The URL can be used to link to this page

Home My WebLink AboutItem 10 2021 Employee Benefits Renewal AGENDA ITEM SUMMARY Meeting Date: 10/19/2020 Meeting Type: Regular Meeting Staff Contact/Dept.: Tom Mugleston Staff Phone No: 726-3724 Estimated Time: Consent Calendar S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Financially Responsible and Stable Government Services ITEM TITLE: EMPLOYEE 2021 BENEFIT CONTRACT RENEWAL ACTION REQUESTED: Authorize City Manager to negotiate and execute 2021 employee benefit renewal contracts for self-funded medical, prescription, vision, stop-loss, dental and disability insurance and third-party administrative services. ISSUE STATEMENT: Existing contracts with PacificSource Health Plans, Moda Dental and Hartford Insurance for Third-Party Administration, stop-loss coverage, and disability insurance coverage will expire on December 31, 2020. ATTACHMENTS: Attachment 1: CBM Employee 20201 Benefit Contract Renewal DISCUSSION/ FINANCIAL IMPACT: The City provides a comprehensive self-funded health insurance plan for eligible employees, dependents, and retirees. PacificSource is the City’s third party administrator (TPA) for self-funded medical benefits. The city pays all claims valued less than $150,000 and purchases stop-loss insurance to cover claims more than $150,000. Moda Dental provides TPA services for dental claims. This year, we are adding an employee-paid higher deductible plan option with orthodontia coverage. Hartford Insurance provides life, accidental death and dismemberment, and short- and long-term disability coverage. Annual Cost Current Renewal Medical Claims Liability at expected $6,344,434 $6,357,748 Medical/Vision Administration $217,946 $242,786 Medical Stop Loss $753,198 $789,713 Dental PPO @ expected $568,721 $658,858 Dental DMHO $62,168 $62,168 Life/AD&D $42,329 $42,329 Pre-Retirement Life $2,402 $2,402 Short-Term Disability $85,980 $85,980 Long-Term Disability $116,771 $116,771 FSA/HRA Administration $26,382 $26,382 Annual Total $8,220,332 $8,395,138 Change from Current $174,806 Percentage Change 2.1% Overall projected renewal rates are favorable and staff recommends Council authorize the City Manager to negotiate and sign benefit renewal contracts with PacificSource, Moda Dental, and Hartford insurance. M E M O R A N D U M City of Springfield Date: 10/19/2020 To: Nancy Newton COUNCIL From: Chaim Hertz & Tom Mugleston BRIEFING Subject: EMPLOYEE 2021 BENEFIT CONTRACT RENEWAL MEMORANDUM ISSUE: Existing contracts with PacificSource Health Plans, Moda Dental and Hartford Insurance for Third-Party Administration, and stop-loss, and disability insurance coverage will expire on December 31, 2020. Value of these individual contracts exceed $100,000 and are brought to Council for approval. Contracts with PacificSource, Moda Dental and Hartford Insurance will allow the City to continue to obtain these services. COUNCIL GOALS/ MANDATE: Provide Financially Responsible and Innovative Government Services BACKGROUND: The City provides a comprehensive self-funded health insurance plan for eligible employees, dependents, and retirees covering approximately 1600 lives. The Human Resources Department contracts with USI benefits for broker services. USI approached the market and received favorable renewal terms on all lines of coverage. An overview of this year’s cost proposal is included below in Table 1. Table 1 Annual Cost Current Renewal Carrier Medical Claims Liability at expected $6,344,434 $6,357,748 PacificSource Medical/Vision Administration $217,946 $242,786 PacificSource Medical Stop Loss $753,198 $789,713 PacificSource Dental PPO at expected $568,721 $658,858 MODA Dental Dental DMHO $62,168 $62,168 Willamette Dental Life/AD&D $42,329 $42,329 Hartford Pre-Retirement Life $2,402 $2,402 Hartford Short-Term Disability $85,980 $85,980 Hartford Long-Term Disability $116,771 $116,771 Hartford FSA/HRA Administration $26,382 $26,382 PacificSource Administrators Annual Total $8,220,332 $8,395,138 Attachment 1, Page 1 of 3 MEMORANDUM 10/15/2020 Page 2 Change from Current $174,806 Percentage Change 2.1% Notes: 1. Voluntary life / AD&D is omitted because this benefit is fully employee-paid 2. PacificSource Administrators has not released the 2021 renewal. We anticipate the same fees. 3. Costs associated with the Patient-Centered Outcomes Research Institute (PCORI) fee is not included in the totals above. PCORI fees are filed within the form 720 due July 31st based on future enrollment that is not yet available and a fee not yet released. PCORI fees apply to self-insured plans and health reimbursement accounts (HRA). PacificSource PacificSource provides third party administrator (TPA) services for self-funded medical benefits. The city pays all claims valued less than $150,000 and purchases stop-loss insurance to cover claims valued over $150,000. In past years, the City has shared prescription (Rx) rebates with PacificSource in exchange for reduced TPA administration fees. This year we plan to move to a 100% Rx reimbursement model. This should more than account for the increase in medical administration fees. Overall claim trends continue to be favorable due to A) a high-deductible (HIP) plan design offset by a city-paid Health Reimbursement Account (HRA) and B) employee utilization of the Wellness Center. Market trend for medical costs is 8% annually and we have been able to hold employee rates relatively flat for almost 7 years. The HIP plan design allows employees to use the HRA to pay for deductibles should they need them. But because the HRA can roll over from year to year and even retained after retirement, this plan encourages employees to be judicious and save HRA funds when they can. The Wellness Center provides preventative and light urgent care services at no cost to participants. This encourages employees to utilize lower-cost services at negotiated rates rather than seeking high-cost urgent care or doctor office services. MODA MODA Dental provides TPA services for self-funded dental benefits and the City pays all covered dental claims. This year, we are adding an employee-paid enhanced plan option with orthodontia coverage. This plan is omitted from the data above because the cost difference in this benefit is fully-employee paid. Hartford Hartford Insurance provides life, accidental death and dismemberment (AD&D), and short- and long-term disability coverage. There are no significant changes to these coverages proposed this year. Attachment 1, Page 2 of 3 MEMORANDUM 10/15/2020 Page 3 RECOMMENDED ACTION: Overall projected rates are favorable and staff recommends Council authorize the City Manager to negotiate and sign benefit renewal contracts with PacificSource, MODA Dental, and Hartford insurance. Attachment 1, Page 3 of 3