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193-24 RESOLUTION
113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 193-24 File Number: 2024-334 2025 EMPLOYEE BENEFITS PACKAGE (REQUEST FOR APPROVAL): A RESOLUTION TO APPROVE THE 2025 EMPLOYEE BENEFITS PACKAGE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves the 2025 employee benefits package as recommended in the staff memorandum attached to this Resolution. PASSED and APPROVED on August 6, 2024 Attest: ✓ ���: • t gYi.T 1 r.V:i.i.. ; Kara Paxton, City Clerk Treasurer IV 111144111 Page 1 CITY OF FAYETTEVILLE ARKANSAS MEETING OF AUGUST 6, 2024 TO: Mayor Jordan and City Council THRU: Susan Norton, Chief of Staff FROM: Missy Hutcheson, Human Resources Director SUBJECT: 2025 Employee Benefits Renewal RECOMMENDATION: CITY COUNCIL MEMO 2024-334 Staff recommends City Council approve the employee benefits renewal package for 2025 as outlined below and in the attached presentation. BACKGROUND: Staff and Brown & Brown, the City's benefits broker, have reviewed the annual renewals for employee insurance plans. Employee benefits renewals are brought forward at this time to ensure the annual open enrollment may proceed according to schedule. DISCUSSION: Health Insurance The one-year look back period of the City's health claims shows a 92.74% utilization rate of claims paid versus premiums paid. The original renewal with Arkansas Blue Cross Blue Shield resulted in a 15.9% overall increase in premiums; however, in negotiations with the City through Brown & Brown the rate increase was reduced to 3.7% average increase (HDHP — 3.6%, PPO — 4.5%). The IRS increased the HDHP minimum deductible limits for embedded deductible plans for 2025, resulting in an increase to the HDHP deductible of $100 (individual) and $200 (family). HSA annual contribution maximums for an individual will be $4,300 (up from $4,150) and for a family $8,550 (up from $8,300). Dental Insurance Renew with AR BCBS in second year of a two-year rate guarantee, no plan or rate changes. Vision Insurance Renew with AR BCBS VSP in second year of a two-year rate guarantee, no plan or rate changes. City Paid Life/AD&D, Voluntary Life/AD&D and LTD Benefits Renew these products with USAble through AR BCBS in second year of a two-year rate guarantee. Voluntary STD Benefits Add richer STD plan, 60% benefit vs. 35% benefit; offer both options through American Fidelity. Flexible Spending Accounts Renew with American Fidelity as administrator with no changes. Mailing address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 Health Savings Accounts Renew with First Security Bank as administrator with no changes. COBRA Administration Renew with Consolidated Admin Services (CAS) as administrator. Supplemental Benefits Paid by Employees Staff recommends continuing to offer additional supplemental benefits to employees through American Fidelity which include: Disability Income Insurance, Accident Only Insurance, Cancer Insurance, Critical Illness Insurance, Life Insurance, AF Term Life Insurance, AF Permanent Life Insurance, Hospital Gap Insurance and Short Term Disability Insurance. BUDGET/STAFF IMPACT: The costs of these planned insurance/benefit items are being budgeted in the City's 2025 budget. ATTACHMENTS: SRF (#3), Brown and Brown - Renewal Analysis and Process Presentation (#4) Mailing address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 _= City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 (479)575-8323 - Legislation Text File #: 2024-334 2025 Employee Benefits Renewal A RESOLUTION TO APPROVE THE 2025 EMPLOYEE BENEFITS PACKAGE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves the 2025 employee benefits package as recommended in the staff memorandum attached to this Resolution. Page 1 Missy Hutcheson Submitted By City of Fayetteville Staff Review Form 2024-334 Item ID 8/6/2024 City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item 7/8/2024 HUMAN RESOURCES (120) Submitted Date Division / Department Action Recommendation: Staff recommends City Council approve the 2025 employee benefits renewal package as proposed in the staff memo. Budget Impact: XXXX.XXX.XXXX-5108.XX Citywide Account Number Fund Project Number Project Title Budgeted Item? Yes Total Amended Budget $ 8,585,399.00 Expenses (Actual+Encum) $ 3,834,840.38 Available Budget $ 4,750,558.62 Does item have a direct cost? No Item Cost $ Is a Budget Adjustment attached? No Budget Adjustment $ - Remaining Budget 4,750,558.62 V20221130 Purchase Order Number: Previous Ordinance or Resolution # Change Order Number: Approval Date: Original Contract Number: Comments: �iBrown & BrowA. Renewal Analysis and Process July 2024 CITY OF FAYETTEVILLE ARKANSAS Overview Medical-BCBS • Original Renewal 15.9% - reduced to 3.7% • Packaged with Dental, Life, Disability • 2021 CY Loss Ratio was 131 % • 2022 CY Loss Ratio was 111.3% • 2023 CY Loss Ratio was 92.74% • 2024 YTD through 6/2024 = 76.35% Vision-BCBS VSP • End of a two-year rate guarantee • 2025 Rate Hold; no plan changes Dental-BCBS • Second year of a two-year rate guarantee • 2025 Rate Hold; no plan changes Base Life & LTD-USAble • Second year of a two-year rate guarantee • 2025 Rate Hold; no plan changes Brown & Brown INSURANCE' EMPLOYEE BENEFITS FSA-American Fidelity • Continue with administrator HSA-First Security Bank • Continue with current administrator Cobra -CAS • Continue with current administer Voluntary STD Benefits -One America • Losing STD plan due to low participation, but moving to American Fidelity Voluntary Benefits -American Fidelity • Renew all benefits with no changes • Adding a richer STD plan, 60% benefit vs. 35% benefit; offering both options 13 BROWN & BROWN 1 2 Historical Lookback 2016 6.4% 2017 5.6% 2018 20% 2019 15% 2020 0% 2021 6% 2022 16.8% 2023 16.8% 2024 4.9% 2025 3.7% Experience Period Total Claim Premium 5/1/15 - 4/30/16 $4,322,202 $4,216,666 5/1/16 - 4/20/17 $4,576,036 $4,513,431 5/1 /17 - 4/30/18 $4,713,036 $47913,154 5/1 /18 - 4/30/19 $4,8317586 $577575503 5/1 /19 - 4/30/20 $5,4557647 $672745795 5/1 /20 - 4/20/21 $57719, 772 $67270, 906 5/ 1 /21 - 4/30/22 $71289, 359 $67248, 761 5/1/22 - 4/30/23 $6,897,808 $6,084,374 5/ 1 /23-4/30/24 $6, 728, 829 $7, 319, 883 Totals $5035343275 $5135999473 Brown & Brown INSURANCE' EMPLOYEE BENEFITS Paid Loss Ratio 102.5% 101.4% 95.3% 83.9% 86.9% 91.2% 116.7% 113.3% 92% 98.1 % 0 BROWN & BROWN 1 3 Dual Med'ica1=HDHP Benefit Comparison Eligibility Definition --.. .............-- Annual Individual / Family Deductible Deductible Type Coinsurance Annual Out -of -Pocket Maximum Out -of -Network Coinsurance ........ ........................ Preventive Benefit Office Visits - Primary Care Office Visits - Specialist Hospital Services In -Patient Hospital Services Out -Patient Outpatient Diagnostic X-Ray & Lab Services Major Lab - MR1, PET Scan, CAT Scan Emergency Room Facility Charge Urgent Care Visit (excludes certain diagnostic procedures) ....................... ....................... ............... ................................................ RX - Tier 1 / Tier 2/Tier 3 ............................................................................. RX - Sp eciality yRX Mail Order - 90 Day Supply ®Brown & Brown INSURANCE' EMPLOYEE BENEFITS CURRENT Renewal Non Grandfathered Non Grandfathered BCBS of Arkansas BCBS of $3,200 HDHP $3,300 HDHP n-Network In-Networ ij All Actively at Work Full Time Employees All Actively at Work Full Time Employees $3,200 / $6,400 $3,300 / $6,600 Embedded Embedded 1 00% 1 00% $3,200 / $6,400 $3,300 / $6,600 O% 0% ......................... No Charge if In -Network No Charge if In -Network Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance ........... . . Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance Deductible & Coinsurance ................................................................... Deductible & Coinsurance ................................. ............................ Deductible & Coinsurance Deductible & Coinsurance Available Deductible & Coinsurance Available Deductible change due to IRS revised limit for embedded deductibles a. BROWN & BROWN 1 4 Dual Medmical=PPO Plan Benefit Comaarison Eligibility Definition .................................................................................................................................................................. Annual Individual / Family Deductible .................................................................................................................................................................. Deductible Type ................................................................................................................................................................... Coinsurance ................................................................................................................................................................... Annual Out -of -Pocket Maximum .................................................................................................................................................................. Out -of -Network Coinsurance ................................................................................. Preventive Benefit RX - Tier I / Tier 2 / Tier 3 RX - Specialty ................................................................................................................................. RX Mail Order - 90 Day Supply Brown & Brown INSURANCE' EMPLOYEE BENEFITS In -Network do In- Network All Actively at Work Full Time Employees ......................................................................................................................................................................................................................................................................................................................................................................................................................... All Actively at Work Full Time Employees $1,000 / $2,000 $1,000 / $2,000 ......................................................................................................................................................................................................................................................................................................................................................................................................................... Fulfillment Fulfillment ......................................................................................................................................................................................................................................................................................................................................................................................................................... 80% 80% ......................................................................................................................................................................................................................................................................................................................................................................................................................... $3,000 / $6,000 $3,000 / $6,000 ......................................................................................................................................................................................................................................................................................................................................................................................................................... 60'/ 60 ......................................................................................................................................................................................................................................................................................................................................................................................................................... No Charge if In -Network ......................................................................................................................................................................................................................................................................................................................................................................................................................... No Charge if In-Network ......................................................................................................................................................................................................................................................................................................................................................................................................................... $10 / $40 / $ 60 $10 / $40 / $ 60 ......................................................................................................................................................................................................................................................................................................................................................................................................................... $150 $150 ......................................................................................................................................................................................................................................................................................................................................................................................................................... Available Available t BROWN & BROWN 1 5 Health Plan Comparison 2024 vs 2025 oil F III 1 is. . . . Employee Only 22 $890.36 $930.42 $226.94 $237.16 $10.22 $663.42 $693.26 $29.84 25.49%/74.51% Employee + Spouse 4 $1,941.40 $2,028.76 $732.88 $765.86 $32.98 $1,208.52 $1,262.90 $54.38 37.75%/62.25% Employe + Child (re n) 2 $1, 602.58 $1, 674.70 $604.96 $632.20 $27.24 $997.62 $1, 042.50 $44.88 37.75%/62.25 % Family 0 $2, 642.32 $2, 761.22 $997.48 $1, 042.36 $44.88 $1, 644.84 $1, 718.86 $74.02 37.75%/62.25% Total Monthly 28 $30, 558.68 $31, 933.68 $9,134.12 $9, 545.36 $411.24 $21, 424.56 $22, 388.32 $963.76 Total Annual $366, 704.16 $383, 204.16 $109, 