HomeMy WebLinkAbout173-12 RESOLUTIONRESOLUTION NO. 173-12
A RESOLUTION APPROVING A 2013 EMPLOYEE BENEFITS PACKAGE
BE IT RESOLVED BY THE CITY
FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of
the 2013 employee benefits package as recommended
Exhibit "A".
COUNCIL
Fayetteville,
in the staff
PASSED and APPROVED this 21st day of August, 2012.
APPROVED:
B
ATTEST:
By:
OF THE CITY OF
Arkansas hereby approves
memorandum attached as
SONDRA E. SMITH, City Clerk/Treasurer
�evi�le
THE CITY OF FAYETTEVILLE, ARKANSAS
HUMAN RESOURCES DIVISION
113 West Mountain
Fayetteville, AR 72701
P (479) 575-8278 F (479) 718-7698
ARKANSAS
www.accessfayetteville.org
TO: Kit Williams, City Attorney
CC: Jason Kelley, Assistant City Attorney
FROM: Missy Leflar, Human Resources Director At2Z
RE: Amendment to Benefits Renewal Resolution from City Council Meeting of August 21, 2012
Per our discussion, I've reviewed the video from the August 21, 2012 City Council meeting. A copy of
the Final Agenda for that meeting is attached. Item #5 under "New Business" was "Proposed Employee
Benefits Renewal: A resolution approving a 2013 employee benefits package."
At that meeting Alderman Petty proposed an amendment. After lengthy discussions, the following
amendment was voted on and approved by the City Council:
"All employees hired January 1, 2013 and later will contribute 18% toward their individual health
insurance and 24% toward their family health insurance. This is applicable to both the Traditional PPO
insurance and the High Deductible insurance."
The above provision was implemented at the City as of January 1st of this year.
Telecommunications Device for the Deaf TDD (479) 521-1316 113 West Mountain - Fayetteville, AR 72701
City Council Meeting Page 1 of 2
Mayor Lioneld Jordan
City Attorney Kit Williams
City Clerk Sondra Smith
Final Agenda
City of Fayetteville Arkansas
City Council Meeting
August 21, 2012
Aldermen
Ward 1 Position I — Adella Gray
Ward 1 Position 2 — Brenda Boudreaux
Ward 2 Position I — Mark Kinion
Ward 2 Position 2 — Matthew Petty
Ward 3 Position I — Justin Tennant
Ward 3 Position 2 — Robert Ferrell
Ward 4 Position I — Rhonda Adams
Ward 4 Position 2 — Sarah Lewis
A meeting of the Fayetteville City Council will be held on August 21, 2012 at 6:00 PM in Room 219 of the City Administration Building located at 113 West
Mountain Street, Fayetteville, Arkansas.
Call to Order
Roll Call
Pledge of Allegiance
Mayor's Announcements, Proclamations and Recognitions:
City Council Meeting Presentations, Reports and Discussion Items:
Agenda Additions:
A. Consent:
1. Approval of the August 7, 2012 City Council meeting minutes.
2. 2012-2013 Edward Byrne Memorial Justice Assistance Grants: A resolution authorizing acceptance of the 2012-2013 Edward Byrne Memorial Justice
Assistance Grants in the total amount of$197,333.59.
2012-2013 Edward Byrne Memorial Justice Assistance Grants
Additional: 2012-2013 Edward Byrne Memorial Justice Assistance Grants
3. 2012 Justice Assistance Grant Local Solicitation Award: A resolution authorizing acceptance of a 2012 Justice Assistance Grant Local Solicitation
Award in the amount of $72,707.00 for the Police Department, and approving a budget adjustment.
2012 Justice Assistance Grant Local Solicitation Award
4. Bid #12-57 Williams Tractor: A resolution awarding Bid #12-57 and authorizing the purchase of one (1) round baler from Williams Tractor of
Fayetteville in the total amount of $27,203.00 for use by Wastewater Treatment.
Bid #12-57 Williams Tractor
5. Bid #12-59 Williams Tractor: A resolution awarding Bid #12-59 and authorizing the purchase of two (2) Polaris Rangers with Kimtek transport units
from Williams Tractor of Fayetteville in the total amount of $45,276.00 for use by the Fire Department, and approving a budget adjustment.
