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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