ADMINISTRATIVE REPORT
MEETING DATE: September 24, 2025 AGENDA CATEGORY: Consent – Resolutions TO: Honorable Mayor and City Council
FROM: Christi Tenter, Human Resources Director
DATE: August 27, 2025
SUBJECT: Healthcare Plan Renewals 2026
Resolution identifying vendors, healthcare plans, and rates for City-wide health insurance plans for eligible active and retired employees for the 2026 plan year.
RECOMMENDATION:
The Personnel Committee recommends approval of resolution and 2026 renewal package.
BACKGROUND:
Each year the City’s healthcare consultant, Segal Consulting (Segal), undergoes an aggressive claims review process in an effort to identify and negotiate the most cost -effective health plan rates for the upcoming plan year. The proposed rates and the supporting documentation are shared with the City’s Insurance Committee, which represents the various employee groups o f the City to reach an agreement on the healthcare rate renewal package. The City Council’s Personnel Committee is also provided this information and ultimately is the body responsible for a recommendation to the full City Council.
Several factors, listed below, combined to create a circumstance where several healthcare plans will see a rate change for the 2026 plan year.
The Blue Shield HMO (Full and Narrow Network) plans for the Active Employee group have a rate increase of 8.25% due to overall claims experience, trend, and underwriting methodology. The Blue Shield PPO plan for the Active Employee group has an increase of 19.90% due to overall claims, experience, and trend. The Retiree PPO plan has a rate increase of 8.5% due to trend and capitations. All plans are being impacted by mandated benefit changes in 2026. The Blue Shield Medicare plan has an increase of 5.0%.
Kaiser Permanente has proposed a rate increase due to higher utilization by increasing the Active Employee plans: HMO, Deductible HMO Mid $20 copay and Deductible HMO Low $30 copay plans, to have an increase of 14.99%. The Kaiser Senior Advantage plan for the Retiree group has an increase of 4.84%.
The United Concordia dental plan will have an increase to the PPO plan of 3.0%. There are no rate changes to the Active and Retiree HMO plans.
The Employee Assistance Program (EAP) by Optum will have an increase of 2.81%.
After negotiations with Segal, concessions resulted in projected annual premium savings totaling $1,359,000.
There are no increases in premiums for the other plans that are offered.
Percentage Increase
Blue Shield – HMO (Full Network)
Active Employees 8.25%
Blue Shield – HMO (Narrow Network)
Active Employees 8.25%
Blue Shield – PPO
Active Employees 19.90%
Retirees 8.50%
Blue Shield – Medicare Advantage
Retirees Over 65 5.0%
Kaiser Permanente – HMO Traditional
Active Employees 14.99%
Kaiser Permanente – HMO Deductible $20 Copay
Active Employees 14.99%
Kaiser Permanente – HMO Deductible XD $30 Copay
Active Employees 14.99%
Kaiser Permanente – Senior Advantage Plan
Retirees Over 65 4.84%
United Concordia Dental – PPO
Active Employees 3.0%
United Concordia Dental – DHMO
Active Employees 0.0%
Retirees 0.0%
EyeMed – PPO
Active Employees 0.0%
EyeMed – HMO
Active Employees 0.0%
Optum - Employee Assistance Program 2.81% Voya – Employee Life Insurance 0.0%
Basic Life 0.0%
AD&D 0.0%
P&A Group – FSA and DCAP (employee paid benefit) 0.0% UNUM – Long Term Disability 0.0%
City staff would once again like to thank Segal for their diligent work in developing this rate renewal package for the City and our employees. In addition, we would like to thank the employees who serve on the Insurance Committee and the Council’s Personnel Committee for working to develop and ultimately recommending the proposed healthcare plan renewal package.
FISCAL IMPACT:
The budgetary result of this proposed package in healthcare plan costs to the City for the active employee benefits increased by 15.6% or $3,631,000 as compared to the 2025 plan rates which were 9.1% or $1,971,000. The actual costs are subject to the numbe r of filled positions and plan enrollees. The 2026 premiums for retiree benefits increased by 8.2% or $710,600 as compared to the 2025 plan rates which were 6.9% or $584,700.
COUNCIL GOAL:
Innovative and Efficient City Government
ATTACHMENTS: