Agenda - 10-12-1995 - Item A 1-3 (no abstract)

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r Attachment 2 NCACC Health Insurance Trust 1. Financial Liability The NCACC Trust advises that the only circumstance in which Orange County would have a financial liability beyond the amount of its set monthly contributions would if the Trust: As a whole experienced a deficit at the end of its plan year, and The NCACC Board of Trustees determined a special assessment against all plan members was necessary to offset the deficit and Designated a pro-rata share to Orange County. 2. According to NCACC Executive Director Ron Aycock: The Trust has been establishing its member contributions at a level to yield a small surplus at the end of the plan year. The Trust carries aggregate stop loss insurance on the Trust as a whole at a level of 115 percent. The maximum loss (worst case scenario)the Trust could possibly incur is the difference between the projected payment for health benefit claims(100 percent and the aggregate stop loss insurance or 115 percent). In dollar amount,he advises this amount is$5.6 million. In addition to the aggregate stop loss insurance,the Trust has purchased specific stop loss insurance at$100,000. Any individual claim over the member's individual claim stop loss(Orange County's is$50,000)and under$100,000 is covered by the Trust. Any amount over the $100,000 is covered by the Trust's specific stop loss insurance and would not go toward creating a Trust deficit. The Trust's actuary has concluded there is a one in 1,000 chance of reaching the 115 percent aggregate stop loss level. In the event of reaching the 115 percent level,counties which are on an "administrative services only" funding arrangement(not Orange County)would bear approximately 60 percent of the $5.6 million liability or$3.4 million. The remaining$2.2 million would be the responsibility of the "fully insured" members(including Orange County). In essence, it is a one in 1,000 chance that Orange County and the remaining members would have to provide additional funds of$2.2 million.