Agenda Item 8ACITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Renewal of Employee Benefit Insurance Policies
SUBMITTED BY: Jim Hansea,City.Man
DATE: October 21, 2013
S'TRATEGIC PLAN LINK: None
AGENDA ITEM # 8A
NOVEMBER 12, 2013
BACKGROUND: Several insurance policies related to employee benefits are up for renewal on
January 1, 2014. To give adequate time for enrollment of employees in new or
changed plans, these policies should be approved in November by the City
Commission.
BUDGET:
The policies include the City sponsored plans for medical, life insurance and
supplemental life as well as several voluntary policies that are paid by the
employees which include dental, vision and short and long term disability.
The most expensive of these policies is the employee medical insurance. The
City switched carriers last January to Florida Blue after an extensive process of
bids and evaluation of benefits done by the City's insurance broker; Harden &
Associates. This year, after another lengthy review process, representatives
from Harden & Associates are recommending renewal of the policy with
Florida Blue effective January 1, 2014. The cost will go up approximately
9.8% both for the City and for employee coverages. In addition, some of the
benefits will be reduced so that the cost increase can stay within the 10%
increase that the City has budgeted.
Representatives from Harden & Associates will be at the Workshop on October
28th to present their recommendations and answer questions. A copy of the
PowerPoint presentation that they will use is attached to this staff report.
The recommendation from Harden & Associates is to renew the other
employee benefit policies with the existing carriers. The cost for life and
supplemental life insurance from Standard Insurance will remain the same as in
the past year. Dental insurance is provided by the Guardian Insurance
Company and will have an increase of 8% in the PPO Plan and a 4% increase
in the DHMO Plan. Policies for vision, provided by Humana CompBenefits
and short/long term disability, provided by Lincoln, will cost the same next
year as they have in the past year.
The City has included in the FY 14 budget for a 10% increase in employee
healthcare coverage. The City's cost for medical insurance in the FY 14 year is
budgeted at $855,000.
RECOMMENDATION:
AGENDA ITEM # 8A
NOVEMBER 12, 2013
Approve the renewal of all employee benefit insurance policies listed below
effective January 1, 2014 through December 31, 2014 and authorize the City
Manager to sign the related documents.
• City Sponsored Policies
Medical — Florida Blue
Life and Supplemental Life — Standard
• Voluntary Policies
Dental — Guardian
Vision — Humana CompBenefits
Short/Long Term Disability - Lincoln
ATTACHMENTS: PowerPoint presentation from Harden & Associates.
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HARDEN
Results of 2013 Renewal
. 'Florida Blue Options reduced current medical
rates by 18% ($188,085 under
current/renewal CIGNA premium of
$1,426,119) with enhanced benefits.
. Savings provided funding for wellness
program (biometrics).
HARDEN
January 1, 2014 Renewal Options
. Original Florida Blue renewal of 29.1% negotiated
down to 19.0% with no changes,
• Florida Blue plan alternatives recommended bring
increase to 9.8% (within 10% budget).
a Marketed to Aetna — 37% increase over current.
. 2014 rates are below the 2013 CIGNA renewal and
plan benefits are significantly better than 2013
CIGNA options.
HARDEN
10/21/2013
AGENDA ITEM # 8A
NOVEMBER 12, 2013
1
Reasons for Increase?
▪ 8.9% due to Health Care Reform (paid by Florida
Blue, impacts rates)
. 9 -12% due to medical trend (Inflation)
Loss ratio for Immature plan year at 78% through
August
. Administrative expenses — 18%
• Run -out of accounts for an additional 15% of
renewal calculation
HARM
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HARDEN
10/21/2013
AGENDA ITEM # 8A
NOVEMBER 12, 2013
2