Bid #12-59 Williams Tractor
6. Bid #12-63 Hilbilt Sales Corporation -Arkansas: A resolution awarding Bid #12-63 and authorizing the purchase of one (1) end dump trailer from
Hilbilt Sales Corporation -Arkansas in the total amount of $43,361.00 for use by Wastewater Treatment, and approving a budget adjustment.
Bid #12-63 Hilbilt Sales Corporation -Arkansas
7. Bid #12-64 Warrior of Arkansas: A resolution awarding Bid #12-64 and authorizing the purchase of one (1) articulated wheel loader from Warrior of
Arkansas, Inc. in the total amount of $119,950.00 for use by Wastewater Treatment, and approving a budget adjustment.
Bid 412-64 Warrior of Arkansas
8. Solid Waste Agreement Extensions: A resolution approving one (1) year extension agreements with Deffenbaugh Industries, Hog Box and Waste
Management of Northwest Arkansas to haul and dispose of solid waste and recycling in the city.
Solid Waste Aereement Extensions
9. Animal Services Donation Revenue: A resolution approving a budget adjustment in the amount of $14,655.00 representing donation revenue to
Animal Services for the second quarter of 2012.
http://accessfayetteville.granicus. com/GeneratedAgendaViewer.php?view_id=2&clip_id=2... 5/7/2013
City Council Meeting Page 2 of 2
Animal Services Donation Revenue
B. Unfinished Business:
1. Amend §154.03 Private Parties/Zoning Amendment: An ordinance to amend §154.03 Private Parties/Zoning Amendment to clarify the powers of the
Planning Commission and City Council when a property owner seeks rezoning. This ordinance was left on the First reading at the July 17. 2012 City
Council meeting. This ordinance was left on the Second reading at the August 7, 2012 City Council meeting.
Amend §154.03 Private Parties/Zoning Amendment
C. New Business:
L Amerlux Exterior, LLC: An ordinance waiving the requirements of formal competitive bidding and approving an agreement with for the purchase of
seventeen (17) streetlight poles and fixtures manufactured by Dynamic Lighting. Inc. in the total amount of $28,415.93 for installation on downtown
improvement projects along Mountain Street, College Avenue. Center Street. East Avenue and Meadow Street.
Amerlux Exterior. LLC
2. Seven Valley's Construction Co.: A resolution awarding Bid #12-58 and authorizing a contract with Seven Valleys Construction Co., Inc. in the
amount of $1,368,379.00 for construction of water and sewer improvements along State Highway 265 between Joyce Boulevard and Albright Road.
approving a project contingency of $75,000.00 and approving a budget adjustment.
Seven Valley's Construction Co.
3. Sunbridge Villas Subdivision Private Street Acceptance: A resolution accepting dedication of street right-of-way and maintenance responsibility for
streets in the Sunbridge Villas Subdivision from the Sunbridge Villas Property Owners Association, Inc. upon completion of the current private milling
and overlay project to City standards as approved by the City Engineer.
Sunbridge Villas Subdivision Private Street Acceptance
Additional: Sunbridge Villas Subdivision Private Street Acceptance
4. Proposed Employee Benefits Renewal: A resolution approving a 2013 employee benefits package.
Proposed Employee Benefits Renewal
5. RZN 12-4146 (4054 W. Starry Night View/Oakbrooke III PZD): An ordinance rezoning that property described in rezoning petition RZN 12-4146, for
approximately 1.80 acres, located at 4054 and 4076 West Starry Night View and 1907 North Best Friend Lane from R-PZD 09-3439 Oakbrooke II1 to
RSF-8, Residential Single Family, 8 Units Per Acre.
RZN 12-4146 (4054 W. Starry Night View/Oakbrooke III PZD)
6. RZN 12-4164 (1420 N. Garland Ave./Bonds): An ordinance rezoning that property described in rezoning petition RZN 12-4164, for approximately
0.28 acres. located at 1420 North Garland Avenue from RMF -24. Residential Multi -Family. 24 units Per Acre to NS, Neighborhood Services.
RZN 12-4164 (1420 N. Garland Ave./Bonds)
7. RZN 12-4166 (South of Brookbury Crossing & East of Candlewood Developments/Riggins): An ordinance rezoning that property described in
rezoning petition RZN 12-4166, for approximately 20.99 acres, located to the south of Skillern Road from R -A, Residential Agricultural to RSF-0.5
One Half Single -Family Units Per Acre.
