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: SEPTEMBER 22, 2026
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: 2027 HEALTH AND WELFARE PLAN CARRIERS AND RATES ATTACHMENT (Y/N): YES ITEM # 11
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, by Motion, approve the 2027 Health and Welfare Plan Rates as listed in Attachment “A”, approve an agreement, in substantial form, with Standard Insurance Company for administration of life, disability, and leave insurance and services for a three-year period effective January 1, 2027, and authorize the Human Resources Director to make de minimis revisions to the related agreements, as approved by the City Attorney’s Office, and to enter and execute all required agreements necessary to implement and administer the approved programs and services.
DISCUSSION:
The City provides a comprehensive health and welfare program covering medical, dental, vision, wellness, life insurance, and disability coverage for eligible active employees, as well as medical, dental, vision and life insurance for eligible retired City employees. Each year, the City reviews these benefits to evaluate plan offerings and rates, manage overall employee and employer costs, and ensure the program continues to meet the needs of employees and retirees. This annual review is conducted by Human Resources in concert with Mercer, the City’s insurance broker, and the Anaheim Health Council, an advisory body comprised of city employees representing each collective bargaining group.
The City offers eligible active employees a choice between Kaiser and Blue Shield for medical and vision coverage. To provide more rate stability and protect the City and employees from large rate fluctuations, the City entered a two-year renewal strategy with Kaiser for the 2026 and 2027 plan years, securing lower renewal rates. This strategy was successful, resulting in a projected 2.9% increase for the plan year 2027 while also including benefit enhancements such as acupuncture coverage and the elimination of preventative care copayments.
Blue Shield offers City employees a choice of two (2) HMO and two (2) PPO plans. The City secured a reduction in Blue Shield’s initial renewal proposal from 11.7% to an average increase of 9.6%. The increase is primarily due to the City’s utilization, significant high-cost employee claims, and a rise in medical and prescription cost trends. 2027 Health and Welfare Plan Carriers and Rates
September 22, 2026
The Medicare Advantage plans offered by Blue Shield, Kaiser, Humana, and UnitedHealthcare will have an average increase of 7.8% across all retiree plans. This increase is due to changes in Centers for Medicare & Medicaid Services (CMS) funding for Medicare Advantage plans.
To ensure high-quality care for employees, timely response, and cost-effectiveness, Human Resources issued a request for proposal (RFP) for ongoing services covering the City’s life insurance, disability, and leaves administration services for the 2027 renewal period. Following a competitive evaluation of five vendors, Human Resources recommends awarding the agreement to Standard Insurance Company.
The current proposed agreement is structured on a per-active employee count, with costs adjusting based on the City’s employee population and services rendered. The proposed agreement includes a three-year rate guarantee and based on current active employees, is expected to generate an estimated annual savings of approximately $25,000. In addition to expected savings, the proposed agreement includes additional comprehensive leave and Americans with Disabilities Act (ADA) administration services not currently available, which will improve operational efficiency and enhance service delivery to employees. The agreement maintains comparable life and disability benefits. The City notified labor for these ongoing services in accordance with AB339, and no objection was received.
Beginning in 2027, the City will enhance its benefits package by offering full-time and part-time employees the option to purchase voluntary supplemental accident, critical illness, and hospital indemnity insurance through Aflac. These employee-paid benefits provide employees with valuable financial protection against unexpected medical expenses while expanding the City's overall benefits package at no cost to the City.
The remaining health and welfare plans including Delta Dental DHMO and DPPO plans, Flexible Spending Account (FSA), Health Savings Account (HSA), and Consolidated Omnibus Budget Reconciliation Act (COBRA) programs administered by IGOE, and the City’s Employee Assistance Program (REACH) remain unchanged with no rate increase.
IMPACT ON BUDGET:
Employee Health and Welfare Programs are budgeted in the Employee Benefits Fund and sufficient funds have been allocated in the Fiscal Year 2026/27 budget; there is no general fund impact.
Respectfully submitted,
Linda N. Andal
Human Resources Director
Attachments:
1. Attachment A - 2027 Health & Welfare Plan Carrier Rates
2. Agreement with Standard Insurance Company