609.44 $114, 544.32 $4, 934.88 $257, 094.72 $268, 659.84 $11, 565.12 Total Premium Change $16,500.00 % Change 4.5% Employee Only 322 $453.44 $469.78 $63.74 $66.04 $2.30 $389.70 $403.74 $14.04 14.06%/85.94% Employee + Spouse 104 $977.94 $1,013.20 $145.52 $150.76 $5.24 $832.42 $862.44 $30.02 14.88%/85.12% Employe + Child (re n) 77 $740.80 $767.52 $110.22 $114.20 $3.98 $630.58 $653.32 $22.74 14.88%/85.12 % Family 216 $1,373.28 $1.1422.80 $204.34 $211.70 $7.36 $1,168.94 $1,211.10 $42.16 14.88%/85.12% Total Monthly 719 $601, 383.52 $623, 065.80 $88, 282.74 $91, 464.52 $3,181.78 $513,100.781 $531, 601.28 $181500.50 Total Annual $7,2161602.24 $7,476,789.60 $1,059,392.88 $1,097,574.24 $38,181.361 $6,157,209.36 $6,379,215.36 $222,006.00 Total Premium Change $260,187.36 % Change 3.6% Total $71583, 306.40 $7, 859, 993.76 Change from Current Premium Change from Initial Renewal Offer $276, 687.36 - $929, 066.28 13 :I:Z01TIVA04E:�■:�d�1��11���: HDHP/HSA IRS 2025 The IRS made changes to both HDHP deductibles and HSA contribution limits. • HDHP deductibles will be increasing to: • $3,300 from $3,200 for an individual • $6,600 from $6,400 for family • HSA contribution limits will be increasing to: • $4,300 from $4,150 for an individual • $8,550 from $8,300 for family 13 BROWN & BROWN 1 7 HSA Contributions for HDHP Plan Brown & Brown INSURANCE' EMPLOYEE BENEFITS E E $43.75 $87.50 $1,050.00 $3,250.00 $4,300.00 ES $61.67 $123.34 $1,480.08 $7,069.92 $8,550.00 EC $78.75 $157.50 $1,890.00 $6,660.00 $8,550.00 .Family $95.001$190.001 $21280.00 $61270.001$81550.00] BROWN & BROWN 1 8 Single Dental Benefit Comparison Eligibility Definition Individual / Family Deductible Annual Benefit Maximum Carry -Over Benefit Coverage Waiting Periods Out of Network Reimbursement / MPA Preventive & Diagnostic Care Benefit Preventive & Diagnostic Services Basic Care Benefit Major Care Benefit Endodontics Periodontics - Surgical Periodontics - Non -Surgical Orthodontia Benefit Orthodontia Eligibility Dependent Children / Full time student up to age In -Network All Actively at Work Full Time Employees $50 / $150 $1,500 $500 benefit/ $700 threshold / $1,250 max benefit None 90% / 70% / 40% 100% Exams, Cleanings, Fluoride, X-Rays, Sealants 80% after deductible 50% after deductible 80% after deductible 50% after deductible 50% after deductible 50% - $1,500 (lifetime max) Dependent Children to Age 19 Up to Age 26 .......................................................................................................... Brown & Brown INSURANCE' EMPLOYEE BENEFITS [;E: In -Network All Actively at Work Full Time Employees $50 / $150 $1,500 $500 benefit/ $700 threshold / $1,250 max benefit None 90% / 70% / 40% ------------------- 100% Exams, Cleanings, Fluoride, X-Rays, Sealants 80% after deductible 50% after deductible 80% after deductible 50% after deductible 50% after deductible 50% - $1,500 (lifetime max) Dependent Children to Age 19 Up to Age 26 13 BROWN & BROWN 1 9 Dual Vision Benefit Comparison Eligibility Definition Frequency of Service - Exam/Lenses/Frames Eye Exam Single Vision Lenses Bifocal Lenses ................... Trifocal Lenses --------------- Frames Contact Lenses Exam - Standard Contact Lenses Exam - Specialty Contact Lenses - Elective (conventional or disposable) In Lieu of Frames & Lenses Contact Lenses - Medically Necessary Lasik Dependent Children / Full time student up to age In -Network All Actively at Work Full Time Employees 12 / 12 / 12 $10 Copay $10 Copay $10 Copay $10 Copay $150 retail allowance Not to exceed $60 $150 retail allowance $10 Copay Average discount is 15% off retail pricing Up to Age 26 In -Network All Actively at Work Full Time Employees 12 / 12 / 12 $10 Copay $10 Copay $10 Copay $10 Copay $150 retail allowance Not to exceed $60 $150 retail allowance $10 Copay Average discount is 15% off retail pricing Up to Age 26 In -Network 7AII Actively at Work Full Time Employees 12 / 12 / 24 $10 Copay $15 Copay $15 Copay ................ $15 Copay $130 retail allowance Not to exceed $60 $130 retail allowance $15 Copay Average discount is 15% off retail pricing Up to Age 26 Brown & Brown INSURANCE' EMPLOYEE BENEFITS In -Network All Actively at Work Full Time Employees 12 / 12 / 24 $10 Copay $15 Copay $15 Copay $15 Copay $130 retail allowance Not to exceed $60 $130 retail allowance $15 Copay Average discount is 15% off retail pricing Up to Age 26 0 BROWN & BROWN 1 10 THANK YOU1. Any solicitation or invitation to discuss insurance sales or servicing is being provided at the request of O � � � r O w n Brown &Brown Insurance Services, Inc.. Brown &Brown Insurance Services, Inc. only provides insurance related solicitations or services to insureds or insured risks in jurisdictions where it and its individual insurance professionals are properly licensed. © 2024 Brown & Brown. All rights reserved.