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City Council |
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Agenda Request |
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Agenda Of: |
09-21-10 |
Agenda Request No: |
vii-a |
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Initiated By: |
Ericka Hayes HR Business Partner |
Responsible Department: |
Human Resources |
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Presented By: |
Paula Kutchka Assistant Human Resources Director |
Department Head: |
Mary House, Director of Human Resources |
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Additional Department. Head (s): |
N/A |
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Subject / Proceeding: |
2011 Group Benefit Plans |
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Exhibits: |
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Clearances |
Approval |
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Legal: |
N/A |
Executive Director: |
N/A |
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Purchasing: |
Todd Reed Purchasing Manager |
Asst. City Manager: |
Karen Glynn |
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Budget: |
Jennifer Brown Budget & Research Director |
City Manager: |
Allen Bogard |
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Budget |
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Expenditure Required: $ |
4,831,025 Medical, 324,421 dental and vision 100,329 Life, AD&D & LTD |
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Amount Budgeted/Reallocation: $ |
5,155,691 Medical and dental 156,620 Life, AD&D & LTD |
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Additional Appropriation: $ |
n/a |
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Recommended Action |
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It is recommended that the City Council renew contracts with Cigna Healthcare for group medical, group dental and voluntary vision insurances. We are also asking that Council award a contract to Cigna Healthcare for the life and disability products which include group life/accidental death and dismemberment, voluntary life/accidental death, short-term disability, and long-term disability. |
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Executive Summary |
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Group Medical
Plan The City of Sugar Land selected Cigna Healthcare as the medical insurance vendor beginning with the January 1, 2010 plan year as a result of a competitive process. Beginning with the 2010 plan year, the City entered into a five-year contract with Cigna, which is renewable up to 2015 depending on negotiated and agreed upon re-rates. Based on the City’s claim experience and unknown factors of health care reform, our consultant estimated the City’s re-rate for 2011 to be approximately a 30% increase. (Due to Health Care Reform many businesses are seeing 30% to 70% increase in their health care costs for next year.) Through the proactive approach of the City’s Wellness Committee and the Human Resources Department staff, the City was able to secure a 6.5% increase in our health insurance costs next year. However, with the award of the Life and Disability products to Cigna, as you will see below, the medical rate increase reduces further to 6.0%. The City’s FY 2011 Budget includes the total increase for employees and their dependents. Employees will not see an increase in premiums, deductibles or co-pays in 2011. The total cost for the City to absorb the increase is $49,165. Therefore, staff recommends Council authorize the execution of a renewal agreement with Cigna Healthcare for group medical plans based on set costs per plan and coverage. Actual dollars in the contract are projected based on assumptions. The cost will fluctuate with the types of plans chosen by employees and the number of employees at any given time. It is not anticipated that this contract will exceed $4,855,301. Group Dental
& Voluntary Vision Plans In 2010, the City entered into a two-year rate cap guarantee with Cigna Healthcare. This will be the second year of the two-year rate guarantee and will result in an 8% increase from 2010. Therefore, we recommend Council authorize the execution of a renewal agreement with Cigna Healthcare for the group dental and voluntary vision plans for an amount not to exceed $324,421. Life Products This summer, staff conducted an RFP process for the life and disability products. We found it to be to the City’s advantage to bundle the life and disability products together with one provider, as insurance vendors will reduce costs on disability products when they also are the providers of the life products. We received four proposals for our request for life and disability products. The cost are as follows:
The Cigna Healthcare proposal is the least expensive plan for the City and results in a $56,291 savings in the budget. Cigna also offered a 0.5% reduction in medical premiums, approximately $24,276. Cigna provided the least expensive plan for our voluntary life/accidental death and dismemberment and voluntary short term disability rates. Employees who have these coverages will see a reduction in premiums. Staff recommends Cigna Healthcare as the life and disability vendor for 2010. |
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Exhibits |
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Letter of Agreement-Rates for 2011