TO: Mayor and Commissioners
FROM: Duane D'Andrea, Human Resources Director
THROUGH: Terrence R. Moore, ICMA-CM
DATE: September 22, 2026
Title
RESOLUTION NO. 147-26 AWARDING AGREEMENTS FOR GROUP HEALTH, DENTAL, VISION, LIFE AND DISABILITY INSURANCE, ANCILLARY INSURANCE BENEFITS
Body
Recommended Action:
Recommendation
Motion to allow the City Manager to enter into and execute a three (3) year agreement, with two (2) one-year renewal options with the following vendors to provide employee benefits: CIGNA to provide the City’s group health plan; P&A Group to provide COBRA administration; UnitedHealthcare to provide the City’s group dental plan(s); Humana to provide the City’s group vision plan; New York Life to provide the City’s group life, disability, FMLA administration, and worksite insurance benefits; Pet Benefit Solutions to provide a pet discount plan; and, LegalShield to provide legal and identity theft coverage.
Body
Background:
The City’s current group medical plan with Cigna and several other insurance policies will expire on September 30, 2026. In preparation, the City’s consultant, Gehring Group, partnered with the internal purchasing department to issue a comprehensive Request for Proposals (RFP) for all insurance lines. Following a thorough review, the RFP committee recommends the following actions for the City's insurance coverage:
• Medical: Retain current provider, Cigna, for Medical ASO, Pharmacy, FSA and EAP.
• Dental: Continue with Solstice Dental, which is transitioning to its parent company, UnitedHealthcare Dental.
• Vision: Switch to Humana Vision Plan.
• Disability & Life: Bundle group disability, life, and voluntary worksite benefits with New York Life.
• Ancillary Policies: Retain ancillary benefits with PetAssure, LegalShield, and P&A Group (for COBRA administration).
On June 10th and September 2nd, the Medical RFP committee approved by Terrence Moore met to score proposers. The committee evaluated all responsive proposals for Medical (ASO, Pharmacy, Stop Loss, EAP, Wellness), Dental, Vision and ancillary policies (life, disability, FMLA, FSA, COBRA, worksite plans, and pet and legal).
Medical Plan
The City operates a self-insured medical plan and utilizes an insurance administrator to process claims. Following the RFP process, Cigna submitted a firm, three-year proposal for Administrative Services Only (ASO) and stop-loss insurance. While the base administration fees remain stable, prior claims experience will drive a 7.8% overall premium increase (approximately $148,000) for the 2026/2027 plan year.
Financial Breakdown
• ASO Fees: 0% increase in Year 1 through Year 3; followed by a 2% increase in Year 4 and Year 5.
• Specific Stop Loss: 10% increase driven by claims experience.
• Aggregate Stop Loss: 0% increase.
• Pharmacy Rebates: Enhanced rebate structure, yielding an expected 5.5% increase in drug rebates returned to the City (approximately $1.4 million in expected rebates).
Additional Cigna Allowances & Funds
• Wellness Funds: $125,000 annually, representing a 25% increase over the prior contract.
• Discretionary Funds: $75,000 annually (stabilizing the declining structure of the prior contract, which fell from $100,000 in Year 1, $60,000 in Year 2, and $30,000 in Year 3 to $0 by Year 4 and Year 5).
• COBRA Allowance: $5,000 annually to fully cover the cost of the P&A Group contract.
Value-Added Services
• Onsite Wellness Coordinator: Retained as a full-time, onsite position for the life of the contract to provide expert development and implementation of City wellness programs.
