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HomeMy WebLinkAbout25A - AGMT - EMPLOYEE INSURANCE RENEWALSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: OCTOBER 3, 2011 TITLE: EMPLOYEE GROUP INSURANCE RENEWALS 1 al CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 1" Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For_ CONTINUED TO FILE NUMBER Authorize the City Attorney to prepare and authorize the City Manager and Clerk of the Council to execute agreements for long term disability, medical, dental, vision, employee assistance, employee group life and accidental death and dismemberment insurance. DISCUSSION The City's employee group benefit policies, contracts and agreements are renewed annually on January 1. This year the City will contract with a new provider for employee group life, accidental death & dismemberment, long-term disability, and renew contracts with the current providers for employee assistance, dental and flexible spending plans. Life and Accidental Death & Dismemberment and Long-Term Disability Currently the City provides life and accidental death & dismemberment (AD&D) coverage and long-term disability (LTD) insurance through AIG Life Insurance Company for full-time employees. Bids were solicited for life, AD&D and LTD providers to ensure that the renewal rates from our current provider were competitive based on the current market. As a result of the bid process, Aetna was selected to provide life, AD&D and LTD coverage effective January 1, 2012. This selection reflects a combined decrease in premiums of 14.0% (while maintaining an identical benefit structure to our current plan). Aetna has agreed to a three-year rate guarantee for the Life, AD&D and LTD rates through December 31, 2014. 25A-1 Employee Group Insurance Renewals October 3, 2011 Page 2 Life Insurance Insurance Coverage Current Insurance Insurance Percent Change Rate Renewal Rate Life Insurance $0.10 per $1000 $0.102 per $1000 2.0% Accidental Death & $0.0285 per $1000 $0.020 per $1000 -29.8% Dismemberment Long-Term Disability Group Coverage Current Insurance Insurance Percent Change Rate Renewal Rate Management $0.57 per $100 $0.352 per $100 -38.2% Employees $8.78 $8.78 0.0% 130 day wait Employees $15.93 $15.93 0.0% 60 day wait Dental Plans The contract with Safeguard is up for renewal. Safeguard has agreed to renew our contract for a period of one year with no rate increase. We are currently in the second year of a two-year contract with Delta Dental, and there will be no rate increase. Type of Coverage Safeguard Dental Current Rate Safeguard Dental Rate 2012 Percent Change Employee $25.28 $25.28 0.0% Employee Plus Family $43.22 $43.22 0.0% 25A-2 Employee Group Insurance Renewals October 3, 2011 Page 3 Type of Coverage Cur e l Rate nt RaDelta 2012 Percent Change Employee $48.39 $48.39 0.0% Employee Plus Family $119.17 $119.17 0.0% CalPERS Health Program The CalPERS basic HMO health plans will increase by 5.3% and the basic PPO health plans will increase by 3.0%. The increase reflects higher costs anticipated for hospital, medical and prescription drug use next year. The City will incur a 7.28% increase in costs because the City's contribution toward medical is tied to the Kaiser rate. The employees will pick up any increase in cost above the Kaiser rate. Plan Employee Only Employee & one Dependent Employee & two or more Dependents Blue Shield Access+ HMO $583.60 $1167.20 $1517.36 Blue Shield NetValue $501.93 $1003.86 $1305.02 Kaiser $512.76 $1025.52 $1333.18 PERSCare $943.26 $1886.52 $2452.48 PERSChoice $526.19 $1052.38 $1368.09 PERSSelect $446.68 $893.36 $1161.37 PORAC safet members $527.00 $987.00 $1254.00 25A-3 Employee Group Insurance Renewals October 3, 2011 Page 4 Employee Assistance Program - REACH Employee/Associate Assistance The Employee Assistance Program (EAP) assists employees and their eligible dependents in handling problems that may be interfering with their performance on the job. Consultation for problems such as alcohol and drug abuse, marital and family problems are available. REACH currently provides services under this program. Bids were solicited for a new EAP provider to ensure that the rates from REACH continue to be competitive based on the current market. The service level from REACH has been superior and the contract will be renewed with REACH. The terms of the contract will remain the same. The current fee is $1.85 per employee per month based on 1,550 employees. REACH has agreed to renew this contract for a three year period with no increase. Retirees are not included in the annual cost estimates. The Police Officers Association maintains their own insurance programs for medical, dental and LTD coverage. The Firemen's Benevolent Association maintains their own insurance program for LTD coverage. FISCAL IMPACT The annual cost of each plan may vary depending on changes in the number of employees enrolled during the year. The projected annual costs are calculated using current enrollment as of July 2011. Coverage for POA (Sworn and Non-Sworn) 2011 2012 Difference Aetna Life/POA LTD Insurance $ 455,730 $ 439,753 $ - 15,977 POA Dental $ 594,000 $ 574,560 $ - 19,440 POA Medical $ 6,688,836 $ 6,940,940 $ 252,104 REACH (EAP Provider) $ 12,210 $ 11,810 $ - 400 Total Annual Cost $ 7,750,776 $ 7,967,063 $ 216,287 Coverage for FBA (Sworn and Non-Sworn) 2011 2012 Difference Aetna Life/FBA LTD Insurance $ 153,922 $ 152,853 $ - 1,069 Dental Carriers $ 154,857 $ 158,374 $ 3,517 CalPERS Medical $ 2,570,016 $ 2,752,991 $ 182,975 REACH (EAP Provider) $ 4,551 $ 4,529 $ - 22 Total Annual Cost $ 2,883,346 $ 3,068,747 $ 185,401 25A-4 Employee Group Insurance Renewals October 3, 2011 Page 5 Coverage for SEIU, CASA, SAMA, EM, FMA, PMA & PTCS 2011 2012 Aetna Life/LTD Insurance $ 164,339 $ 131,594 Dental Carriers $ 404,487 $ 375,038 CalPERS Medical $ 6,452,107 $ 6,455,785 REACH (EAP Provider) $ 17,649 $ 18,071 Total Annual Cost $ 7,038,582 $ 6,980,488 Difference $ - 32,745 $ - 29,449 $ 3,678 $ 422 $ - 58,094 Funds in the amount of $4,964,871 are budgeted and available in the Personnel Services Employee Benefits account (account no. 08109053-64010) to pay for City Administered insurance coverage. Funds in the amount of $4,043,278 are budgeted and available in the Employee Benefits account (account no. 08109053-64010) to pay for the Association Administered insurance coverage. Total budgeted amount is $9,008,149 available in Fiscal Year 2011-2012. The balance to be budgeted in Fiscal Year 2012-2013. APPROVED AS TO FUNDS AND ACCOUNTS: hoj-eon!rn_? athie S. Gonz lez Executive Director Personnel Services Francisco Gutierrez Executive Director Finance & Management Services Agency 25A-5 25A-6