Exh 8BAGENDA ITEM 8B
FEBRUARY25; 2002.
CITY OF ATLANTIC BEACH
CITY COMMISSIONER MEETING
STAFF REPORT
ACTION REQUESTED: Approve changing of employee Health Insurance to Blue Cross
Blue Shield (BCBS) of Florida effective April 1, 2002.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: February 15,2002
BACKGROUND: The City's current health insurance provider, American Heritage
Life (AHL) will no longer be in the health insurance market after
September 30, 2002. In May 2001, an RFP for health insurance to
be effective October 1, 2001 was issued; however, no bids were
received. In January 2002, a proposal was received from BCBS
and the following health insurance providers were again contacted;
however, declined to bid: AETNA, CIGNA, HUMANA, and
United Health Care.
The health insurance proposal from BCBS is for a HMO plan with
higher employee co-pays and "out-of-pocket" limits as listed
within Attachment 1. However, BCBS will offer employees a
Child Care and Health Care Flexible Spending Account that could
help lower the actual "out-of-pocket" costs to the employee.
BCBS is also proposing a PPO with approximately the same level
of benefits as currently provided by the AHL PPO: That is, a $300
per employee and a $900 per family annual deductible and an
80%/20% co-pay for PPO providers. Prescription co-pays have
been increased from $7 to $10 for Generic and from $14 to
$25/$40 for Preferred and non-preferred prescriptions.
Although our current insurance will not expire until September 30,
2002; we recommend the change to BCBS effective April 1, 2002
in order to guarantee health insurance for our employees. We are
currently the only client being serviced by AHL and, although the
current AHL level of service is very good, their service and
network may not maintain such over the next 7 months
Additionally, we currently have a renewal rate quote from BCBS
to be effective April 152. To delay renewal by 6 months will, in all
probability, result in a higher renewal rate. We have been advised
that unless our health insurance experience were to significantly
improve, we could expect an approximate 2.5% rate increase for
each month of delay and, if our experience were to become worse,
the rate increase could be significantly higher.
AGENDA ITEM 8B
FEBRUARY 25, 2002
The rates being offered by BC/BS aze slightly higher (+4.23%)
than the current rates being paid by the City. However, the BCBS
rates are fora 12 month period and would include 6 months of the
remaining AHL contract and rates for six months of a new Fiscal
Year period. Based upon a "normal" renewal on October 1, 2002,
we could have expected a rate change (increase ?).effective
October 1, 2002; however, with the BCBS proposal, we will not
be subject to any rate changes until April 1, 2003.
Assuming that the City retains the current employee contribution
rates, the BCBS proposal will increase the annual City premiums
by $32,282.76 or + 4.23%. As this premium covers a 12 month
period with 6 of the months replacing the current AHL premium
and 6 of the months into a new Fiscal Year period where the City
may have received a rate increase, we believe that the + 4.23% rate
increase is reasonable.
In addition to active employees, this change will affect 5 of the
City's 37 retirees.
FUNDING: Any additional funding shortfall will be addressed with amid-year
budget modification.
RECOMMENDATIONS: 1. That the City Commission retain the. current employee dollar
contribution amounts.
2. That the City Commission authorize the City to change it's
health insurance to BC/BS effective April 1, 2002.
ATTACHMENTS: 1. Summary of Most Common. Procedures
2. Premium cost comparison
CITY MANAGER:
AGENDA ITEM 8B
FEBRUARY 25, 2002
CURRENT AND BC/BS HEALTH INSURANCE EMPLOYEE COST
MOST COMMON PROCEDURES
NOTE: One of the major changes in the current/proposed insurance is that the current EPO
insurance allows an employee to obtain treatment from specialist without a referral as long as the
specialist is within the network. The proposed HMO policy will require that the employee
designate a primary care physician and obtain a referral prior to appointments with specialist.
TYPE OF SERVICE CURRENT
AHL
EPO
POLICY PROPOSED
BCBC
HMO
POLICY.
Physician Office Services
Primary Care office services 10.00 15.00
Partici ating Specialist office services 10.00 25.00
Annual GYN visit for well-woman exam 10.00 25.00
Hos ital In atient
Per day 100.00 150.00
Maximum for stay 500.00 750.00
Ou atient sur cal services 100.00 200.00
Emer ency room services 50.00 50.00
Maternity Services
Primary care office visit 10.00 15.00
Partici atin s ecialist initial OB visit 10.00 25.00
In atient hos ital - er day 100.00 .150.00
In atient hos ital -maximum 500.00 750.00
Pharmac
Generic 7.00 10.00
Brand, referred 14.00 25.00
Brand, Non- referred 14 + diff 40.00
Maximum Out-of-Pocket
Member 1,500 1,500
.Per family 3,000 3,000
AGENDA ITEM 8B
FEBRUARY 25, 2002
AHL EPO Current for 12 Months
Coverage Current
Monthly Employee
Pays City
Pays Nr
of
Em Total
Monthly
Cit Costs Tota112
Month City
Costs
Em loyee 478.90 00.00 478.90 60 28,734.00 344,808.00
Em /Children 921.88 107.28 814.60 6 4,887.60 58,651.20
Emp/Spouse 981.74 153.20 828.54 17 14,085.18 169,022.16
Em /Family 1,424.72 317.60 1,107.12 9 9,964.08 119,568.96
92 57,670.86 692,050.32
Proposed BCBS HMO BlueCare #14 effective April 1; 2002 for 12 Months
Coverage
Monthly Employee
Pays City
Pays Nr
of
Em Total
Monthly
City Costs Total l2
Month City
Costs
Em loyee 497.82 00.00 497.82 60 29,869.20 358,430.40
Em /Children 958.29 107.28 851.01 6 5,106.06 61,272.72
Emp/Spouse 1,020.52 153.20 867.32 17 14,744.44 176,933.28
Em /Family 1,480.99 317.60 1,163.39 9 10,470.51 125,646.12
92 60,190.21 722,282.52
Current AHL PPO Renewal for 12 Months
Coverage
Monthly Employee
Pays City
.Pays Nr
of
Em Total
Monthly
Cit Costs Tota112
Month City
Costs
Em loyee 532.10 00.00 532:10 6 3,192.60 38,311.20
Emp/Children 1,024.29 195.34 828.95 00.00 00.00
Em /S Ouse 1,090.81 245..75 845.06 00.00 00.00
Em /Spouse 1,090.81 00.00 1,090.81 1 1,090.81 13,089.72 ',
Em /Family 1,582.98 509.29 1,073.69 00.00 00.00
Em /Family 1,582.98 00.00 1,582.98 1 1,582.98 18,995.76
8 5,866.42 70,396.68
Proposed BC/BS BlueChoice Plan #108 effective April 1, 2002 for 12 Months
Coverage
Monthly Employee
Pays City
Pays Nr
of
Emp Total
Monthly
City Costs Tota112
Month City
Costs
Em to ee 547.60 00.00 547.60 6 3,285.60 39,427.20
Em /Children 1,054.13 195.34 858.79 00.00 00.00
Em /S ouse 1,122.57 245.75 876.82 00.00 00.00
Em /S ouse 1,122.57 00.00 1,122.57 1 1,122.57 13,470.84
Em /Family 1,629.10 509.29 1,119.81 00.00 00.00
Em /Family 1,629.10 00.00 1,629.10 1 1.,629.10 19,549.20
8 6,037.27 72,447.24