|
Medical |
Current |
Year 1 |
Year 2 |
Year 3 |
Life of Contract |
|
ASO |
$ 338,654.88 |
$ 338,654.88 |
$ 338,654.88 |
$ 338,654.88 |
$ 1,015,964.64 |
|
SSL |
$ 1,480,110.00 |
$ 1,627,948.56 |
$ 1,627,948.56 |
$ 1,627,948.56 |
$ 4,883,845.68 |
|
ASL |
$ 80,701.92 |
$ 80,701.92 |
$ 80,701.92 |
$ 80,701.92 |
$ 242,105.76 |
|
FSA |
$ 7,488.00 |
$ 7,488.00 |
$ 7,488.00 |
$ 7,637.76 |
$ 22,613.76 |
|
Admin Cost |
$ 1,906,954.80 |
$ 2,054,793.36 |
$ 2,054,793.36 |
$ 2,054,943.12 |
$ 6,164,529.84 |
|
|
|
7.8% |
7.8% |
7.8% |
|
|
Pharmacy Rebate |
$ 1,390,000.00 |
$ 1,466,275.00 |
$ 1,466,275.00 |
$ 1,466,275.00 |
$ 4,398,825.00 |
|
WellnessFunds |
$ 100,000.00 |
$ 125,000.00 |
$ 125,000.00 |
$ 125,000.00 |
$ 375,000.00 |
|
Discretionary Funds |
$ - |
$ 75,000.00 |
$ 75,000.00 |
$ 75,000.00 |
$ 225,000.00 |
|
Rebates & Incentives |
$ 1,490,000.00 |
$ 1,666,275.00 |
$ 1,666,275.00 |
$ 1,666,275.00 |
$ 4,998,825.00 |
|
|
|
11.8% |
11.8% |
11.8% |
|
|
Net Cost (Admin - Rebates) |
$ 416,954.80 |
$ 388,518.36 |
$ 388,518.36 |
$ 388,668.12 |
$ 1,165,704.84 |
|
|
|
-6.8% |
-6.8% |
-6.8% |
|
COBRA Administration
P&A Group is our current COBRA administrator. They offered to continue their current rate of $0.45 per employee per month. The estimated annual fees are approximately $5,000 which is directly paid and reimbursed by CIGNA. This is a two (2) year rate guarantee.
|
COBRA Admin |
Current |
Year 1 |
Year 2 |
*Year 3 |
Life of Contract |
|
COBRA |
$ 4,995.00 |
$ 4,995.00 |
$ 4,995.00 |
$ 4,995.00 |
$ 14,985.00 |
|
CIGNA Reimburse |
$ 4,995.00 |
$ 4,995.00 |
$ 4,995.00 |
$ 4,995.00 |
$ 14,985.00 |
|
Net Cost to City |
$ - |
$ - |
$ - |
$ - |
$ - |
|
|
|
0.0% |
0.0% |
0.0% |
|
Dental Plan
The City offers dental insurance as a 100% employee-paid benefit. Current provider Solstice Dental is transitioning to its parent company brand, UnitedHealthcare (UHC), which brings improved digital tools like mobile ID cards and online claims tracking. For this transition, UHC submitted a 3% rate increase with a two-year rate cap for both the DHMO and DPPO plans.
RFP Selection Rationale
While competing DHMO bidders proposed lower premiums, the RFP committee recommends UHC due to the following factors:
• Plan Flexibility: The Solstice/UHC DHMO features an open network, allowing members to choose or change providers at any time without the standard requirement to designate a primary dentist.
• Superior Network: Competing plans offered significantly smaller provider networks.
• Preserved Benefits: Alternative lower-cost proposals included reductions to current coverage levels.
|
Dental |
Current |
Year 1 |
Year 2 |
*Year 3 |
Life of Contract |
|
DHMO |
$ 89,360.16 |
$ 92,033.64 |
$ 92,033.64 |
$ 92,033.64 |
$ 276,100.92 |
|
DPPO |
$ 289,851.36 |
$ 298,546.68 |
$ 298,546.68 |
$ 298,546.68 |
$ 895,640.04 |
|
Net Cost |
$ 379,211.52 |
$ 390,580.32 |
$ 390,580.32 |
$ 390,580.32 |
$ 1,171,740.96 |
|
|
|
3.0% |
3.0% |
3.0% |
|
Vision Plan
The City offers vision insurance as a 100% employee-paid benefit. Following the RFP process, the committee selected Humana Vision to replace EyeMed. Humana matches the existing provider network and benefit levels while delivering a substantial cost reduction.
Key Proposal Highlights
• Premium Reduction: An initial 8.6% rate drop was further negotiated during the Best and Final Offer (BAFO) stage to an 11.3% overall decrease in premiums.
• Estimated Savings: The rate reduction yields an estimated $8,000 in annual savings for participating employees.
• Rate Guarantee: Humana extended its initial price lock to a four-year rate guarantee.
|
Vision |
Current |
Year 1 |
Year 2 |
Year 3 |
Life of Contract |
|
Vision |
$ 68,375.64 |
$ 60,631.92 |
$ 60,631.92 |
$ 60,631.92 |
$ 181,895.76 |
|
|
|
-11.3% |
-11.3% |
-11.3% |
|
Life, Disability, FMLA, and Voluntary Worksite Insurance
The City provides a mix of employer-paid and employee-paid life and disability insurance plans. To simplify administration and maximize cost savings, the City requested bundled Best and Final Offers (BAFO) from top proposers. Based on these proposals, the committee recommends consolidating all lines with New York Life, migrating the life insurance policies away from the current carrier, The Standard.
