Item 8EAGENDA ITEM # 8E
JULY 26, 2010
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITF,M: Change to Employee Health Insurance
SUBMITTED BY: George Foster, Human Resource Manager
DATE: July 16, 2010
BACKGROUND: Based upon the small size of the City workforce, high utilization and
several major medical situations, the City's October 1, 2010 CIGNA health insurance premiums
were projected to increase by 75.44%; however, as the City is rated on a "pool" basis, our
10/O1/l0 premium increase was adjusted to 32.78% (+$221,659).
Last year the City's Aetna health insurance premiums were projected to increase by 25.5%
(+$175,215). The City requested that the following health providers give the City proposals for
health insurance to be effective October 1, 2009: Aetna, AvMed, BCBS, CIGNA, Florida
League of Cities, Humana and UnitedHealthcare. After an evaluation of proposals and meetings
with representatives from the three that replied (Aetna, BCBS and CIGNA), the City changed its
health insurance provider to CIGNA with health insurance premiums being retained at the
October 2008 levels and employee co-pays, deductibles, and other employee out-of pocket costs
increased.
Since receiving our +32.78% renewal rate for October 2010, the City has contacted our general
insurance carrier, the Public Insurance Agency, to see if they could provide the City with health
insurance from their pool or any of the nine other health insurance carriers that they deal with in
the Northeast Florida area. Only one proposal was received and after evaluation, the
benefits/costs were not as good as those proposed by CIGNA.
The City has also reviewed 17 Point of Service (POS) and 17 Open Access "off the shelf' health
insurance plans from CIGNA. Based upon guidance received to maintain health insurance
premium levels for the 2010/2011 budget, a health insurance plan (Plan B below) was selected
that would raise the City's contribution by approximately 3.75% ($25,182). However, this
coverage has higher premiums, co-pays and deductibles to the employee and a maximum out=of--
pocket limit that employees would have trouble meeting (Individual of $9,000 and family of
$18,000).
Therefore, we are requesting that the Commissioners consider funding Plan C below for our
employees. Funding for this action is estimated, based upon current enrollments, at an additional
$55,616. The City has previously agreed to selection of "off-the-shelfl' Plan B with an estimated
$25,182 premium increase to the City which could, in all probability, be covered by the current
budgeted funding.
AGENDA ITEM # SE
JULY 26, 2010
Although there are no employees pay increases in the proposed budget for 10/01110, there is a
3.5% increase to the employee premiums to be paid for health insurance with optional Plan C and
a variable employee premium increase with optional Plan B.
All plans being considered for October 1, 2010 also have increases in employee co-pays for
primary care office visits; specialist visits; outpatient facilities; urgent care facilities; MRI, CT
and PET scans; prescriptions; urgent care; etc.
PLAN PLAN PLAN
A B C
Minor Increase New
Current Plan to City Premiums Proposed Plan
Deductible -Individual $ 1,000 $ 3,500 $ 2,000
Deductible -Family $ 2,000 $ 10,500 $ 4,000
Employee Co-Pay after deductible 30% 30% 30%
Max Out-of-Pocket -Individual $ 5,000 $ 9,000 $ 5,000
Max Out-of-Pocket -Family $ 10,000 $ 1.8,000 $ 10,000
The establishment of a maximum out-out-of pocket amount at $5,000 individual and $10,000
family is also more in line with the latest information received on the Patient Protection and
Affordable Care Act, that, unless changed, requires cost-sharing beginning in Calendar Year
2014 (October 1, 2013 for our health plans) be limited to the Health Savings Account limits
which are currently $5,950/individual and $l 1,900/family.
There are no proposed changes to the City's Health Caze and Child Care Flexible Spending
Accounts or the internal management and administration of COBRA. The one exception is that,
per the Patient Protection and Affordable Care Act, effective 01/01/11, the Health Care Flexible
Spending Account will no longer be eligible for use to purchase over-the-counter medicines
without a prescription.
TIMING: The City's health insurance is on a fiscal yeaz basis and all enrollments must be
completed and entered into the CIGNA health insurance and City payroll systems in sufficient
time for employees to receive their health insurance cards and have payroll deductions from their
first paycheck in October. We are, therefore, unable to wait until the final budget is approved for
Commission guidance.
FUNDING: If approved, funds for this action will need to be added to the 2010/2011 budget.
RECOMMENDATIONS: Approve changing the base health insurance plan provided to
employees to Plan C as indicated above.
CITY MANAGER: ~/