RZN 12-4166 (South of Brookbury Crossing & East of Candlewood Developments/Riggins)
8. ADM 12-4171 (Amend UDC Ch. 166: Development): An ordinance amending Title XV: Unified Development Code of the City of Fayetteville
§166.24 to amend the applicability of non-residential design standards.
ADM 12-4171 (Amend UDC Ch. 166: Development)
Announcements:
Ad iournment:
http://accessfayetteville. granicus. com/GeneratedAgendaViewer.php?view_id=2&clip_id=2... 5/7/2013
Missy Leflar
Submitted By
City of Fayetteville Staff Review Form
City Council Agenda Items
and
Contracts, Leases or Agreements
8/21/2012
City Council Meeting Date
Agenda Items Only
Human Resources
Division
Action Required:
Chief of Staff
Department
Staff recommends that Council approve renewal of the Datapath and Ace USA contracts at no increased cost to the
City. Staff further recommends that Council approve the City's proposed United Health Care health insurance
changes, as well as the employee wellness incentive premiums as outlined in the accompanying memo.
3,967,200.00
Cost of this request
)0000000(.51 )000(
Account Number
N/A
Project Number
Budgeted Item
X
Category / Project Budget
Citywide
Program Category / Project Name
Citywide
Funds Used to Date Program / Project Category Name
Citywide
Remaining Balance Fund Name
Budget Adjustment Attached
Dep
rtment Director
Date
I=8 -!Z.
Date
Finance and Internal Services Director Date
5f -'5? -1A
Date
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
08-03-12P03:02 RCVD
Received in City
Clerk's Office
Received in
Mayor's Office
ENT €D
8rZ
Comments:
Revised January 15, 2009
RESOLUTION NO.
A RESOLUTION APPROVING A 2013 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 2013 employee benefits package as recommended in the staff memorandum attached as
Exhibit "A".
PASSED and APPROVED this 21st day of August, 2012.
APPROVED: ATTEST:
By: By:
LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer
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City of Fayetteville
PPO Budget Comparison Report - PPO Traditional
1/1/2012 through 12/31/2012
ti
tal `i`
672
679
680
675
0
0
0
0
0
0
0
0
$335,036
$337,174
$337,786
$337,034
$0
$0
$0
$0
$o
$0
$0
$0
$498.57
$496.57
$496.74
$499.31
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$195,167
$175,540
$411,019
$212,141
$0
$0
$o
$0
$0
$0
$0
$0
$44,075
855,469
$62,220
$56,821
$0
$0
$0
$0
$0
$o
$0
$0
$0
$0
$0
$0
$0
$0
$o
$o
$o
$0
80
$0
$239,242
$231,009
$473,239
$268,962
$0
$0
$0
$0
$o
$0
$0
$0
$356.01
$340.22
$695.94
$398.46
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$81,682
$82,203
$82,352
$82,169
$0
$o
$0
$o
$0
$0
$0
$0
$320,924
$313,212
$555,591
$351,131
$0
$0
$o
$0
$o
$0
$0
$0
$477.56
$461.28
$817.05
$520.19
$0.00
$0.00
$0.00
$0.00
$0.00
$0.0o
$0.00
$0.00
$14,112
$23,962
(8217,805)
($14,097)
$0
$o
$o
$0
$0
$0
$0
$0
$21.00
$35.29
($320.30)
($20.88)
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
95.79%
92.89%
164.48%
104.18%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
2,706
$1,347,030
$497.79
$993,867
$218,586
$0
$1,212,452
$448.06
$328,406
$1,540,858
$569.42
($193,829)
($71.63)
114.39%
19
Plan Name
Product
Option
Plan Offering
Multiple Option with:
HRA or HSA
Benefits*
Office Copay (PCP/SPC)
Other Copays (IP/ER/UC)
Other
Deductible
Coinsurance
Out -of -Pocket
Pharmacy
Deductible
Coinsurance
Out of Pocket
Enrollment
Employee
Employee + Family
Total
Rates
Employee
Employee + Family
Monthly Cost
Annual Cost
Change from Current
TOTAL PREMIUM COST
SAVINGS OVER ORIGINAL
ORIGINAL PROPOSAL
Option 1: Current
Choice Plus * Insurance
A - Choice Plus
Dual Option
Option(s) 2
No
Network Single/Family.