Financial and Administrative Impacts
New York Life submitted a highly competitive bundled proposal featuring a three-year rate guarantee:
• Basic & Retiree Life: Yields a 34% rate reduction for basic life and a 36% reduction for retiree life, generating approximately $100,000 in annual savings.
• Long-Term Disability (LTD): Delivers a 14% premium reduction, saving the City approximately $27,000 annually.
• FMLA Administration: Reappointed with a 0% rate increase.
Plan Structures & Cost Sharing
The consolidation maintains or enhances the City’s existing benefit structures:
• Basic Life and AD&D: 100% City-paid for full-time employees, with coverage based on life class.
• Retiree Life: A one-time opportunity at retirement to continue the basic policy, 100% retiree-paid.
• Long-Term Disability: 100% City-paid for full-time employees, replacing up to 60% of salary after a 60-day elimination period.
• Voluntary Benefits: 100% employee-paid options including short-term disability and supplemental life for employees, spouses, and dependent children.
Integrated Worksite Benefits
The City will also introduce voluntary, employee-paid worksite plans through New York Life, including accident indemnity, hospital indemnity, and critical illness insurance. Because New York Life also manages FMLA and disability, they can cross-adjudicate claims. This integration allows the carrier to automatically identify and pay eligible worksite claims based on approved FMLA or disability paperwork, simplifying the process for employees.
|
Life |
Current |
Year 1 |
Year 2 |
Year 3 |
Life of Contract |
|
|
Basic Life & AD&D |
$ 236,129.00 |
$ 156,550.00 |
$ 156,550.00 |
$ 156,550.00 |
$ 469,650.00 |
-34% |
|
Retiree Life |
$ 56,289.00 |
$ 36,210.00 |
$ 36,210.00 |
$ 36,210.00 |
$ 108,630.00 |
-36% |
|
Long-Term Disability |
$ 193,119.00 |
$ 166,015.00 |
$ 166,015.00 |
$ 166,015.00 |
$ 498,045.00 |
-14% |
|
FMLA Administration |
$ 2,428.00 |
$ 2,428.00 |
$ 2,428.00 |
$ 2,428.00 |
$ 7,284.00 |
0% |
|
Net Cost |
$ 487,965.00 |
$ 361,203.00 |
$ 361,203.00 |
$ 361,203.00 |
$ 1,083,609.00 |
|
|
|
|
-26.0% |
-26.0% |
-26.0% |
|
|
*Rates for Short-Term Disability, Voluntary Life plan(s) and worksite plan(s) are not included as they fluctuate based on enrollment, age banded, salary changes, and newly offered.
Additional Worksite Plans
The City offers employee-paid voluntary worksite plans, including pet discount plans and legal/identity theft protection. These low-cost, high-impact benefits are designed to boost employee retention and workplace productivity. Based on the RFP evaluation, the non-bargaining committee recommends renewing existing coverage with no premium increases.
Ancillary Renewals
• Pet Benefit Solutions (PetAssure): Renewed with no rate increase. This plan allows employees to cover one or more animals, providing discounted veterinary services and prescription medication programs.
• LegalShield & IDShield: Renewed with no rate increase. The committee opted to retain these current providers for legal and identity theft monitoring as they submitted the lowest-cost proposal.
City Attorney Review:
Approved as to legal form and legal sufficiency.
Funding Source/Financial Impact:
Funding is available for these services in Health Insurance Fund outlined below, in addition to revenues received in 551-00-000-341-240 through 551-00-000-341-275:
551-13-041-513.31-90
551-13-041-513.45-12
551-13-041-513.45-20
551-13-041-513.45-35
551-13-041-513.45-36
551-13-041-513.45-37
551-13-041-513.45-40
551-13-041-513.45-43
551-13-041-513.45-44
551-13-041-513.45-46
551-13-041-513.45-49
551-13-041-513.45-57
551-13-041-513.45-60
551-13-041-513.45-62
551-13-041-513.48-17
Timing of Request:
The renewal contract needs to be implemented by October 1, 2026, the beginning of the City’s new plan year.