201 S. Anaheim Blvd.
Suite #501
Anaheim, CA 92805
Tel: (714) 765-5111
Fax: (714) 765-5215
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
HUMAN RESOURCES DEPARTMENT
DATE: AUGUST 23, 2022
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: 2023 HEALTH AND WELFARE PLAN CARRIERS AND RATES ATTACHMENT (Y/N): YES ITEM # 12
RECOMMENDATION:
That the City Council, by Motion, approve the 2023 Health and Welfare Plan Rates as listed on Attachment “A” and authorize the Human Resources Director to enter into and execute all required provider agreements as well as take any and all actions necessary to implement and administer the agreements.
DISCUSSION:
Each year, the City of Anaheim reviews its health and welfare benefits to determine the best plan options, associated rates, and to manage overall employee/employer costs. The City provides a comprehensive health and welfare program with various options covering medical, dental, vision, wellness, and life and disability coverage for eligible active employees, as well as access to medical and dental group coverage for qualifying retirees.
The Anaheim Health Council, established in 1984 through bargaining groups, is made up of city employees representing each unit who work closely with the City’s insurance broker (Mercer) to review health programs, promote a healthy workforce, analyze and manage insurance premiums, and serves as an advisory body to Human Resources.
Under the Kaiser plan, Kaiser projected the renewal increase at 9.46%. However, as a direct result of the 2022 plan rate negotiations, the City successfully negotiated a 2023 guaranteed not-to-exceed rate cap increase of three percent (3%), a benefit to the City and its members. Under the Blue Shield plan, the City successfully negotiated a modest
8.9% average increase from current rates for the 2023 plan, compared to the expected rate cap for the HMO plans and PPO plans of 9.9% and 12.9%, respectively. These increases are driven primarily by less favorable claims experience, including significant inpatient hospitalizations and pharmacy claims. Although rates are increasing on both Kaiser and Blue Shield plans, employees will see an average 3.63% reduction in their monthly contributions due to increases in the City’s contributions. Based on contractual language that includes Consumer Price Index, employer contributions will increase an average of 6.87%.
2023 Health and Welfare Plan Carriers and Rates
August 23, 2022
Retiree medical renewals for the 2023 plan year will increase by approximately 4% on average, across all plans. This represents a slight increase in comparison to the 0.75% average increase for the 2022 plan year.
Furthermore, Human Resources evaluated other opportunities for administration of the City’s medical and dependent care Flexible Spending Account (FSA), Health Savings Account (HSA), and Consolidated Omnibus Budget Reconciliation Act (COBRA) programs. The City has contracted with PayFlex, an Aetna company, for FSA and HSA Plan administrative functions since 2012 while COBRA has been administered by Health Equity-WageWorks, since 2005. After evaluating the existing services along with vendor performance provided by PayFlex and Health Equity-WageWorks, a Request for Proposal (“RFP”) was issued for the 2023 renewal period and marketed to 10 vendors.
As a result of the competitive bid process, Human Resources recommends combining service providers and replacing the City’s current carriers, PayFlex and Health Equity- WageWorks, with Igoe Administrative Services and approving the 2023 rates with a 3- year rate guarantee, resulting in an eight percent (8%) annual savings. In addition, Igoe is a local vendor and the City expects to experience improved services and customer service while creating greater efficiencies and administrative management over the programs.
The remaining health and welfare plans including all group life insurance and disability products as well as the City’s Employee Assistance Program (REACH) remain at the 2022 rates with no changes for 2023.
IMPACT ON BUDGET:
Sufficient funds for employee Health and Welfare Programs are budgeted in the Employee Benefits Fund; there is no General Fund impact.
Respectfully submitted,
Linda N. Andal
Human Resources Director
Attachment:
1. Health & Welfare Plan Carriers and Rates – 2023