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<br />rCI ----'\) <br />( )j <br />tli{ <br /> <br /> <br />MEMORANDUM <br /> <br />**ITEM 3.4.** <br /> <br />TO: <br /> <br />Mayor & City Council <br />~ <br /> <br />Lori Johnson, Finance Director ~r:pJJJ <br /> <br />FROM: <br /> <br />DATE: <br /> <br />September 20, 1999 <br /> <br />SUBJECT: Workers' Compensation Insurance <br />Renewal <br /> <br />The city's workers' compensation insurance with the League of Minnesota Cities <br />Insurance Trust (LMCIT) renews on October 1, 1999. Attached is a copy of the <br />renewal quotation based on our estimated payroll for the contract period. The <br />quotation does not include credits for managed care or a per occurrence deductible <br />both of which the city received previously. <br /> <br />. <br /> <br />In the past, the city had a contract with Medica Work Choice to provide managed <br />care services. Medica Work Choice discontinued offering managed care services in <br />April 1999. After evaluating other managed care providers, it is recommended that <br />the city enter into a contract with Corvel Corporation for such services. Corvel <br />works with numerous other cities and the LMCIT. As in the past, employees will be <br />allowed to utilize any of the Elk River clinics for work related injuries. The <br />purpose of the program is to return injured employees to work sooner and to direct <br />the care given to injured employees thereby reducing insurance costs and lost <br />productivity. The insurance company pays all costs associated with this program, <br />and the city receives a $3,520 credit for having a managed care program. <br /> <br />Each year the city has the option of applying a deductible to this policy. For the <br />past several years, the city has elected a $5,000 per occurrence deductible. After <br />reviewing the possibility of increasing to a $10,000 deductible for the October 1998, <br />renewal, the Council chose to keep the deductible at $5,000. A credit of $9,505 is <br />received if the city selects a $5,000 deductible. The annual savings to increase to a <br />$10,000 deductible is $3,168. <br /> <br />Finally, the 1999 experience modification factor of .65 is based on claims for the <br />three years before the last insured year. In other words, last year's claims will not <br />factor into the experience modification factor until next year at which time it is <br />anticipated that the experience modification factor will increase based on claims. <br />This will cause an increase in the premium. <br /> <br />. <br /> <br />13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330. TDD & Phone: (612) 441-7420 . Fax: (612) 441-7425 <br />