Agenda Report
Fullerton City Council
MEETING DATE: SEPTEMBER 20, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: EDDIE MANFRO, DIRECTOR OF HUMAN RESOURCES PREPARED BY: CHRISTINE PILAPIL, HUMAN RESOURCES MANAGER I SUBJECT: 2023 GROUP INSURANCE PLAN RENEWAL
SUMMARY
Staff annually reviews the Group Insurance Program to assess plan options and renewal rates and to manage overall employer and employee costs. This report provides the 2023 renewal rates for the City’s fully insured group insurance and benefits programs.
RECOMMENDATION
Receive and file report.
CITY MANAGER REMARKS
The following represents the negotiated insurance renewal rates for the 2023 year.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
The Fiscal Year 2022-23 Budget includes funding for the employee group insurance and benefits programs as follows:
PLAN
Budgeted FY 2022-2023
Expenditures
Medical Insurance (Cigna and Kaiser)
$ 5,375,480
Medical Insurance (CalPERS/PEMHCA)
$ 1,638,100
Dental Insurance
$ 168,000
Vision Insurance
$ 46,800
Life Insurance
$ 36,000
Long Term Disability Insurance
$ 162,000
Cigna EAP
$ 15,600
TOTAL
$ 7,446,980
The overall renewal increase for the City’s 2023 health and benefits program has a 4.61% increase. The FY 2022-23 Budget includes this increase.
DISCUSSION
The City of Fullerton provides a comprehensive set of health benefits, including medical, dental, vision, life and disability coverage, for eligible active employees as well as access to medical and dental group coverage for eligible retirees. The collective bargaining process determines City contributions.
The 2023 renewal process for the City-sponsored plans began earlier this year and included strategic conversations with the City’s benefits broker, Burnham Benefits Insurance Services (Burnham). Staff and Burnham managed the renewal process to ensure the most comprehensive and financially competitive health benefits package.
The overall renewal for the City’s 2023 health and benefits program includes a 4.61% increase. The initial renewal increase totaled 8.04% for all plans, however, Burnham successfully negotiated lower increases. The medical plans primarily drive the increases.
The City established a medical advisory committee (MAC) comprised of city employees representing four bargaining units. The bargaining units include:
Fullerton Municipal Employees Federation (FMEF)
Fullerton Management Association (FMA)
Fullerton Police Officers’ Association (FPOA)
Fullerton Police Management Association (FPMA).
Burnham presented the 2023 renewal information to the MAC in July 2022. The MAC reviewed the rates and provided the information to their respective bargaining units. The bargaining unit representatives determined that City would have no design changes to the plans for 2023.
City Sponsored Programs
Cigna initially proposed a 12.29% increase which Burnham, negotiated down to 4.85%. Kaiser set a 5.64% increase and remained steadfast during negotiations. Less favorable claims experience including significant outpatient hospital services and pharmacy claims primarily drove the increases. Delta Dental and VSP programs run favorably with lower loss ratios causing a decrease in premiums for 2023. The City has no increases to Life Insurance, Accidental Death and Dismemberment Insurance and Long-Term Disability as they have rate guarantees through 2023.
The following table reflects the initially proposed and the final negotiated increases or decreases:
Plan
2023 Initial Proposed Renewal Increase
2023 Final Negotiated Renewal Increase/(Decrease)
Cigna
12.29%
4.85%
Kaiser
5.64%
5.64%
Delta Dental HMO
0%
0%
Delta Dental PPO
0%
-3.0%
VSP
-3.0%
-7.8%
LTD
0%
0%
Life / AD&D
0%
0%
Attachment 1 includes monthly premiums for City sponsored benefit plans. The collective bargaining process determines City contributions which vary by bargaining group or employee unit.
Employees represented by the FMA, FMEF, FPMA, FPOA (Safety and Dispatch), Confidential and Executive Employees are eligible for health coverage through a City-sponsored program. The FMA, FMEF, Executive and Confidential employees have flat rate City contributions that vary by agreement for each program and the employees in these groups will absorb all increases to premiums for 2023. The City and the FPMA and FPOA share increases or decreases to premiums equally (50% / 50%).
Minimum Value Plan for Non-Regular Employees
The City provides the Cigna Minimum Value HMO plan to eligible non-regular employees in compliance with the Affordable Care Act (ACA). Eligible non-regular employees are temporary employees that work, on average, 30 or more hours per week. The plan meets the ACA test for affordability and minimum essential coverage. The monthly employee contribution for this plan equals $103, in accordance with Resolution No. 2020-104. Currently, fewer than ten employees qualify for the plan, of which only two have enrolled.
Dental Insurance
The City provides two dental plan options to all regular employees through Delta Dental. The City contribution is limited to the maximum of the employee-only premium, or $25 per month for either plan, for most employees as determined by collective bargaining agreements.
Life / AD&D Insurance
The City contracts with The Standard Insurance Company for Life / AD&D coverage. Basic life insurance coverage amounts vary based on MOA.
Long Term Disability (LTD)
The City contracts with The Standard Insurance Company for LTD coverage. The plan covers non-safety employees only. Collective bargaining agreements determine eligibility for coverage limits.
Vision Insurance
Collective bargaining agreements determine eligibility for benefits under this plan.
Public Employees’ Medical and Hospital Care Act (PEMHCA ) /California Public Employees Retirement System (CalPERS) Health Program Employees represented by the Fullerton Fire Management Association (FFMA) and Fullerton Firefighters’ Association (FFA) may receive health coverage through benefit plans offered by PEMHCA which governs the CalPERS Health Program. The CalPERS Board of Administration negotiates rates in this program.
The Peace Officers Research Association of California (PORAC) plan is the baseline plan used to establish City contributions for all plans available through CalPERS. The City and the FFMA and FFA share increases or decreases to premiums (40% / 60% respectively). CalPERS overall health plans increased 6.75%. Rates for PORAC regional plans ranged from 4.00% to 5.81% increases depending on the region.
Other than health, FFMA and FFA employees may participate in other City sponsored programs as required by their bargaining unit agreements.
Attachments:
Attachment 1 – City Sponsored Program Premiums
cc: City Manager Eric J. Levitt
Group Insurance Program Renewals
September 20, 2022