ADMINISTRATIVE REPORT
MEETING DATE: September 16, 2026 AGENDA CATEGORY: Consent - Resolutions TO: Honorable Mayor and City Council
FROM: Christi Tenter, Human Resources Director
DATE: August 18, 2026
SUBJECT: Health insurance plans for eligible active and retired employees for 2027 plan year
Resolution identifying vendors, healthcare plans, and rates for City-wide health insurance plans for eligible active and retired employees for the 2027 plan year
RECOMMENDATION:
The Personnel Committee recommends approval of resolution and 2027 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 year. The proposed rates and the supporti ng documentation are shared with the City’s Insurance Committee, which represents the various employee groups of 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 2027 plan year.
The Blue Shield HMO (Full and Narrow Network) plans for the Active Employee group have a rate decrease of 3.40%. The Blue Shield PPO plan for the Active Employee group initially had a proposed increase of 13.90% and the Retiree group of 10.0% after negotiations with City Staff and Segal, Blue Shield reduced the rate to 10.91% for the Employee group and 6.95% for the Retiree group. These concessions resulted in projected annual savings totaling $756,000. There was initial discussion of an added tax to support funding of Medi-Cal under Senate Bill 125 which could increase rates by up to 1.49% for active plans. The application of this rate for 2027 is still pending and, if approved and applied during the plan year, would require an amendment.
The Blue Shield Medicare plan has an increase of 2.0%.
Kaiser Permanente has proposed a rate increase due to their underwriting methodology changing from 12 months of experience to 24 months. Active Employee plans: HMO, Deductible HMO Mid $20 copay and Deductible HMO Low $30 copay plans, to have an increase o f 2.65%. The Kaiser Senior Advantage plan for the Retiree group has a decrease of -2.53%.
The United Concordia dental plan will have an increase to the PPO plan of 5.0%. There are no rate changes to the Active and Retiree HMO plans.
The Employee Assistance Program (EAP) by Optum will have a decrease of -11.48%.
There are no increases in premiums for the other plans that are offered.
The budgetary result of this proposed package in healthcare plan costs to the City for the active employee benefits i ncreased by 6.1% or $1,631,700 as compared to the 2026 plan rates which were 15.6% or $3,631,000. The actual costs are subject to the number of filled positions and plan enrollees.
The 2027 premiums for retiree benefits increased by 6. 3% or $5 49,100 as compared to the 2026 plan rates which were 8.2% or $710,600.
As previously stated, the renewal rate was evaluated through a process that included meetings with the Insurance Committee, and the Personnel Committee recommended approval of the rates as presented. A summary of the overall rate changes for 2027 are provided below.
Percentage Increase
Blue Shield – HMO (Full Network)
Active Employees -3.40%
Blue Shield – HMO (Narrow Network)
Active Employees -3.40%
Blue Shield – PPO
Active Employees 10.91%
Retirees 6.95%
Blue Shield – Medicare Advantage
Retirees Over 65 2.0%
Kaiser Permanente – HMO Traditional
Active Employees 2.65%
Kaiser Permanente – HMO Deductible $20 Copay
Active Employees 2.65%
Kaiser Permanente – HMO Deductible XD $30 Copay
Active Employees 2.65%
Kaiser Permanente – Senior Advantage Plan
Retirees Over 65 -2.53%
United Concordia Dental – PPO
Active Employees 5.0%
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 -11.48% 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 Person nel Committee for working to develop and ultimately recommending the proposed healthcare plan renewal package.
FISCAL IMPACT:
Based on 2026 enrollment, the plan renewal results in an estimated increase of $1,631,700 for active plans and $549,100 for retiree plans. Funding is included in the current fiscal year budget and no other requests are required.
COUNCIL GOAL:
Innovative and Efficient City Government
ATTACHMENTS:
1. Resolution Health Plan Rates_2027