N/A Per Visit
N/A/N/A/N/A
N/A
$500/1,000
80%
$2,500/4,000
$10/30/50
Out of Network Single/Family
$1,000/2,000
60%
$4,000/8,000
168
401
569
Rates (Bi
Current
led)
Option 2: Current
Choice Plus * Insurance
AA - Choice Plus HSA
Dual Option
Option(s) 1
HSA
Network Single/Family
N/A Per Visit
N/A/N/A/N/A
N/A
$3,000/6,000
100%
$4,000/8,000
Int Med/Rx Ded, $10/35/60
Out of Network Single/Family;
$5,000/10,000
80%
$6,000/12,000
57
55
112
Proposed
$250.86
$664.77
$308,717
$3,704,607
$302.27
$801.00
$371,982
$4,463,788
20.5%
Rates .(Billed)
Proposed
Current.
$153.68
$407.24
$31,158
$373,896
$188.18
$498.66
$38,153
$457,831
22.5%
$4,921,619
REVISED PROPOSAL
Option 3
NEW
Choice Plus * Insurance
New Plan
Dual Option
Option(s) Replaces 1
No
Network Single/Family:.
N/A Per Visit
N/A/N/A/N/A
N/A
$1,000/2,000
80%
$3,000/6,000
$10/30/50
Out of Network Single/Family
$2,000/4,000
70%
$6,000/12,000
168
401
569
Rates (Billed)
Current Proposed
Option 10
NEW
Choice Plus * Insurance
New Plan
Dual Option
Option(s) Replaces 2
HSA
Network Single/Family
N/A Per Visit
N/A/N/A/N/A
N/A
$3,000/$6,000
80%
$4,000/$8,000
Int Med/Rx Ded, $10/35/60
Out of Network Single/Family
$5,000/$10,000
60%
$6,000/$12,000
57
55
112
$281.40
$745.70
$346,301
$4,155,611
12.2%
Rates (Billed):
Current Proposed
$150.07
$397.67
$30,426
$365,110
-2.3%
$4,520,721
$400,898
2013 Health Insurance Summary:
Monthly Premiums: (Employee)
620 - PPO HEALTH INSURANCE - FAMILY
Cost to Employee
(50% Split Cost Increase)
8/4/2012
630 - PPO HEALTH INSURANCE - INDIVIDUAL
660 - HDHP HEALTH SAVINGS - INDIVIDUAL
670 - HDHP HEALTH SAVINGS - FAMILY
620 - PPO HEALTH INSURANCE - FAMILY
410 $ 93.18 $
163 $ 18.42 $
45 $ 10.08 $
50 $ 26.58 $
em
126.96 $ 133.64 $ 140.32
32.01 $ 33.69 $ 35.37
7.87 $ 8.28 $ 8.69
20.71 $ 21.80 $ 22.89
emit,.:.
410 $ 571.59 $ 618.74 $ 612.06 $ 605.38
630 - PPO HEALTH INSURANCE - INDIVIDUAL 163 $ 232.44 $ 249.39 $ 247.71 $ 246.03
660 - HDHP HEALTH SAVINGS - INDIVIDUAL
670 - HDHP HEALTH SAVINGS - FAMILY
45 $ 214.40 $ 213.00 $ 212.59 $ 212.18
50 $ 537.32 $ 533.62 $ 532.53 $ 531.44
620 - PPO HEALTH INSURANCE - FAMILY
410 $ 2,812,200
630 - PPO HEALTH INSURANCE - INDIVIDUAL 163 454,700
660 - HDHP HEALTH SAVINGS - INDIVIDUAL 45 115,800
670 - HDHP HEALTH SAVINGS - FAMILY 50 322,400
TOTAL BUDGET
$ CHANGE FROM 2012
*Includes COF Contribution on the HDHP Plans
mium, : Rremiu
$ 3,044,200 $ 3,011,300 $ 2,978,500
487,800 484,500 481,200
115,000 114,800 114,600
320,200 319,500 318,900
$ 3,705,100
$ 3,967,200 $ 3,930,100 $ 3,893,200
$ 262,100 $ 225,000 $ 188,100
"Initial Proposal"
Impact on City Budget
If Current Employee/Employer 0/0
Were Kept the Same
Health Current New Increase
Plan Cost Cost To The City 0/0
PPO - FAMILY (620) $ 2,812,200 $ 3,388,500 $ 576,300 20%
PPO - INDIVIDUAL (630) 454,700 547,800 93,100 20%
HDHP - INDIVIDUAL (660) 115,800 133,200 17,400 15%
HDHP - FAMILY (670) 322,400 373,700 51,300 16%
$ 3,705,100 $ 4,443,200 $ 738,100 20%
Impact on City Budget
If Increase Divided Equally
Between Employee/Employer
Health Current New Increase
Plan Cost Cost To The City
0/0
PPO - FAMILY (620) $ 2,812,200 $ 3,147,400 $ 335,200 12%
PPO - INDIVIDUAL (630) 454,700 504,900 50,200 11%
HDHP - INDIVIDUAL (660) 115,800 125,100 9,300 8%
HDHP - FAMILY (670) 322,400 349,800 27,400 8%
$ 3,705,100 $ 4,127,200 $ 422,100 11%
"Recommended"
Impact on City Budget
If Current Employee/Employer 0/0
Were Kept the Same
Health Current New Increase
Plan Cost Cost To The City 0/0
PPO - FAMILY (620) $ 2,812,200 $ 3,154,600 $ 342,400 12%
PPO - INDIVIDUAL (630) 454,700 510,000 55,300 12%
HDHP - INDIVIDUAL (660) 115,800 160,300 44,500 38%
HDHP - FAMILY (670) 322,400 309,200 (13,200) -4%
$ 3,705,100 $ 4,134,100 $ 429,000 12%
Impact on City Budget
If Increase Divided Equally
Between Employee/Employer
Health Current New Increase
Plan Cost Cost To The City
0/0
PPO - FAMILY (620) $ 2,812,200 $ 3,044,200 $ 232,000 8%
PPO - INDIVIDUAL (630) 454,700 487,800 33,100 7%
HDHP - INDIVIDUAL (660) 115,800 115,000 (800) -1%
HDHP - FAMILY (670) 322,400 320,200 (2,200) -1%
$ 3,705,100 $ 3,967,200 $ 262,100 7%
le
C. 4
Proposed Employee
THE CITY OF FAYETTEVILLEial
HUMAN RESOUR ES DIVISION
113 West Mountain
Fayetteville, AR 72701
P (479) 575-8278 F (479) 718-7698
ARKANSAS.;
www.acc.e.ssfayetteville.org
CITY COUNCIL AGENDA MEMO
To: Mayor Lioneld Jordan and City Council members
Thru: Don Man, Chief of Staff
From: Missy Leflar, Human Resource Director
Date: August 8, 2012
Subject: Employee benefits renewals
PROPOSAL:
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It is proposed that the City Council renew the City's employee benefits for 2013, as more fully described
below. The proposal is made now in order for the employee benefits enrollment process to proceed on time, and
so that City employees may retain what many consider the most positive aspect of their employment with the
City: their benefits.
There are three City paid benefits contracts coming up for renewal for 2013. Two of them are for the
same price as the City currently pays. Staff recommends renewal of these two contracts. The first is with
Datapath Administrative Services for administration of the legally required Section 125 Summary Plan
Description and COBRA Administration services, as well as administration of the employee Flexible Spending
Accounts (medical reimbursement and dependent care reimbursement. The second is with Ace USA for group
Accidental Death & Dismemberment insurance ($25,000 coverage in the event an employee dies in an accident
or loses a limb).
In addition, there are two employee paid benefits contract matters not requiring Council approval, since
the employees pay for these benefits rather than the City. Just for Council's information, one is the Delta
Dental insurance renewal that is occurring (at no rate increase). The other is a change in vision insurance from
AlwaysCare Vision to Superior Vision, which will be a vision product that will cost employees less and will
have better coverage.
The third City paid benefit contract coming for renewal for 2013 is the health insurance. For the last
several years the City's health insurance companies have consistently paid out far more in claims than they have
collected in premiums, resulting in annual losses to them of well over a million dollars each year. Against this
background the City's Benefits Broker, Gallagher Benefits Services, Inc., solicited competitive bids from
several major health insurance carriers. Of those, two came the closest to being the least expensive: Arkansas
Blue Cross Blue Shield and United Health Care.
