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Home My WebLink About224-05 RESOLUTION• • RESOLUTION NO. 224-05 A RESOLUTION EXERCISING THE SECOND OF FIVE ONE-YEAR OPTIONS TO RENEW EMPLOYEE GROUP POLICIES WITH USABLE LIFE TO PROVIDE LIFE, ACCIDENTAL DEATH AND DISMEMBERMENT, AND LONG TERM DISABILITY INSURANCE COVERAGE, AND WITH BLUE CROSS/BLUE SHIELD FOR THE GROUP MEDICAL PLAN. 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 exercises the second of five one-year options to renew employee group policies with USAble Life to provide Life, Accidental Death and Dismemberment, and Long Term Disability insurance coverage. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby exercises the second of five one-year options to renew the Blue Cross/Blue Shield Group Medical Plan. PASSED and APPROVED this 15th day of November, 2005. ATTEST: By: ccG�'•'-�y p S • E • FAYETTEVILLE • :�_ c ••9RKAN`;cx Jam;5 ''y;Y � GT ON �G�``�, lY4 ONDRA SMITH, City Clerk Michele Bechhold Submitted By • City of Fayetteville Staff Review Form City Council Agenda Items or Contracts 11/15/2005 City Council Meeting Date Human Resources Division Action Required: • s /x/5765 -lac/ 11MM, Li fie/ Out Glass/ 13/4C Alta Finance & Internal Services Department Approve renewal of the City's group benefit plans for 2006. Staff recommends that the City exercise the 2006 optio to renew with Arkansas Blue Cross Blue Shield and USAble for health, life and long term disability plans. $ 3,211,211.00 Cost of this request Various Account Number Project Number Budgeted Item Category / Project Budget Funds Used to Date Remaining Balance Budget Adjustment Attached Program Category / Project Name Program / Project Category Name Fund Name (D/ 2 7/0( 111 Dat D rtfhent Director City Attorney iniZbeAS ate 1f -?-mss ina ce and Internal Service Director Date Mayor Date Previous Ordinance or Resolution # Original Contract Date: Original Contract Number: Rec ived in y Clerk's Office ENTERED / X#7/PS Comments: • Tarettelyi le S • CityCouncil Meeting of November 15, 2005 CITY COUNCIL AGENDA MEMO TO: Mayor Dan Goody and City Council THRU: Stephen Davis, Finance & Internal Services Direct FROM: Michele Bechhold, Human Resources Director DATE: October 24, 2005 SUBJECT: Group Insurance Renewals for Plan Year 2006 Recommendation Staff recommends approval of the renewal for group benefit plans with our existing carriers for the plan year 2006. The option to renew for 2006 would be the second of five one-year options to renew approved by Council in 2003. The original five (5) year term began in 2004. As part of the renewal with Blue Cross Blue Shield, Staff recommends adding a mail-order prescription drug benefit to the existing plan and offering a voluntary option for enrollment in a consumer driven health plan. Discussion The City's benefits broker, Hoffman -Henry represented by Jeff Jackson, negotiated renewal rates with the respective carriers of each of the offered benefit plans. Mr. Jackson met with the Wage & Benefit Committee and with senior management staff to discuss the results of the negotiations. These results are summarized below by type of benefit. Major Medical — The initial renewal offer from Blue Cross Blue Shield, (BCBS), was a 2.2% increase over current rates for the same coverage. After negotiations, BCBS offered a 1% reduction in rates for the same benefits and a 0% increase on a benefit package that would retain all current coverages at the same level and add a mail-order prescription drug benefit. This mail-order drug benefit would allow for the purchase of a three month supply of maintenance medication for the cost of two months co -pay. For example, if an employee taking a high blood pressure medication has a monthly co -pay of $30 purchased a three month supply from a pharmacy; the cost to the employee would be $90. If this medication was purchased through mail-order, the cost for a three month supply would be $60. Over a one-year period the employee would save four $30 co -pays or $120 by purchasing through mail order. The chart below reflects 2005 premiums and the proposed 2006 premiums for the recommended renewal of the core benefit plan. MONTHLY MEDICAL PREMIUMS — 0% Increase with Mail Order Prescription Benefit 2005 Individual 2005 Family 2006 Individual 2006 Family City $202.04 $453.24 $202.04 $453.24 Employee $9.16 $60.46 $9.16 $60.46 Total Premium $211.20 $513.70 $211.20 $513.70 • • Voluntary Consumer Driven Health Plan Option — As part of this year's renewal process Mr. Jackson introduced a consumer driven health plan design incorporating a Health Savings Account (1 -ISA). Both the Wage and Benefit Committee and Staff recommend offering this as an option to employees. This plan combines a high deductible health plan with a tax -favored savings account for medical expenses. This plan option would be attractive to those employees who prefer to save for possible future medical expenses instead of paying a pre -determined premium amount regardless of incurred medical costs. Health savings accounts were authorized in the Medicare Prescription Drug Improvement and Modernization Act of 2003. Offered in conjunction with a qualified health plan, both employers and employees can contribute to an HSA up to annual limits allowed by law. Employees contribute on a pre-tax basis, earnings on the account are not taxable, and withdrawals spent on health care services are not taxable. If an employee spends any money from this account on non-medical expenses they incur a tax penalty. The savings account is employee owned and is portable. The qualified health plan, which is tied to the HSA account, is intended to function as coverage for large claims, not first dollar coverage. The plan has a $3000 individual deductible, $6,000 family deductible and 100% coverage after the deductible is met. There are no drug co -pays. Wellness benefits are paid at 100% up to an annual maximum of $500. The premiums for this plan represent an approximate 40% decrease over the cost of the City's regular major medical plan. Mr. Jackson's recommended funding formula for this plan is outlined below. The combined total of the City's contribution to the HSA and the monthly premium are equal to the City's current cost for the major medical plan. This situation allows for the creation of an additional benefit option without creating additional benefit expense to the City. It is expected that the premiums for this plan would remain fairly level for at least three years. PROPOSED FUNDING MODEL FOR THE OPTIONAL CONSUMER DRIVEN HEALTH PLAN Coverage Type City Paid Monthly Premium Employee Paid Monthly Premium City Contribution to Health Savings Account Minimum Employee Contribution to Health Savings Account Total City Cost Individual $131.24 $0 $70.80 1 $9.00 $202.04 Family $296.59 $0 1 $156.65 $9.00 $453.24 Life & Disability Insurance — Staff recommends renewing w'th USAble Life with no change to the rates for Life, Accidental Death & Dismemberment, and Long-term Disability coverage. Mr. Jackson did bid out these products and received bids from four additional carriers. Due to complicated matters surrounding differing contract language, benefits and waiver of premium issues for those currently receiving disability benefits, Staff and the Wage & Benefit Committee want to continue to evaluate the available options. If a change of carriers is recommended, it can be accomplished during the 2006 plan year. Dental Plan — Dental premiums are 100% employee paid. Delta Dental proposed a 13% increase over current rates. Based on this information, Mr. Jackson bid out the plan and quotes were received from three additional carriers. After reviewing this information, the Wage & Benefit Committee recommended that the City renew with Delta Dental. The three other bids did not present any significant premium savings and the dentist network they offered was not as extensive as Delta's network. The 2005 and 2006 monthly dental rates are on the following page. • • Voluntary Vision Plan — Starmount, the current carrier, was selected in 2003. There will be no change in the premiums for 2006. Budget Impact This renewal presents no additional rate driven costs over the 2005 Budget. The cost of these benefits is budgeted within the various program budgets for 2006. Staff is available to answer any questions you may have. 2005 Monthly Dental Rates 2006 Monthly Dental Rates Individual 19.46 21.99 Family 64.28 72.64 Voluntary Vision Plan — Starmount, the current carrier, was selected in 2003. There will be no change in the premiums for 2006. Budget Impact This renewal presents no additional rate driven costs over the 2005 Budget. The cost of these benefits is budgeted within the various program budgets for 2006. Staff is available to answer any questions you may have. • • RESOLUTION NO. A RESOLUTION EXERCISING THE SECOND OF FIVE ONE-YEAR OPTIONS TO RENEW EMPLOYEE GROUP POLICIES WITH USABLE LIFE TO PROVIDE LIFE, ACCIDENTAL DEATH AND DISMEMBERMENT, AND LONG TERM DISABILITY INSURANCE COVERAGE, AND WITH BLUE CROSS/BLUE SHIELD FOR THE GROUP MEDICAL PLAN. 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 exercises the second of five one-year options to renew employee group policies with USAblc Life to provide Life, Accidental Death and Dismemberment, and Long Term Disability insurance coverage. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby exercises the second of five one-year options to renew the Blue Cross/Blue Shield Group Medical Plan. sew 1 PASSED and APPROVED this 15th day of November, 2005. jr APPROVED: 1 re . By: By: ! d DAN CO ODY, Mayo :/ ATTEST: • • • • • RESOLUTION NO.173-04 A RESOLUTION EXERCISING THE FIRST OF FIVE ONE-YEAR OPTIONS TO RENEW EMPLOYEE GROUP POLICIES WITH USABLE LIFE TO PROVIDE LIFE, ACCIDENTAL DEATH AND DISMEMBERMENT, AND LONG TERM DISABILITY INSURANCE COVERAGE, AND WITH BLUE CROSS/BLUE SHIELD FOR THE GROUP MEDICAL PLAN 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 exercises the first of five one-year options to renew employee group policies with USAble Life to provide Life, Accidental Death and Dismemberment, and Long Term Disability insurance coverage. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby exercises the first of five one-year options to renew the Blue Cross/Blue Shield Group Medical Plan. PASSED AND APPROVED this 1" day of November 2004. ATTEST: D COODY, Mayor ayt�,lc t�� ivy. i� •,1).413 a By: - E :FAYEITEVILLE• SO RA SMITH, City Clerk t%•'' IY zi9RKA iy&T'nu,uin Clarice Pearman - Res. 224-05 • From: Clarice Pearman To: Bechhold, Michele Date: 11/21/05 4:17PM Subject: Res. 224-05 Michele, Attached is a copy of the above resolution passed by City Council, November 15, 2005. CC: Bell, Peggy; Deaton, Vicki Page 1