TO: Mayor and Commissioners
FROM: Tennille DeCoste, Human Resources Director
THROUGH: Donald B. Cooper, City Manager
DATE: September 8, 2016
Title
EMPLOYEE HEALTH BENEFIT PREMIUM COSTS EFFECTIVE OCTOBER 1, 2016
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Recommended Action:
Recommendation
Motion to Award Agreements for employee benefits and approve the premium costs effective October 1, 2016.
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Background:
On March 7, 2016, a Request for Proposals RFP No. 2016-076 was issued to obtain proposals for the City Employee Benefit programs. On July 12, 2016, Commission approved the motion to approve the Selection Committees final ranking and authorized negotiations to finalize the benefit services and costs with the following firms:
Employee Benefit(s) Top Ranked Firm
Health, HRA/FSA United Healthcare Group, Inc.
Dental Metropolitan Life Insurance Company
Vision EyeMed Vision Core LLC
STD, LTD, FMLA Life Insurance Company of America NA / CIGNA
EAP OptumHealth, a wholly-owned subsidiary of UnitedHealtcare Group, Inc.
Administration and the City’s employee benefits consulting group, Gehring Group, has conducted negotiations and finalized the plan designs and premium costs. The result of these comprehensive negotiations is a group health program with lower employee out of pocket costs, reduced premiums costs of 14% to the City, and enhanced benefits. Administration is also recommending the employee premiums for both the Core and Buy-up HMO plans be based on both the medical benefit option elected and themployees’s annual salary which will reduce employee premiums overall by 7%. The City, following its current collective bargaining agreements, will continue to provide the HMO Core plan at no cost to the employee.
The Employee Assistance Program (EAP) negotiated with OptumHealth, a wholly owned subsidiary of UnitedHealthcare Group, reduces the City’s annual cost of this employee benefit by 32%.
The dental plan, as negotiated with Metropolitan Life Insurance Company, will reduce the number of plans from the current four plans, two DHMO options and two PPO options, to one DHMO option and one PPO option. The new DHMO plan option, when compared to the current DHMO Advantage Plan with Humana/CompBenefits, has an employee premium reduction of at least 37%. There will be an increase in the cost of the MetLife PPO plan over the current Humana Comp/Benefits PPO plans offered of 9%. This is primarily due to coverage for orthodontia for children and adults, which was not provide under the Humana/CompBenefits PPO plans.
Vision benefits negotiated with EyeMed Vision Core reduced the employee premium cost by 7% and provide an increase in the plan coverage.
The City’s long-term disability plan was negotiated with Life Insurance Company of America NA (CIGNA), the incumbent provider. Additionally, an offering of an short-term disability plan was discussed and is recommended as an enhancement to the City’s current benefit offerings. This short-term disability plan provides the employee with a benefit of 60% of their earnings for a period of up to eight weeks should a non-work-related illness or injury prevent them from performing the duties of their position with the City. If added as an employee-funded plan the annual cost for short-term disability is approximately $250,000 based on an estimated enrollment of 50% of the City’s employees. Should Commission elect to include short-term disability as a benefit provided to all employees, the estimated annual cost to the City would be $121,375.
An additional offering by CIGNA is the administration of the City Family and Medical Leave (FMLA) program at a cost of $12,900 annually. Outsourcing the administration of FMLA provides employees with immediate access to subject matter experts in FMLA and confidential management of their leave. City administration would be advised of those employees who are on FMLA, the length of time the FMLA has been approved for, and would release the City from any legal liability under FMLA and HIPPA, should confidential health information accidently be disseminated. Gehring Group stated that CIGNA has indicated that it could possibly provide FMLA administration to the City at no cost should the Commission elect to fully fund the short-term disability benefit for all employees.
Details of each of the proposed plans are included as attachments.
This motion is in accordance with City Code of Ordinances Section 36.02 (A)(2) Sealed Competitive Method, Request for Proposals, Requests for Qualifications, Requests for Letters of Interest.
City Attorney Review:
Approved as to form and legal sufficiency.
Finance Department Review:
The short and long term financial implications should be described to the City Commission in a clear and crisp manner. The financial implication should be reasonably free of jargon.
Funding Source:
Funding is available from accounts below. Budget changes to reflect recent adjustments to insurance costs will be made before the adoption of the final budget.
Medical - Funding is shared between the City and the employee
Claims Funding Number $6,276,347
Claims handling 551-1576.591-45.20 $301,276
Individual all Stop Loss 551-1576-591-45.36 $643,474
Aggregate Stop Loss 551-1576-591-45.35 $51,467
EAP - City funded 551-1576-591-31.90 $17,410
Vision -Employee funded 551-1576-591-45.49 $47,410
Dental - Employee funded 551-1576-591-45.43 $309,100
Long Term Disability - City Funded 551-1576-591-45.44 $64,300
Short Term Disability
City Funded New Offering $121,375 (coverage for all full time employees)
Employee funded No funding code at this time $250,000 (based on an estimated enrollment of 50% of full time employees)
FMLA Administration New Offering $12,950
No Funding code at this time
Timing of Request:
The new contract needs to be implemented by October 1, 2016, the beginning of the City’s new plan year.