HISTORY
The City has experience with both insurance companies. It has a long history of having insurance with
Blue Cross for the majority of the last 50+ years. United Health Care is the City's current health insurance
carrier. The City has carried two types of plans with each company: PPO (Traditional) insurance and HDHP
Telecommunications Device for the Deaf TDD (479) 521-1316 113 West Mountain - Fayetteville, AR 72701
THE CITY OF FAYETTEVILLE, ARKANSAS
(High Deductible insurance, which is less expensive) from which employees make a choice. The City switched
from Blue Cross to United Health Care as of January 1, 2012 for financial reasons. The coverage and networks'
are not identical but have been, generally speaking, comparable although the pharmacy foimulary (rules on
what is covered for prescriptions) are more stringent and more subject to review with United Health Care than
with the prior provider Blue Cross and Blue Shield of Arkansas. This is part of a strategy to keep phaiinacy
costs down. Health Care Reform laws have changed the way wellness is handled, but the changes in wellness
benefits covered, and amounts paid is caused by Health Care Reform requirements more than by the individual
insurance company's rules on wellness coverage.
There have been some employee complaints about the change from Blue Cross to United Health Care,
and they have predominantly centered around the pharmacy formulary differences (a difference in the insurance
companies' respective pricing contracts with the drug companies) and the wellness coverage (a difference
caused by Health Care Reform laws which will apply regardless of carrier selected). There have likewise been
some employee compliments about the change from Blue Cross to United Health Care from people's whose
drug prices went down instead of up, etc. United Health Care does seem to have better online tools available
for employees, such as an online tool for pricing medications and finding less expensive alternatives.
The two companies were close in the PPO (Traditional) health insurance plan proposals, but were
significantly different with regard to the HDHP (High Deductible) health insurance plan proposals. United
Health Care was much less expensive in that regard. Still, the proposals from both involved increases in the
double digits (well over 20% increases). The City thus sought and received numerous variations of Blue Cross'
and United Health Care's competitive bids. Variables included different deductible configurations, different
pharmacy formularies, etc. After all the variables were studied, United Health Care in the end was the least
expensive, with an increase of 12.2% from current rates on the PPO health insurance and a decrease of -2.3% on
the HDHP health insurance. Staff accordingly recommends that the City continue with United Health Care as
its health insurer.
SCOPE OF COVERAGE CHANGES:
KEEPING THE RATES DOWN FROM DOUBLE DIGIT INCREASES
Even with the City continuing with United Health Care, premiums as a whole will still be going up quite
a bit. They would be in the double digits above the 20% range on the increases but for the City's decision to
make some changes in the deductibles, co-insurance, and co-insurance maximums. Such changes will bring the
premium increases down 8.3% (from the original proposed increase) on the PPO health insurance and down
24.8% (from the original proposed increase) on the HDHP health insurance. Put another way, the lowest
proposal that the City could get, balanced against coverage changes that were acceptable, is an increase of
12.2% from current rates on the PPO health insurance and a decrease of -2.3% on the HDHP health insurance.
Please refer to the attached rate comparison chart.
1 Although the networks have been comparable, the City recently received a letter from Northwest Health System warning of its
intention to drop Blue Cross from its network effective August 19`h. The letter stated there were still negotiations but it portrayed the
event as one that would occur unless negotiations changed things. This would mean that Northwest Medical Center in Springdale and
Willow Creek Women's Clinic would no longer be in the Blue Cross network. A Northwest Health Center representative has stated to
the City that there is no reason to believe it will drop out of the United Health Care network for 2013.
2 Even with the more stringent pharmacy requirements, between January and April of 2012 the health insurance paid out a total of
$218,586 on pharmacy claims on the PPO policy.
Telecommunications Device for the Deaf TDD (479) 521-1316 113 West Mountain - Fayetteville, AR 72701
THE CITY OF FAYETTEVILLE, ARKANSAS
In order to get the lowest proposal, the changes to the insurance coverage from current coverage are:
• The PPO deductible will change from $500 for individual coverage to $1,000 for individual coverage.
• The PPO deductible will change from $1,000 for family coverage to $2,000 for family coverage.
• The HDHP co-insurance coverage (coverage after the deductible is met) is changing from 100% to
80%.
• The HDHP family deductible will change back to the non -embedded form the City had under the Blue
Cross policy. This means that all the family members' claims have to add up to the $6,000 deductible
before the co-insurance coverage begins.
