Agenda Item 8BAGENDA ITEM:
SUBMITTED BY:
DATE:
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF' REPORT
Employee Health Insurance
George Foster, Human Resource Manager
October 18, 2011
AGENDA ITEM 4 8B
OCTOBER 24, 2011
BACKGROUND: During the discussion on health insurance at the August 8, 2011
Commission meeting, the Commission was advised that I did not go out to market to obtain bids
from insurance carriers for the 10/01/11 renewal. This decision was based upon our health
insurance being changed to CIGNA effective 10/01/09, our claims history and the claims to
premiums data which showed that the City would have an experienced based rate increase of
approximately 59%. However, as the City is not fully rated on our own experience and has a
"pool" adjustment, our actual rate increase for 10/01/11 was quoted as 28.65% with a final
negotiated renewal rate increase of 25%. After discussion, the City Commission requested that
we bid out our health insurance for a January 1, 2012 effective date to verify that there are no
other health insurance plans available.
We sent an RFP to Aetna, AvMed, BC/BS, PRIA, CIGNA, FLC, Humana, PRM Group Health
and United Health Care and have now completed the RFP process. All declined to provide the
City with a bid with the common reason being that our current and projected medical claims to
premiums experience is excessively high.
As a response to our RFP and the City's desire to get our insurance on a calendar year basis, our
current carrier, CIGNA, has agreed to retain our current premiums for an additional three months
through December 31, 2012. This would result in no premium changes for the next 15 months
thus locking in a premium that may have increased on 10/01/12 due to claims experience and a
medical inflation factor.
FUNDING: None required.
ACTION REQUESTED: Authorize the City to extend the current contract with CIGNA
through 12/31/2012 and City Manager to sign related contracts.
CITY MANAGER: