CLERK: 10/29/2013
PASSED BY THE CITY COUNCIL: 11/05/2013
RESOLUTION NO.: 13 -750
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