• The out-of-pocket maximums (maximum amounts employees can be liable for paying for covered items
in a calendar year's time) increased. Please refer to the attached rate comparison chart.
The above changes together created a savings of $400,898. (Please see attached chart)
The above are the only changes. Other coverages will remain the same. Further, the City will maintain
its contributions into Health Savings Accounts for employees on the High Deductible plan. Employees are able
to use the money from these accounts to pay for medical expenses not paid for by the insurance.
WELLNESS EFFORT INCENTIVES
One set of variations the City carefully examined was a premium structure designed to provide
incentives for employees to take responsibility for their own healthy practices. Statistically, City employees use
health insurance at a much higher rate than the normal industry standard by which insurance companies price
premiums. In other words, City employees as a group use their health insurance at an unusually higher rate than
would be normally expected. Health insurance today is usually quoted to an employer assuming that
employees will use it at the normal 82%-84% utilization rate3. The City's employee utilization rate, however,
far exceeds that with a 114.39% utilization rate after just the first four months of 2012 (see attached chart).
Anything over 100% means that medical payments have exceeded health insurance premiums that were
collected. Obviously premiums will go up when more insurance is being used than is being paid for.
Part of the answer may lie in the results from the City sponsored free health screenings that were
provided on site last Spring for insured employees. Health screenings are one way to catch serious health
problems before they become symptomatic (and more expensive to treat). Of the 685 insured employees
eligible to participate in the free health screenings sponsored by the City, only 207 (30%) elected to do so. Of
those that did, 73.4% were determined to be at risk for being overweight and obese (above the national
average), 62.3% were detelinined to be at risk for high blood pressure, 53.4% were at risk for HDL Cholesterol,
and 14% were at risk for hypertension.
In the past there has been no financial incentive for City employees to take actions to try to stay healthy,
thus reducing the need to use health insurance. In light of soaring health care costs, City employees' extremely
high usage of the health insurance, and the high percentage of City employees who scored as "high risk" on the
3 Generally speaking there is a break even point for insurance companies. The permissible Medical Loss
Ration (MLR) currently typically falls between the 82%-84% range in order for there to be profitability.
Telecommunications Device for the Deaf TDD (479) 521-1316 113 West Mountain - Fayetteville, AR 72701
THE CITY OF FAYETTEVILLE, ARKANSAS
health screenings, the City has decided to follow the example set by other employers who are trying to slow the
growth of health insurance premiums by giving financial incentives to stay healthy.
After careful examination of the possibilities, the City has opted to offer a three tier premium system for
its employees to reward those who engage in proactive healthy practices. First, there will be a Regular
insurance premium paid by employees. Second, there will be a Tobacco User's premium that is 5% higher than
the Regular premium, which will be paid by employees who use tobacco or are insuring a dependent who use
tobacco. Third, there will be a Wellness Program Participant discount that is 5% lower than the regular
premium, for employees who participate in the City's Wellness Program. (Note: Employees who use tobacco
and who aren't insuring a dependent who uses tobacco can still get a specially coded regular insurance premium
rate by participating in the City's Wellness Program). A chart demonstrating the three tier premium program is
attached.
It is anticipated that City sponsored wellness program will include a wide variety of activities such as
free health screenings; on site educational meetings where good nutrition, exercise/sports, etc. are introduced or
taught; use of the free City employee gym or other gyms; on site weight watchers meetings or similar type
meetings; various organized employee activities such as walks on Park Trails; and other programs developed in
conjunction with a third party Wellness Program vendor (to be selected via competitive bidding through the
Benefits Broker).
APPORTIONMENT OF THE INCREASES
The City is recommending that employees absorb 50% of the increased dollar costs, as has been the
tradition in many past years. One reason for this is that the employees of Fayetteville pay an unusually small
percentage of health insurance cost (7% of the cost for individual coverage and 14% of the cost for family
coverage) compared to others who work for other governmental employers (see attached comparison chart).
Second, these cost increases are in large part due to increased usage of medical services by employees and their
families, as opposed to the nationwide trend of medical costs going up in general. The employees who get the
Wellness Program Participant discount will obtain it by having their 5% discount covered by the City when it
pays the insurance company.
SUMMARY OF STAFF RECOMMENDATIONS:
Staff recommends that Council approve renewal of the Datapath and Ace USA contracts, so that these
same services will continue at no increased cost to the City.
