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i~ <br /> ~ ~ MAY0f2 <br /> , nill nlesenrn~ <br /> 1 <br /> x ~ COUNCIL <br /> ~'•~ZT 12iolc MoniAUr <br /> ? (y~j./~C~ ~ John ICcis <br /> Q T~ -~/~LGGG lJ~~ia~a M(chc,cl McGraw <br /> Shelly nosy <br /> <br /> 515 Little Canada Road, Little Canada, MN GG117-1600 ADMINISTRATOR <br /> (6G1) 766-4029 /FAX: (G51) 7G6-4048 Jocl R. Hanson <br /> www. ci.l itYle-cartada. m n. us <br /> MEMORANDUM <br /> TO: Maym• Blesencr & Members of the City Council <br /> rROM: ,Joel Hanson, City Administrator <br /> DATE: Februatyl9, 2010 <br /> I21;: Work Comp Deductible <br /> Our Worker's Compensation policy with the League of Minnesota Cities Insurance 'T'rust (LMCIT) is <br /> up for renewal (4/1/2010). We have the option of choosing a deductible for this plan. For the past few <br /> years, we have chosen a $2,500 per occurrence for medical cost deductible. By choosing this option, <br /> we have received a 7.5% premium credit (It was 8% for 2009) and that saved us $1,868. Since 1990, <br /> we have never had a claim that reached that amount in totality, much less in medical costs. But, as is <br /> often stated when reviewing investments, past performance is not a guarantee for future results. <br /> The additional deductible options areas follows: <br /> Y $5,000 - 1 I.0% savings - or $2,750 based on an expected premium of $25,000 or $875 <br /> additiolial over the $2,500 deductible option. . <br /> Y $10,000 - 15.50% savings - or $3,875 or $2,000 additional over the $2,500 deductible <br /> option. <br /> Since 1990, the City has haci a total of 21 fled work comp claims. Of those, four had no costs <br /> associated with them. The largest total claim was $1,422.33 in 1990. 'The largest medical claim was <br /> $1,149.54 (same claim already referenced). Total medical costs incurred since 1990 equal $5,039.68. <br /> Based on this information, we would have been very safe at the highest deductible option. However, <br /> one claim can destroy this analysis. While our group has had excellent experience, I can't guarantee a <br /> bad claim won't occur during the policy term. <br /> From a payback standpoint, if we have no claims for 2.58 years, we fund the $10,000 deductible. T'he <br /> payback in assuming the additional $7,500 ol'risk over our current deductible level is 3.75 years <br /> ($7,500 divided by $2,000). <br /> Staff believes a higher deductible may make sense. We do not think it is unreasonable to increase our <br /> deductible to the $10,000 level. However, we are retaining more risk by doing so. We would like to <br /> tell us where your comforC level lies. <br /> 1 <br /> <br />