Staff recommends that Council approve the City's proposed United Health Care health insurance
changes, as outlined above, for 2013. Staff also recommends that Council approve the employee wellness
incentive premiums for 2013 as also outlined above.
BUDGET IMPACT:
These planned items are being budgeted for in the City's 2013 budget, subject to Council approval of the
above. City staff and staff from the City's Benefits Broker, Gallagher Benefits Services, Inc., are available to
answer any questions you may have.
Telecommunications Device for the Deaf TDD (479) 521-1316 113 West Mountain - Fayetteville, AR 72701
Missy Leflar/Don Marr
Submitted By
City of Fayetteville Staff Review Form
City Council Agenda Items
and
Contracts, Leases or Agreements
N/A
City Council Meeting Date
Agenda Items Only
Human Resources
Division
Action Required:
kLXYC4In kSa L(O, Svi c
e
si
atte,e},t_
Cia0,1„a tat1-
I13-12_
Chief of Staff
Department
HR request Mayor Jordan's signature on routine Benefits documents -HIPPA Agreements, Protected Health
Information, Carrier Applications - all necessary for the completion of the City Council Approved 2013 Benefits
Program.
No Cost
Cost of this request
Account Number
Project Number
Budgeted Item
Category / Project Budget
No Cost
Program Category / Project Name
Funds Used to Date Program / Project Category Name
Not applicable
Remaining Balance Fund Name
Budget Adjustment Attached
t'u *.
164%
Dartment Director
City Attorney
0-3) 7 Previous Ordinance or Resolution #
Date
Original Contract Date:
eSou.312013 Original Contract Number:
Date
Finance and Internal Services Director Date
Comments:
113-a
Received in City 2^3
Clerk's Office
_P12:34 RC D
Received in
Mayor's Office
Revised January 15, 2009
Request for Group Insurance Amendment
Standard Insurance Company
900 SW Fifth Avenue
Portland, OR 97204-1282
Employee Benefits Consultant: Ryan Herrman
Employee Benefits Service Representative: Sherri Borgmeyer
Employee Benefits Sales and Service Office: Kansas City
Employer Name: City of Fayetteville
Group Number: 148264
As an authorized representative of the Employer, I request that Standard Insurance
Company ("The Standard") amend the above Employer's coverage under the Group
Policy to make the following change(s):
Amend the definition of a Spouse to include Domestic Partners.
I request that the amendment become effective on January 1, 2012. I understand that
the amendment will not become effective unless approved and issued by The Standard.
I request that the amendment be approved by The Standard subject to The Standard's
usual underwriting requirements, including, if applicable, Evidence of Insurability or a
Pre-existing Condition provision.
I understand that the amendment, if approved by The Standard, will be issued in the
policy language customarily used by The Standard.
I understand that any increase in Insurance for a Member who is not Actively At Work
all day on the Member's last regular work day before the scheduled effective date of the
amendment will be deferred until the first day after the Member completes one full day
of Active Work.
I request that the amendment, if approved and issued by The Standard, become
effective by its terms without any further acceptance by the Employer, and that a copy
of this Request for Group Insurance Amendment form be attached to and made a part
of the amendment.
Sign Nam
Print Name:
A
entative
//
Title:
Date: 1 3// l
Standard Online Amendment Request 12/28/2012 2:35 PM
A Superior vsion®
May 15, 2013
Ms. Missy Leflar
Human Resources Director
City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, AR 72701
Our Members. Our Mission.
RE: Executed Originals of Group Vision Application and Business Associate
Agreement
Ms. Leflar,
Your letter requesting fully executed copies of the original signed Group Vision
Application and Business Associate Agreement was sent to my attention for
processing.
Enclosed are the fully executed original documents. We already have the executed
copies on file from when they were received and returned via email, but will also
retain copies of these fully executed originals in our files.
Yours in Superior Service,
IS'
Scott Austin
Compliance Coordinator
Superior Vision Services, Inc.
Enclosures
cc: Nikky Hill, Gallagher Benefit Services, Inc.
Janice Nadolski, Superior Vision Services, Inc.
Pam Woodward, Superior Vision Services, Inc.
Roxanne Koopman, Superior Vision Services, Inc.
11101 White Rock Road A Rancho Cordova, CA 95670 • Tel 800-923-6766 • Fax 916-852-2290